By Eamonn Ryan

Industrial Plumbers commenced operations in 1969 in its current form, evolving since that time from a one-plumber operation to one of South Africa’s largest contract and maintenance plumbers, with associated businesses. Herein are the secrets to its success.

The Industrial Plumbers group of companies is a leading contracting group of companies specialising in plumbing and drainage, mechanical pipework, and fire control installations on a national and continental basis. The company has its head office in Midrand, with offices in Trichardt in Mpumalanga and Lusaka in Zambia.

Over the years the company has spread its wings well beyond plumbing to include fire prevention and construction maintenance. While this corporate profile will focus primarily on the company’s plumbing interests, these are in fact inseparable, and therefore we mention them here.

History in the making

“We have been operating in the plumbing, mechanical and allied services industries for the past 50 years in Johannesburg and before then in Zambia for 16 years. Our head office is based in Midrand and we undertake light engineering and fabrication work in our own workshop,” says Derek Zipp, Industrial Plumbers CEO.

The company undertakes projects throughout South Africa and has undertaken a number of projects in various African states over the years, while its current Zambian business started operations in 2009.

In fact, the company in one sense is even older than 50 years, having started up in 1954 when Derek’s father, Stuart Zipp, moved to Ndola and went into business there as Zipp Plumbers Ltd – hence the reference to ‘current operations’.

Recalling the early history of the business, Zipp says, “My Mom and Dad trekked to the then Northern Rhodesia in 1953 to the town of Ndola, where I was born. My Dad started Zipp Plumbers Ltd back in 1954 as a one-man operation and grew that business into the largest plumbing construction and maintenance business on the Copperbelt at the time.” After 16 successful years, Stuart Zipp sold the business in 1969 and the family returned to South Africa. Ironically, the buyer of the Zambian business subsequently also relocated to South Africa, and he is still operating under the name Zipp Plumbers in Durban to this day.

“The family moved back to Johannesburg in April 1969, and after a six-month sabbatical, Industrial Plumbers commenced business in October 1969. The initial main contractor the company engaged with was Wimpy Homes as my Dad knew the commercial manager from their Zambian days – hence his belief in the importance of nurturing relationships,” says Zipp.

The IP Group comes full circle: back to Zambia

Zipp adds that he followed a career in auditing at first and after serving his articles and working for seven years in the auditing game he joined another company as financial manager for two years before deciding to join his father in the business in 1984. This was a tough decision as there wasn’t really the quantum of business at the time to support them both – nevertheless, they pressed on.

The initial plumbing business had grown from a one-man business but was essentially still a one-plumber business centred on Zipp senior, with support functions.

“Working with family in a small business was a challenge: it soon became evident I could not rely on just being an accountant but had to learn all about the industry and grow the business. I was thrust into learning plumbing jargon and was mentored by the quantity surveyor in the company at the time. Being the young upstart in the business, but with more energy, I built relationships with the younger crew of main contractors and we started to develop new leads.”

It isn’t a business that Zipp ever had ‘handed to him on a platter’ – he emphasises he paid for every share in the business over time. His father at the outset was already in his late 50s and stayed on through all the years until six years ago, when he was 84. With the years advancing on him, Zipp senior steadily withdrew from the mainstream plumbing business and concentrated on the workshop side, “where he was very good on the mechanical design side”. Derek Zipp developed relationships with various contractors and won valuable new contracts – undertaking the plumbing on thousands of houses in the Rustenburg area, for instance.

“I made a point of learning how the QS’ing and plumbing works, the various materials – just don’t ask me to actually weld a pipe. My father’s day-to-day involvement diminished in his 60s and his role became more advisory in nature whilst he also kept a close watch over the workshop fabrication activities.” Said Zipp.

As the business grew and Zipp became central to the contracts side, there came a point where a big leap was required in what was a highly stretched management structure. Enzio Zambetti, a previous auditing colleague of Zipp’s joined the company in 2004 to look after administration and accounting. This required a growth spurt similar to when Zipp himself joined, to warrant the overhead of a CA on the team. This duly happened as Zipp was able to focus on his ‘rainmaker’ duties while Zambetti handled the administration of the business. A few years later the need to strengthen the management team became apparent and Neil Mole came on board in 2010 as the contracts director. The management team has been stable since then, directing a business which has been on a steadily accelerating growth trajectory throughout the following decade.

“Our Zambian company is the main stalwart of the group at the moment,” says Zipp. “That business has been on a steady growth path for the best part of the last decade. While growth in the group was steady and consistent before that, it has since accelerated mainly due to our Zambian operations. With the challenges facing the local construction industry over the past few years, we have taken the view that we need to consolidate our position in South Africa and rather to seek growth in Africa, principally in Zambia. However, working in Africa is a continually moving target as economies grow or decline with the ever changing times.”

Staying on and expanding in Zambia was also an easy decision for Zipp to make, as he had an affinity for the country as his birthplace. He wouldn’t describe it as a spur of the moment decision, he says, because it is not easy to move into a new African country to conduct business. Companies have to be registered and innumerable permits acquired. “Our Zambian operation is based in Lusaka and over the years we have developed sustainable relationships with local and South Africa contractors and developers in that country,” says Zipp.

Zambia is experiencing growth primarily as a result of enormous investment from Chinese investors and consequent construction. “We were lucky as our timing was immaculate – we didn’t foresee this happening. Other plumbing firms are expressing interest in the country now – but the timing is no longer as good. The government is refusing work permits so as to encourage work for local plumbing and construction firms, but luckily we are well entrenched,” adds Zipp.

The Zambian operation makes up more than half the staff complement at the moment, having grown strongly while South Africa has stagnated. The Zambian operation started with the one project in Lusaka, which led to another and another. Illustrating what work is like in Zambia, it is currently finishing up a project for the Zambian military in the “middle of nowhere” with the nearest shops to buy even rudimentary products like milk and bread being at towns outside a 30km radius from the site.

Key relationships sustain workflow

The key to Industrial Plumbers’ success stems from the development of relationships, says Zipp. “The process of winning tenders is closely aligned to having the right feel for the market through experience and also the relationship one has with main contractors developed over many years. Relationship building starts with delivering quality work and on time, and thereafter getting to know the relevant individuals not only in a work but also social environment. Like all relationships you have to be reliable and available to discuss and resolve problems and ultimately come up with workable solutions. Working in Zambia for clients from all over the world has meant dealing with people from Japan, China, Israel, and so on – again proving that forming and nurturing strong relationships with our clients is vital to our ongoing success.”

While the recent demise of Group 5 is a blow, Zipp says the company always had to tender for each job. “We tendered on a select list basis – you get put on a list by engineers and quantity surveyors – but ultimately you still have to be the best or lowest price to win the job.

“In addition to our strong alliance with Group 5, we have over time worked for and developed strong relationships with most of the large main contractors – including Grinaker LTA, Concor, Steffanuti-Stocks, WBHO and Liviero. We have undertaken many years of construction of housing plumbing for Fox Lake Developers on the Platinum belt in North-West province.

“Other important relationships were with the people who have been part of the business over the years: key people come and go and there were several ‘partners’ in the business sometimes for ten-year stretches. Mention must also be made of our many suppliers in this industry that we have had association with for most of the time – without their support we could never have grown as we have,” says Zipp.

Diversification successes and false steps

“We have made various attempts at diversification over the years – some succeeded and some failed – and new alliances were formed,” says Zipp. “On the success side we count our diversification and expansion into fire prevention and control and building and plumbing maintenance servicing in two major areas of their [Sasol’s] organisation. Further we have formed alliances with some leading manufacturers in the solar and hot water generation industries. We are continually researching new innovations and aim to bring these in to give us a competitive edge.”

Less successful diversification attempts were made to trade in certain plumbing lines. “We dabbled in certain products like the Wavin agency for HDPE pipes which product range competes overseas with Geberit and Valsir, but we weren’t structured for this kind of distribution business and that was not a successful venture.

“Lowlights for me personally have been the ending of partner relations for various reasons in the past and having to retrench long-term employees – last year we had to retrench staff for the first time in 48 years due to the decline in the local construction industry and that was painful for me. Some projects and contracts don’t go the way they were planned, but we have seen all of them through to completion no matter the cost and eventually come out smiling.

“Working almost exclusively for the big main contractors in the past, we were ill-prepared to deal with some of the ‘weaker’ (or shall we say – less ethical) main contractors in the past two years, who have eventually gone into liquidation and cost us big time,” explains Zipp.

Despite such setbacks, the company has now enjoyed ten years of unbroken growth, which started in the lead up to the 2010 FIFA Soccer World Cup for which it was appointed (as lead partner in a JV) as the sub-contractor for the plumbing for what is today FNB Soccer City. “Suddenly the projects came regularly, and we were very busy locally while also experiencing good growth in Zambia, with multi-year projects in both countries.

“With this growth in the business came growth pains – we had too much on our plate for three local directors and one in Zambia. This resulted in some poor results for certain projects we had, because projects weren’t being monitored closely enough. The fact that we don’t have much contracting work in South Africa at the moment because of the recession in the local economy actually suits us, as we are in a consolidation phase and were able to trim our overheads to suit the reduced local workflow,” says Zipp.

“Our focus into other African countries is close to our hearts and we are gathering the required information before wading into new parts of the continent. There are real and different challenges working in other African countries such as local partnerships, new company and tax legislation, registering with company and labour authorities and the construction regulator. If you think labour laws in South Africa are stringent – they are even more complex in some other African countries.”

Company structure and organisation

All directors have a shareholding in the business and Zipp is no longer the majority owner. Today it has three shareholders / directors in the IP Group and in IP Zambia the shareholding extends to its Contracts Director heading up operations there. Zipp is the MD of the group and very involved in the Zambian operation which is headed up by the Zambian director of that company. Enzio Zambetti is the financial director and looks after finance and general management functions; Neil Mole is the contracts director looking after local contracts and currently focused on operations in its Secunda-based companies performing ongoing contracts for Sasol.

Plumbing Africa’s (PA) Q&A with finance director, Enzio Zambetti (EZ)

PA: What strategic relationships does the business have, and why are these suppliers/partners important to your business?
EZ: Our relationships with our suppliers, which have been built up over many years, are extremely important to us, as we rely on competitive pricing and the credit terms we get from them, without which we would not be able to purchase the materials needed to complete our projects. Plumblink has a national network of branches and has become our leading supplier.

PA: Describe the importance of SABS marks or other forms of quality control.
EZ: Clients will inevitably require comfort that the materials and products we install have been certified by SABS or another accredited body, so this is a policy that we have always applied. We strive to use only SABS approved products, and the demise of the SABS has certainly provided us with a challenge, so where no SABS mark is available, we will use other relevant certifications to ensure that all products that we use are of the right standard.

PA: What are the challenges and opportunities the company faces in growing its market footprint?
EZ: The biggest challenges we face are: The construction industry as a whole is in dire trouble in this country, with the demise of many long-term players in the industry. There seems to be a lack of morals and ethics in the business environment, and it is difficult deciding on who we are comfortable working for so that we can be confident that we will receive payment for
our work.

Another major challenge is the dearth of suitable skills in the industry which perhaps can be blamed on the failure of the technical education system, and the rampant corruption which leads to untrained people receiving trade certificates.

A major problem on some sites has been having to work with local labour consortiums imposed on us by local labour organisations.

And of course, there is the ongoing problem of crime, especially the theft of building materials from sites.

Contracting is problem solving

The bulk of what Industrial Plumbers does is contract work involving the costing and tendering of contracts, quantity surveying and performance, and that area falls to Contracts Director Neil Mole.

“I’m a problem solver,” says Mole bluntly. “Our guys on site come to me with problems, whether it be how to go forward with a project, how to resolve a situation with materials, whether there are new products that could make us more competitive, or a more efficient way of doing something. We do our own designs to a certain extent, though we can’t sign them off or offer professional indemnity.”

Efficiency is central to day-to-day activities, as all work is tendered for in a tough market and awards are based primarily on price. “One of the solutions to efficiency is to identify good staff and focus training and other resources on them, rather than wasting resources. The secret to success in any venture is the quality of communication between myself, the teams that are on the ground, and the professionals on site. It is important that my staff be empowered to communicate with the professionals on site because I cannot be there all the time.

“Furthermore, efficiency in the plumbing industry is not necessarily about doing work faster – but doing it correctly first time. That’s the challenge – we have a huge problem with lack of skills among workers in South Africa, and consequently we do a lot of training. My QS, for example, has been put through a welding course on copper and HDPE pipes so that she can see what is actually involved in costing a contract, and that welding a pipe takes 20 minutes, not two. This is important for tendering and measurement because there are a great many items that are not in the bill of quantities that we nonetheless have to claim for. That training contributes to us getting a lot more things right first time,” says Mole.

At the moment, through its company IPM, they are ‘very involved’ with Sasol. In terms of the contract, every job has to be scoped prior to IPM quoting in a price, albeit at set prices that were agreed in the tender. “Sasol is strict about maintenance – because if something were to go wrong there it would go seriously wrong. If there’s a gas explosion, then entire areas have to be sealed down and whoever is there cannot get in or out.

“Every year Sasol shuts down sections of the plant for maintenance for up to six weeks, and that is when we are exceptionally busy and we have to draw resources from our construction side, which consequently quietens down.”

Going forward

Industrial Plumbers is currently engaged in a variety of projects in South Africa and Zambia for various clients, and while Mole reflects on the recent difficulties that the industry is experiencing in South Africa, he remains optimistic about the future – and the next 50 years for the company.