06 October 2008
South African Marine Repair Company Goes Global
Breaking down racial barriers key to business success
Cape Town, South Africa — A black South African businessman has taken charge of a quaint, century-old ship-repair company with the goal of making it a key entity in the burgeoning West African oil and gas industry.
In so doing, Daniel Bailey, the director of Globe Engineering Works (Pty) Ltd., is transforming South Africa’s business culture by eliminating racial divides that in the past prevented white midlevel managers from working effectively with black owners.
“For me, it was to say, ‘We’re all in this together.’ We need to succeed for the survival of the company, the livelihoods of the workers and the profits of the investors,” Bailey said. “It was a challenge, not only for the white employees, but also for the black employees, to get used to the fact that black owners are in place.”
Bailey said he has met the challenge. “You don’t appeal to somebody as a black person or a white person. You appeal to someone as a person,” he said.
Interestingly, the racial divides were less prominent on the shop floor than in the managers’ offices; the manual labor work force had become integrated several decades earlier because of economic necessity.
Skilled workers and artisans were drawn from ethnically mixed groups in the latter decades of the 20th century to keep the apartheid economy operating. “When I was a lad in a Cape Town technical high school, it was the ambition of several of my classmates to get hired as apprentices of Globe,” Bailey said. A walk through the Globe machine shop shows blacks working alongside whites, welding plates of steel and repairing a massive propeller axle on a lathe roughly 10 meters long.
The removal of racial divides is only one part of Globe’s attempt to transform itself from an old-fashioned ship-repair dock. The company is moving away from paper and ink documents and manual adding machines, becoming a computerized, efficient regional center for servicing mammoth drilling rigs and oceangoing ships.
In 2006, the year Bailey and several other black investors bought the company, Globe posted a record loss of $10 million. “We faced a strategic decision — either shrink the company and make it into a backwater repair dockyard, or grow it into an international business,” Bailey said.
He and his cohorts opted for the latter, intent on competing for potentially huge profits by becoming linked to the West African oil and gas exploration and drilling operations off the coast of Angola and farther north in Nigerian waters.
Establishing this linkage was not an easy task. It was akin to an athlete making it from the minor leagues to the major leagues. The U.S. government, through its South African International Business Linkages (SAIBL) program, has coached Globe as it enters this arena.
Globe’s new black owners contacted SAIBL in 2006 and requested an analysis of its business operations. “We checked its information systems, its pricing mechanisms, and technical and personnel issues. We interviewed each director and learned about morale and strategic planning methods,” said SAIBL’s Bertram Richards. “It was like taking an X-ray of the business.”
Before it could win a foreign contract, Globe first had to show that it was qualified for one. That meant obtaining international certifications of its administrative, industrial, financial and safety practices. SAIBL brought in consultants who walked Globe through each of the processes.
“We knew that our workers are highly qualified. They’re definitely world class,” Bailey said. “Where we needed help was in administrative, financial and marketing operations. SAIBL provided valuable assistance in many sectors, both technical and personnel management.”
The director chuckled as he recalled the resistance of one of Globe’s accountants to computerization. “He actually had a plaque on his wall saying something nasty about computers,” he said.
Bailey said Globe, following advice from SAIBL, puts high priority on complying with international safety standards. “No foreign company wants to send its ships or rigs to our docks if its workers are not safe,” he said. He said strong safety standards, which were not applied as rigorously by the previous owners, do more than protect workers: They also attract business.
Globe’s financial fortunes made a turn into profitability in 2007, when, after obtaining the required certifications, it landed its first international contract to refurbish the Deep Venture, an oil tanker that has been converted into a drilling platform. That single contract — to remove rust, repaint and replace equipment, add buoyancy chambers and so forth — was worth millions of dollars and provided work for hundreds of workers. Since then, Globe has captured similar contracts, enabling it to earn about $12 million in 2007, Bailey said.
He predicts that 2008 profits will reach about $17 million.
