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 Low-key, constant innovation drives manufacturer’s success

 

 Nowadays high-profile inventors such as Elon Musk are revered and celebrated as important economic players. But the low-key, incremental innovation that happens every day in thousands of workshops is arguably even more important and not adequately acknowledged for its contribution to economic development and wealth creation.

The story of Yogan Munusamy’s business illustrates how incremental, local-level innovation can lead to success for a single company, and contribute the local economy.

Yogan’s family was too poor to send him to university after school, so he worked for three years in the struggling family supermarket in King William’s Town before he enrolled as a trainee toolmaker in the East-London car-making industry in the late nineties.

The skills he picked up during his apprenticeship and later as a quality manager of an automotive-parts factory would later play a crucial role in his business success. During his twelve years at the company he also managed to study mechanical engineering and production management part-time.

Increasingly frustrated at his lack of career development at the company, Yogan, together with three friends whom he later bought out, purchased a machine that a local entrepreneur had built to make metal palisade fencing, but had struggled to make it work.

As a tool-maker Yogan was able to get the rudimentary machine going, and Form-It SA started producing its first palisade fencing in a small workshop in King William’s Town, which they ran at first as a moonlighting operation.

Yogan knew there was a need for a range of locally made quality palisade fencing, but it proved extremely difficult to win the trust of the local steel merchants who supplied the local fencing contractors with palisades.

“We already have a Merc and a BMW, why would we want to buy a Volvo from you?” he recalls one steel merchant telling him. “He had to chew on his words later, because today we supply his company,” says Yogan.

His father, who started a small welding and fencing company after closing down the family supermarket, was their biggest customer in the first few months and kept the business going.

Then Yogan came to a crossroads. The Great Recession had hit, and he, along with many of his peers in the motor industry, was offered a voluntary retrenchment package. He took it and decided to put everything he had into Form-It SA, including two investment properties he sold to get his business off the ground.

One of the victims of the recession was East London Palisades, a prominent competitor based in Arcadia Park. Although they made a different type of metal palisade fencing, Yogan went to the company’s liquidation auction to see if he could buy some of the equipment. Not only did he buy two metal presses, but he also found out that the premises was available to rent.

The landlord was Business Partners Limited, the leading risk financial of small and medium enterprises in South Africa, and who also supports many local entrepreneurs in rental units throughout the country.

By moving his operation into the premises of his former competitor, Yogan was not only closer to his market, but was able to benefit from the market’s perception that it remained the site of ongoing palisade manufacturing.

Growth was slow and difficult, with many early lessons learned around extending too much credit to clients who ended up not paying. But by constantly thinking like an engineer and searching for second-hand equipment, Yogan was gradually extending the company’s ability to offer a range of products, and Form-It SA survived and grew. Making use of 50% grant funding from the department of trade and industry, Yogan had a new palisade machine built in Johannesburg which significantly increased their production capacity, and allowed the company to supply palisade fencing at the specifications required by the likes of Eskom and Metrorail.

It did not take long for demand to push up against Form-It SA’s capacity, and Yogan started searching for new machinery again. Together with a former tool-maker colleague who joined him in the business, Yogan designed a machine that could automate palisade manufacturing so that only one machine operator was needed to pack the finished products.

Yogan never found time to build the machine himself, and the Johannesburg manufacturer who built his second machine reckoned he did not have the capacity to realise Yogan’s idea. At last Yogan found an engineering company in China who agreed to build it at an affordable price. It was a risky move, though. The entire order and build process was done via email without ever meeting the Chinese manufacturers.

But once it was shipped from China and installed in East London with some telephonic support from the Chinese engineers, the machine worked beautifully from the start. The machine worked so well and boosted their turnover so much that Form-It SA ordered a second machine. 

Yogan believes the secret to the success of Form-It SA is his constant innovation that allowed him to improve the range, quality and quantity of his products. Also important, he says, was his ability to keep the business debt-free. This helped to keep his prices low at a time when Form-It SA did not have any economy of scale to break into the market.

True to his entrepreneurial style, Yogan is again working on what he calls “the next thing”. This time, it is a move into mesh fencing, which will no doubt lead to more growth, and many more next things.

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