Cathexis Technologies - a manufacturer's story

July 2010 Mining (Industry)

After some 15 years in the industry and customers around the globe, Cathexis has proven that South African companies have what it takes to be successful in the electronic manufacturing arena. If you look at the list of international clients that are using Cathexis equipment, it reads like a who’s who of companies in the retail, mining, banking, city, remote monitoring and many other sectors. Cathexis exports some 60% to 70% of all its products to the UK, USA, Australia, India and Europe.

Cathexis was formed by Dr Clive Putman some 16 years ago and is now owned by the three directors of the company: Dr Mark Randelhoff (MD), who was one of the pioneers in digital video design in South Africa, Gary Shepperson (Operations), who brought a wealth of project management and business expertise to the company and Gus Brecher (Marketing), who is no stranger to the local manufacturing arena having spent many years with Reutech and more recently with UEC of the Altech group (manufacturers of MNET decoders). All of the owners are electronic engineers.

South Africa is well respected internationally in the electronics industry. In a bizarre twist, the country is now benefiting from the Arms Embargo (where countries would not supply arms to the apartheid government) which forced the government to plough funds into local R&D. This created many skills in electronic design and development, quality assurance, project management and manufacturing. Many of these people were the founders of present day successful companies and many others are involved in some way in the industry.

It is also no co-incidence that most of the successful South African developers and manufacturers that I have had associations with, for example Impro (access control), AutoWatch (car alarms), Shurlock (vehicle systems), UEC (Satellite Decoders), MixTelematics (vehicle management and tracking) etc, have all made a success of the export market.

So, what does it take to be a successful manufacturer?

Well firstly, to compete with the products from the East, there needs to be some way of differentiating yourself. In our case, it is our ability to tailor the product to customers' needs and to integrate third party products into our system. We therefore regard ourselves as a solution provider although we also cater for the mid to lower end of the market. For the South African market, it is also a great advantage having local engineering support. Ironically, notwithstanding our success in the international arena, there is a certain amount of scepticism with local products, so quality responsiveness to clients is critical.

We were fortunate that we were at the leading edge of digital video and had product at a time where there were not a lot of players in that space. That allowed us to penetrate the market locally (especially in the mining sector) and abroad. So when the digital market really grew and the plethora of foreign products started entering the market, we already had a good installed base and excellent references. We had also formed excellent relationships with several integrators who are still loyal to us today.

Funding and government support

The government through DTI does provide grants to assist with the development of innovative technology (eg, the SPII grant) and will also provide some funding assistance for overseas export trade shows. In fact, we successfully used the DTI trade show funding facility to assist with exhibiting at IFSEC in Birmingham for three years to grow our market in the UK.

However, there seems to be a lack of pro-active support for locally manufactured products in the local industry, especially in the surveillance sector where there are a plethora of products, not only from the East but from Israel, Germany, Australia and so on. There seems to be little or no preference in government tenders for products that are manufactured in South Africa, with the only emphasis being focused on BEE credentials. This is unfortunate because the real empowerment and growth in South Africa comes from creating local employment.

We employ many more engineers and production staff than any of our distribution competitors, and on top of this, the money paid for the goods remains in South Africa, rather than going offshore. The money is then used to grow the company and to employ more South African people. Economically it makes sense for the country to use South African products.

Is local lekker?

We have many loyal South African clients that like the fact that we have the local engineering expertise that allows us to differentiate ourselves from our competitors by being able to provide great support and develop features and integration specific to their needs.

But there does seem to be a general apathy amongst corporate clients and consultants to embrace South African products. In fact, in some cases local is not lekker.

To give you some examples of where we have been successful overseas, but not locally:

* We supply major cities in the USA with equipment for their port, their street surveillance and the police force, all integrated with access control. We did not even get a look-in for our own ports in South Africa or any South African street systems.

* We are the dominant player to the retail market in the UK but have only received full-blown support from the Woolworths group locally.

* We have systems installed in some of the major stadia in Australia and the UK, but did not get a sniff for any of the South African FIFA World Cup stadia.

Do not get me wrong, I appreciate that customers have the right to choose which product to use, and if South African products are too expensive or do not meet the requirements, then so be it. I am definitely not saying that we need to hamstring our competitors, or that we should get an unfair advantage, but if you look at the countries from where our competitors hail like the East, Germany, Australia, Israel and many others, there is a definite preference in these regions for local products either by way of duties and concessions, by local preference in the bid process or even just the mindset of the customer.

Having said all this though, I must say a word of thanks to all our loyal South African customers and many loyal installers who have stuck with us over the years and continue to do so.

Home-grown initiatives

A good example of a successful initiative is what they have done in Australia with their 'Australian-Made' project. This is not like the 'Proudly South African' campaign which any company can join regardless of where the products come from. It is genuinely raising awareness of Australian products for the Australian market. It also assists Australian companies in their export drives and all government tender adjudications are encouraged to look for products that are registered.

While there are some bodies like ESDA and ESIA who are attempting to regulate the distribution of security products by looking at quality of product, service delivery, training etc. (which should assist in at least filtering the chaff from the market), there is no South African initiative to support and promote genuine South African products.

The way forward

We will continue to be competitive both in regards to technology and commercially. We led many of the biggest names in the industry to providing a full H.264 solution, and are also leaders in some of the software functionality that we provide. We take cognisance of the IP revolution and the move towards IP video standards and functionality at the 'edge' of the network. One thing for sure is that we cannot afford to rest on our laurels in this highly competitive market.

For more information contact Cathexis Africa, +27 (0)31 566 7800, gusb@cat.co.za, www.cathexis.co.za



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