Brikor’s mir­a­cle

In 2013, one of the largest brick mak­ers in SA was put un­der pro­vi­sional liq­ui­da­tion, but it has been re­built

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In the mid­dle of the maize fields just out­side the small town of Nigel in Ekurhu­leni, hun­dreds of work­ers in blue over­alls make al­most 700 000 clay bricks a day. Here, at Brikor’s Plant 1, sur­rounded by rows of stacked bricks that look like sprawl­ing, flat pyra­mids, new CEO Gar­nett Parkin Jr drives around in his shiny black Land Rover.

Wher­ever he goes, Parkin is greeted by smil­ing work­ers. They are smil­ing for a rea­son – a pre­lim­i­nary liq­ui­da­tion or­der that was hang­ing over the heads of al­most 1 000 Brikor em­ploy­ees like a dark cloud was set aside ear­lier this year.

It’s dif­fi­cult to be­lieve that seven years ago, some of these friendly work­ers took part in a bloody four­month-long strike at the com­pany.

Brikor seems to be the first and only JSE-listed com­pany on record that has man­aged to have a pre­lim­i­nary liq­ui­da­tion or­der set aside.

Many of the work­ers at Brikor have known Parkin since he was a boy who helped them stack bricks in the sun at the very same brick plant dur­ing his school hol­i­days.

Brikor listed on the JSE’s AltX stock ex­change in Au­gust 2007 and was at one point the sec­ond-largest brick man­u­fac­turer in the coun­try, with about 1 600 em­ploy­ees.

At that point, the com­pany had seven plants in dif­fer­ent parts of the coun­try that, among other things, man­u­fac­tured clay pipes and roof tiles, and it had stone quar­ries in KwaZulu-Natal.

A year af­ter the com­pany listed, its net profit af­ter tax dou­bled to R73 mil­lion. It was the hey­day of the con­struc­tion in­dus­try and the econ­omy in gen­eral – no one fore­saw the ap­proach­ing fi­nan­cial cri­sis.

The Brikor board de­cided to bor­row mil­lions of rands for ac­qui­si­tions that were sup­posed to ex­tend and di­ver­sify the com­pany’s ac­tiv­i­ties.

Then, in the last months of 2008, Brikor was hit by dra­matic strike ac­tion. Two op­pos­ing unions were fight­ing for recog­ni­tion and salary in­creases.

The com­pany’s pro­duc­tion plum­meted dur­ing the strike and a con­tract worker was burnt to death by strik­ing em­ploy­ees.

By the time pro­duc­tion re­cov­ered af­ter the strike, South Africa was in a re­ces­sion and the con­struc­tion in­dus­try had col­lapsed. Brikor’s earn­ings and share price plunged, to­gether with the en­tire con­struc­tion in­dus­try.

For the fi­nan­cial year to end Fe­bru­ary 2009, Brikor recorded a net loss af­ter tax of R35.9 mil­lion. As a con­se­quence, the com­pany had to re­struc­ture to ex­tin­guish its debts.

“We have made some bad man­age­ment de­ci­sions in the past by lay­ing off peo­ple who were cen­tral to the com­pany,” said Han­leu Botha, Brikor’s fi­nan­cial di­rec­tor.

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She said this hap­pened be­cause, af­ter list­ing, the com­pany ap­pointed di­rec­tors who didn’t un­der­stand the core busi­ness of the com­pany.

Parkin said that when the work­force was re­struc­tured, these di­rec­tors were the first to go.

“My fa­ther [Gar­nett Parkin Sr] said that for ev­ery di­rec­tor I let go, I could save 100 other peo­ple’s jobs.”

He said the de­ci­sion was made to re­turn to the core busi­ness of clay bricks, and four plants were sold in the process.

“We learnt from the strike and have changed how we ap­proach our em­ploy­ees,” said Parkin.

He said that as many work­ers as pos­si­ble were kept on dur­ing the re­struc­tur­ing process, and dur­ing this time they had no res­ig­na­tions.

They also gave recog­ni­tion to both the Na­tional Union of Minework­ers and the As­so­ci­a­tion of Minework­ers and Con­struc­tion Union, which was a new union at the time.

“We were also trans­par­ent. No one ever won­dered about what was go­ing to hap­pen next,” he said.

How­ever, in Au­gust 2013, Brikor was placed un­der pro­vi­sional liq­ui­da­tion af­ter a dis­pute with its fi­nancier FNB about the ra­tio of its prof­its to debts.

Trad­ing in Brikor shares was also sus­pended. When trad­ing was sus­pended, the price per share was 9c – a far cry from the R2 per share that was reached on the day the com­pany listed.

The last unau­dited in­terim re­sults pub­lished shortly af­ter­wards, how­ever, showed that the com­pany’s re­struc­tur­ing be­fore the pro­vi­sional liq­ui­da­tion had al­ready borne fruit.

By June this year, Brikor’s fi­nances had im­proved to such an ex­tent that it reached an agree­ment with FNB to make a pay­ment of R105 mil­lion to ser­vice its debt.

As a re­sult, the pre­lim­i­nary liq­ui­da­tion or­der was set aside on Oc­to­ber 2.

Un­for­tu­nately, Parkin Sr was killed in an ac­ci­dent in Jan­uary be­fore he could see the or­der set aside, and his son took over the reins as CEO on Novem­ber 11.

Ac­cord­ing to Al­lan Pel­low, an in­sol­vency prac­ti­tioner at Westrust and Brikor’s main liq­uida­tor, the level of co­op­er­a­tion be­tween Brikor man­age­ment, unions and em­ploy­ees was as­tound­ing com­pared with other liq­ui­da­tions he had worked on.

“A mir­a­cle hap­pened here,” said Pel­low on Oc­to­ber 8 in the Springs civic cen­tre, where a party was held to cel­e­brate the end of the pro­vi­sional liq­ui­da­tion.

In spite of the weak econ­omy and floun­der­ing con­struc­tion in­dus­try, Parkin is con­fi­dent that Brikor has the com­pet­i­tive edge in the mar­ket.

“We are self-suf­fi­cient be­cause we mine our own clay and coal, and we have a very com­mit­ted and pro­duc­tive work­force.”

Botha said Brikor should be able to pub­lish its fi­nan­cial re­sults for the years 2013, 2014 and 2015 by Fe­bru­ary.

Only af­ter this has been done will the JSE be able to de­cide whether Brikor shares can be traded again.


BACK TO BUSI­NESS Gar­nett Parkin (right), the new CEO of Brikor, with Chance Mosehle, one of the work­ers at Brikor’s Plant 1 out­side Nigel in Ekurhu­leni

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