Local content inspires international expansion

The company’s range of locally manufactured resilient seated valves – an industry niche – coupled with an investment into local foundries to produce lost-foam castings for its production lines, has paved the way for it to almost double in size with regards to technology, manpower and turnover. 

AVK's locally manufactured valves currently exceed the directive’s local content requirement of 70%, reaching an above-average 84% within its production processes.

This means that AVK qualifies to supply product to SOEs and municipalities, giving the company an edge in providing valve solutions to South Africa’s water distribution networks. Additionally, AVK is the only South African valve manufacturer that has the knowledge and capacity to manufacture high pressure large diameter valves – up to 3 m. 

“Local content is of benefit to our country, and also to companies that not only comply with the directive but also embrace it,” says Patrick Jantjies, AVK Southern Africa Managing Director. “It promotes both skills development and resource expansion, which lead to skills transfer and job opportunities. At AVK we have the technical abilities to provide practically any valve solution. Our greenfield developments and brownfield expansion projects have provided us with the infrastructure to build solutions according to specific customer requirements.”

“We view local content not only as an opportunity but as an added value. It promotes the growth of our manufacturing industry which may, in turn, serve as a draw card to recall some of our engineers who have emigrated. This contributes to enhanced skills transfer.” He adds that these factors will enable increased local production to the extent that export opportunities for manufacturers across South Africa will increase.

It was with this in mind that AVK made an investment into locally produced castings that would not only service the company’s requirements, but could also be used for export to Europe and the Middle East. With the bulk of its castings originating in the Far East, AVK had established a lost-foam castings facility in that region. It simultaneously identified two local black-owned foundries and transferred their intellectual property gained from its foundry in the Far East to the local foundries along with an R8-million investment.

“The quantity of lost-foam castings that AVK uses exceeds that produced by our local foundries,” Jantjies explains. “This necessitates continued casting imports from the Far East for many manufacturers. However, we are confident that our local industry will rapidly rise to international competitor status. That would be a cost-saving to South African manufacturers while providing employment and increased skills levels for our country’s labour force.” 

Jantjies adds that companies in Europe and the Middle East have become reticent in ordering castings and other products from the Far East due to economic and other challenges. “This creates an opportunity for the South African industry to target these two markets and, when one takes the exchange rate into account, it will be a cost-effective approach to order castings from South Africa.”  
He says that it is essential that South African manufacturers compete with the quality standards expected by overseas markets. This is not only achievable but already in place – especially with regards to lost-foam castings for the valve industry,” he says. “AVK gives product warranties that far exceed the international norm, and that is because the quality of the products we produce are unsurpassed.” With local casting companies producing world-class products, the likelihood of penetrating the European and Middle Eastern markets seems extremely positive. AVK Southern Africa’s exports would rise, as would lost-foam castings for other production processes.

Local manufacturing of previously imported resilient seated valves and high pressure large diameter valves; the investment in local castings; products that meet international standards; export opportunities to the Middle East and Europe; and an exchange rate that is favourable to the customer, bodes well for AVK to meet Patrick’s vision of doubling turnover, manpower and technology in the next five to 10 years.