Engineering 2018 - Transnet
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Engineering 2018
TRANSNET Engineering 2
Highlights
• Revenue increased by 19,9% to R11,3 billion (2017: R9,4 billion).
• EBITDA, after the impact of incentives, improved by more than
70% from a loss of R457 million in 2017 to R139 million in 2018.
• Transnet Engineering exceeded the Shareholder’s Compact
targets as summarised below:
Target Actual
Key performance indicator 2018 2018
Volume lost due to traction 7% 0,1%
Train delays due to traction 40 minutes 3,2 minutes
Train cancellations 6% 2,3%
Business overview
Transnet Engineering (Engineering) is an advanced manufacturing
division of Transnet SOC Ltd, with a rich and proud heritage spanning
more than 150 years. Over this period, Engineering established
extensive capabilities for the research, design, testing, manufacture,
remanufacturing, maintenance and services of railway rolling stock,
including locomotives, freight wagons, passenger coaches and
ports equipment.
With more 11 600 employees countrywide, 143 depots and
six main factories, Engineering is ideally positioned to serve its
key customers locally and globally. Through its Vision 2021,
Engineering aims to be the preferred brand in rail and related
engineering solutions in Africa and across the world. This entails
strategic imperatives of becoming:
• A preferred maintenance, remanufacturing and overhaul
partner for rail and related equipment on the continent;
• An original equipment manufacturer (OEM) of world-class
rolling stock and logistics equipment;
• A leading enterprise in driving economic development and
growth in sub-Saharan Africa; and
• A Centre of Excellence for technical and engineering skills
development in Africa.
Internally, Engineering continues to focus on improving operational
efficiencies and a safe working environment through various
interventions such as continuous improvement and process
automation.
Engineering will continue to forge and strengthen partnerships
with OEMs, with the aim being to enhance the existing skills and
know-how and to create new market opportunities.
As Transnet transitions from the Market Demand Strategy to the
Transnet 4.0 Strategy, Engineering continues to invest heavily on
its research and development (R&D) initiatives to ensure that it has
cutting-edge technologies and capabilities to deliver world-class
products and services.
Skills, enterprise, rural and supplier development continue to be
focus areas of Engineering, with particular attention given to the
most disadvantaged sectors of our society, youth and women. Over
the years, this Operating Division has identified and implemented
specific programmes to address the challenges of women and the
youth, in line with key developmental objectives outlined in the
National Development Plan.TRANSNET Engineering 3
Beit Bridge
Musina
Transnet Corporate
Centre
Makhado
Soekmekaar Johannesburg
Ellisras Polokwane
Naboomspruit Tzaneen
Thabazimbi
Nylstroom Phalaborwa
Northam Pienaarsrivier Marble Hall Hoedspruit
Engineering
Rustenburg Pretoria
Steelpoort Koedoespoort, Germiston,
Bloemfontein, Durban,
Pyramid South Graskop
North
Pendoring Roossenekal
Uitenhage, Salt River
Macmullins Nelspruit
Magaliesburg Belfast Kaapmuiden
Rayton
Mafikeng Witbak Machadodorp Komatipoort
Pretoria
Lichtenburg Krugersdorp Ogies
Sentrarand
Delmas
Vryburg Coligny Johannesburg Trichardt
Vermaas Welverdiend Bethal
Maydale
Hotzal Klerksdorp
Vereeniging Ermelo
Central Region
Ottosdal Volksrust
Sasolburg
Pudimoe
Orkney
Newcaslte Eastern Region
Erts Makwassie
Piet Retief
Sishen
Kroonstad
Dundee
Golela
Western Region
Nakop Gunhill Vryheid
Warrenton
Upington
Bethlehem
Harrismith Transnet Engineering factories
Posmasburg Theunisen Danskraal
Ladysmith Empangeni
Kimberley
Kakamas Marseillies Bergville
Boksputs Estcourt
Bloemfontein Cedara Greytown Richards Bay Northcor
Koffiefontein Maseru
Pietermaritzburg
Prieska Belmont Sannaspos Underburg
Cato Ridge Stanger Capecor
Kokstad Franklin
Copperton Aliwal North
Springfontein
Barkly East
Richmond
Durban Southcor
Bitterfontein De Aar Dreunberg
Burgersdorp Harding Natalcor
Liebendal Port Shepstone
Noupoort Maclear
Stormberg
R. Baycor
Rosmead Sterkstroom
Klawer Hutchinson
Calvinia Umtata
Cradock Queenstown
N. Westcor
Cookhouse Stutterheim
Malmesbury Beaufort West
Somerset East
Fort Eastcor
Kalbaskraal Beaufort
Klipplaat Blaney
Dal
Touwsrivier Alicdale N. Eastcor
Saldanha Bay Atlantis Josafat East London
New
Worcster
Oudshoorn Avontuur
Uitenhage
Brighton Port Alfred Sishen-Saldanha
Kraaifontein Patensie
Cape Town Port Elizabeth
Bellville
Mossel Bay George Knysna
Sentracor
Caledon
Bredasdorp South East Cor
Westcor
Free State
Namibia
Figure 1: Transnet Engineering’s geographic spread
Regulatory environment DOT ’s engagement workshops on the Bill where agreements have
been reached on some of the contentious issues and changes
Regulatory universe which will be reflected in the final Act.
Engineering currently adheres to compliance with approximately
70 legislations, various applicable regulations and supervisory Broad-Based Black Economic Empowerment
requirements. These legislations impose strict engineering, (B-BBEE) 2016 and 2017 draft codes
governance, health and safety, environmental, labour and
Engineering also complies with the Broad-Based Black Economic
procurement compliance obligations and requirements. The
Empowerment Act, No 53 of 2003 (as amended) and its applicable
legislations include the National Safety Regulator Act, No 14 of
codes. The Department of Trade and Industry (DTI) has published
2002 (as amended by Act 69 of 2008), which provides for the
the 2016 draft Transport Rail Sector Codes and the 2017 proposed
establishment of a Railway Safety Regulator whose mandate is to
amended Transport Rail Sector Codes. According to the Transnet
issue operating licences and oversee safety in the railway industry.
Internal Audit B-BBEE review audit, both the 2016 and 2017 draft
Like other rail operators, Transnet complies with stringent application
codes provide strict measures that will negatively impact
requirements of annual safety permits, which include the
Engineering’s current B-BBEE level status. However, Engineering
establishment and maintenance of the Safety Management System.
has started implementing recommendations of the Mock Audit in
that action plans and projects are being initiated to improve the
Rail Safety Bill, 2016 scores on employment equity, skills development and enterprise
and supplier development in case the codes are gazetted.
The Department of Transport (DOT)published the new Rail Safety
Bill in 2016, which intends to bring substantial changes to the rail
industry. These include giving powers to the inspector to search The African markets
any premises, arrest any person and seize documents without a
Transnet Engineering’s Vision 2021 is an enabling framework to
search warrant; multiple safety permits and licences; licensing of
support its product and service expansion into the rest of Africa.
safety critical grades; and major changes on rail occurrence
To date, various memorandums of understanding have been signed
investigations. Transnet Engineering’s Compliance and Regulatory
with partner countries for advanced manufacturing solutions,
Affairs is part of the Transnet team that has been attending theTRANSNET Engineering 4
thereby evidencing the growing interest in Transnet’s products and OEMs worldwide. This milestone is the first of its kind in Africa and
services. The Operating Division’s expansion into Africa requires an Engineering is proud to have been recognised and awarded this
understanding of the various compliance regulatory requirements world-class certification.
and risks in the countries where it will be operating. The expansion
will require international compliance with international standards A key highlight that further demonstrates Engineering’s commitment
and laws, tax agreements, country-specific legislation, regulations to OEM status and the development of rail and logistics solutions
and other supervisory requirements. tailored for Africa was the successful launch in April 2017 of the
TransAfrica Locomotive, a locally researched and designed
Accordingly, compliance analyses are being conducted in these locomotive.
countries to establish and mitigate potential risks to the
successful penetration of these markets. The analyses are being Another highlight was the transaction in February 2018 through
conducted on trade restrictions, exchange controls, taxes, fines Transnet International Holdings to revitalise the National Railways
and penalties, statutory tariffs, import and export duties and of Zimbabwe and the Zambian Railways.
investor-focused legislation, quality standards that need to be
complied with during the manufacturing process and/or
exportation of rail-related products, commissioning of service Operational performance
workshops and servicing of rail rolling stock.
Core initiatives for 2018
Performance context • Extend Engineering’s maintenance services to other Transnet
Operating Divisions to ensure that they leverage on the available
In executing Vision 2021, Engineering continues to implement an technical knowledge embedded in Engineering.
operating model that allows it to become a preferred supplier of • In order to provide an enhanced service to Transnet Freight Rail,
rolling stock engineering solutions for rail and ports equipment maintenance depots will be aligned with the key Transnet
across the continent and globally. channels as an enabler to achieve Transnet’s volumes.
• Engineering will focus on expanding its maintenance footprint in
In a move that entrenched Engineering as an independent OEM for Africa by marketing its maintenance capability and forging
freight wagons, the wagons business in four centres (i.e. Uitenhage, closer collaboration with Transnet International Holdings.
Durban, Germiston and Bloemfontein) were officially accredited by • The continuous improvement team has identified a potential to
the Association of American Railroads with AAR5000 certification, reduce production inefficiencies within the manufacturing and
the highest ranking quality standard in the world. This accreditation maintenance operations.
enables the Operating Division to compete qualitatively with other
Overview of key performance indicators
2017 2018 2018 2019
Key performance area and indicator Unit of measure Actual Target Actual Target
Financial sustainability
EBITDA margin % 4,9 (5,3) (1,2) 0,9
Operating profit margin % (9,5) (9,1) (9,5) (3,6)
Gearing % 73,7 86,8 88,4 92,8
Net debt to EBITDA times (32,6) (20,7) 45,9 110,2
Return on average total assets % 6,6 (6,7) (0,9) (2,4)
Asset turnover times 0,7 0,7 0,7 0,8
Cash interest cover times (1,0) (0,6) (3,6) 2,6
Total revenue R million 9 380 9 508 11 250 10 871
– External R million 1 622 2 962 2 467 4 065
– Internal 7 758 6 546 8 783 6 806
Capacity creation and maintenance
Capital expenditure R million 945 860 275 748
Planned maintenance R million 203 196 223 209
Operational excellence
Train cancellations due to traction % 5,0 6,0 3,4 6,0
Net volume lost due to traction mt 7,0 7,0 2,3 7,0
Traction delays % 6,5 40,0 12,7 40,0
Human capital
Training spend % of personnel cost (3,4) 1,4 2,6 1,4
Employee turnover % 5,4 6,0 8,5 6,0
Employee headcount permanent 11 731 10 310 10 838 10 962
Revenue per employee R million 0,80 0,89 0,96 1,00
Transformation
Total blacks % 80,2 88 80,8 89
Total females % 22 30 23 32
Total people with disabilities % 1,4 3,1 1,6 3,2TRANSNET Engineering 5
2017 2018 2018 2019
Key performance area and indicator Unit of measure Actual Target Actual Target
Skills development
Apprentice trainees headcount 250 200 200 200
Technician trainees headcount 43 30 87 30
BEng trainees headcount 22 20 12 20
Sector specific headcount 514 250 570 250
Training spend % 3,6 (3,0) 2,57 3,0
Risk, safety and health
Cost of risk % of revenue 1,9 4,3 1,05 4,0
DIFR rate 0,61 0,73 0,66 0,70
Regional integration
Africa sales revenue R million 227 1 250 254 1 979
Industrial capability building
R&D costs R million 185 267 147 300
Financial performance review
Year ended Year ended
31 March 31 March
2018 2017 %
Salient features R million R million change
Revenue 11 250 9 380 20
– Internal 8 783 7 758 13
– External 2 467 1 622 52
Operating expenses (11 369) (9 837) 9,2
– Energy costs (231) (213) 8,5
– Maintenance (223) (203) 9,9
– Materials (4 398) (3 584) 22,7
– Personnel costs (5 809) (5 033) 15,4
– Other (728) (784) (7,1)
Profit from operations before depreciation, derecognition,
amortisation , short-term incentives (STI) and items listed
below (EBITDA) (139) (457) 69,6
Depreciation, derecognition and amortisation (447) (437) 2,3
Profit from operations before items listed below (586) 894 34,5
Impairments and fair value adjustments (52) 2 (100)
Net finance costs (1 116) (715) 56
Profit before taxation (1 754) (1 607) 9,1
Total assets (excluding CWIP) R million 18 687 15 289 22,2
Profitability measures
EBITDA margin1 % (1,2) (4,9) 3,7
Operating margin2 % (9,5) (9,5) –
Return on average total assets (excluding CWIP)3 % (2,4) (6,59) 4,2
Asset turnover (excluding CWIP)4 times 0,60 0,69 (13)
Capital investments5 R million 275 945 (70,9)
Employees
Number of employees (permanent) number 10 838 11 731 (8,2)
Revenue per employee R million 1,04 0,80 30
1
EBITDA expressed as a percentage of revenue, excluding the impact of STI.
2
Profit from operations before impairment of assets, fair value adjustments, net finance costs and taxation expressed as a percentage of revenue.
3
Profit from operations before impairment of assets, fair value adjustments, net finance costs and taxation expressed as a percentage of average total assets,
excluding capital work-in-progress (CWIP).
4
Revenue divided by average total assets, excluding CWIP.
5
Actual capital expenditure (replacement plus expansion), excluding borrowing costs.TRANSNET Engineering 6
Performance commentary Looking ahead
• Engineering will pursue the development of the multi-trailer
Financial sustainability concept to improve port terminal efficiencies.
Engineering’s total revenue for the year is R11,3 billion, which is • The design and development is under way of a standard gauge
19,9% higher than the R9,4 billion achieved in the prior year. bogie for passenger coaches to give Transnet a competitive
Revenue from Freight Rail increased to R8,8 billion (2017: R7,8 edge in the standard gauge market.
billion). In spite of the deteriorating economic outlook, both in the • Engineering plans to research, design and develop locomotive
country and in the rest of Africa , external revenue rose by 52% to propulsion and traction system technologies to further localise
R2,5 billion (2017: R1,6 billion). critical intellectual property for locomotive technology.
• The Operating Divison will research variable gauge bogie
The resultant EBITDA , after STI, reflected a loss of R139 million technologies and potential applications in the African rolling
for the year (2017: loss of R457 million). stock market.
• Engineering proposes researching and developing hybrid
Looking ahead gas-power systems for locomotive applications to take
advantage of the growing liquefied natural gas and Compressed
• Engineering expects to increase external revenue by 65% to Natural Gas gas market, and to further diversify Transnet’s
R4,1 billion (2017: R2,5 billion). product offering.
• Engineering has a comprehensive Reshaping the Core Strategy • Engineering is building the Baluleka coach which is a top line
incorporating revenue and cost-saving interventions to enable executive coach.
the achievement of the 2019 EBITDA target.
Operational excellence
Capacity creation and maintenance
Engineering will roll out a Locomotive Condition Monitoring
• Capital expenditure for the year was R273 million, 68% below System (LCMS), a breakthrough condition monitoring and field
the budgeted R860 million due to project optimisation and processing edge computer that allows for real-time processing and
savings. monitoring of locomotive data. This in-house designed product is
• Maintenance (including financing) for the locomotive, wagon, already running in select Freight Rail locomotives and will be rolled
RM wheels and plant, equipment and machinery maintenance out in 2018.
included:
–– Pure capital – R4,7 million
Looking ahead
–– Rotables increase – R69 million
• Research and development of composite material applications
in rolling stock and other commodity-handling equipment.
Looking ahead • Pursue the feasibility of a Dynamic Kinetic Energy Recovery
• Engineering will look to diversify its customer base in the System application in the rail sector.
African market to optimise revenue from this market segment. • Roll out an advanced multi-model wagon build line (M Cubed) to
External revenue as a percentage of total revenue is forecasted increase flexibility of the production line.
to increase from 17% in 2016 to 38% in 2019.
• Further develop the control tower app, a fleet monitoring
application based on the Intelligent Real-time Information
Human capital
Services (IRIS) platform. The control tower app is the first in • Engineering achieved a permanent employee headcount of
a suite of maintenance applications that Transnet will be 10 838 against the 10 310 target.
deploying as it continues its path towards predictive • Black employees represented 80,8 % of the total employee base
maintenance of rolling stock assets. (target: 88%).
• Engineering will conduct research into the concept of a • Female employees represented 23% of the total employee base
smart wagon. (target 30%).
• People with disabilities represented 1,6% of the total employee
Market segment competitiveness base (target 3,1%).
• As an OEM of various wagons, Engineering continues to develop
and build various wagons fit for the African environment. The Organisational readiness
following products were developed in this past financial year:
Jumbo Grain Wagon, Double Stack Container Wagon, Jumbo
High-performance culture
Timber Wagon and Manganese Lightweight Wagon. Engineering’s drive to reduce costs and improve productivity and
• To continue its journey of becoming an OEM of locomotives, the efficiencies has led to the adoption and implementation of the
TransAfrica Locomotive has been built and is undergoing various strategic flexible workforce model that will develop a workforce
tests. that is multi-skilled, flexible and responsive to market demand.
• Engineering has developed a standard gauge bogie to enter and
compete in the standard gauge rolling stock market.
Skills development
• Engineering is developing a traction motor for rugged African
conditions. • Training spend as a percentage of labour costs: 2,57% has been
• The Operating Division has formalised the design and spent against the 3% target.
development of the Transnet Port Hauler. • Artisan trainees: A total of 200 apprentices were recruited
• Engineering has entered the manufacturing of ports handling against the target of 200.
equipment by partnering with international manufacturer to • Engineering trainees: In total, 12 full-time bursaries were issued
locally produce straddle carriers. against the target of 20.
• Technician trainees: Some 87 P1 and P2 students were recruited
against the target of 30.TRANSNET Engineering 7
• Sector-specific training: 570 employees were trained against the The Governance Structures Effectiveness Assessment is
target of 250. performed annually in terms of King IV and the Companies Act,
• Employees trained against the Industrial Development Plan: No 71 of 2008.
46,19% of employees against the target of 33%.
Declaration of interest
Health and safety In terms of section 75 of the Companies Act, all directors,
prescribed officers and relevant employees of the Operating
• The Operating Division’s health and safety management system Division are required to disclose any personal financial interests to
complies with OHSAS 18001:2014 requirements and is certified. Transnet’s Board of Directors. Transnet’s Declaration of Interest,
The system is integrated into occupational health and safety Related Parties’ Interest Policy and Declaration of Gifts Policy are
as well as the railway safety management system aligned to meant to assist management in complying with this legislation.
SANS 3000-1:2016.
• Engineering continues to perform better than the target year on More than 90% of Engineering’s employees at management level
year in terms of the disabling injury frequency rate (DIFR) have declared their interest in the 2017/18 financial year as per
performance. The performance for 2018 was 0,66, lower than Transnet Internal Audit’s report.
the target of 0,73. There were no fatalities in the previous
financial year. Some of the highlights are as follows:
–– A total of 991 employees attended safety, health and Delegation of authority
environment (SHE) legal liability training across the country, The Chief Officer: Advanced Manufacturing has consistently been
focusing on senior and operational levels of management. complying with the Transnet Delegation of Authority Framework by
–– As part of vehicle safety management, 1 250 sonic repeller delegating to his Executive Committee members within 30 days, as
devices were installed on vehicles that are a travelling where stipulated in the framework.
there is a risk of colliding with animals. These devices emit
sound that can only be heard by animals.
–– Engineering embarked on a project to conduct functional Code of ethics and business conduct
capacity assessments in order to determine the level of Engineering is committed to instilling a culture of good ethics and
fitness required for an employee to perform a specific task to proactively identifying and addressing any fraud and corruption
based on their functional capability. Phase one of this project risks that may impact on the Market Demand Strategy. Fraud
resulted in the completion of a functional capacity guideline. awareness training has been conducted in all the centres during
Going forward, the focus will be on implementation. the 2017/18 financial year; and all instances of fraud and
–– Some 93 level C and D senior managers were subjected to corruption are being investigated and disciplinary actions meted
executive medicals. out against all instances of wrongdoing. A Fraud and Corruption
–– The Confined Space Management Standard and Hazardous Strategy has been developed and implemented, and all cases are
Chemical Management Standard were finalised. tracked by the Fraud Working Group.
–– The e-Learning SHE induction was completed.
–– Completed capacity building and training on SANS 17020 Environmental stewardship
requirements and Occupational Hygiene Legal Knowledge.
–– Commenced with the registration for Occupational Transnet Engineering has managed to maintain its Environmental
Technologists and Assistants. Management System ISO 14001 certification. The next surveillance
audit, which will include the transition audit from 2004 to 2015
–– Engineering completed designs for internal fall protection
new standard, is planned for June 2018. Engineering has also
solutions, i.e. Cantilever Swing Arm, Double Tier Platform and
started implementing the Transnet Integrated Management System
Fixed Single Tier Platform.
procedures that were recently signed off as part of an integrated
Governance and ethics approach.
Transnet Engineering Governance Model
Waste management
In compliance with 2021 Vision, Engineering aims to secure annual
revenue of R20 billion by March 2021, a sustainable EBITDA Waste minimisation and recycling has progressed well in all the
exceeding R2 billion and NPAT exceeding R1 billion. To support this main centres, but at a slow pace. The appointed waste contractors
endeavour a new Transnet Engineering Operating Model and have been managed to ensure they comply and assist the
Governance model have been developed and implemented. organisation to reduce the amount of waste that goes to landfill,
ultimately reducing waste costs. Bloemfontein started the
recycling initiative during the 2017/18 financial year and already
The Transnet Engineering operating model realised a significant reduction of waste to landfill site. Germiston
has widened its scope for recycling to cover some of its
The organisational structure that is based on the Transnet
maintenance depots.
Engineering operating model has been developed and implemented.
Engineering’s operating model speaks to how the organisation plans
to do business with due consideration of new geographies, an Energy-efficiency programme
untested competitive environment and significant expectations
regarding foreign-based earnings. Engineering commenced with the replacement of sodium lighting
with energy-efficient lighting in Bloemfontein, and will continue in
the new financial year.
Governance structures
There is a plan for the new financial year to:
Proper governance structures with clear mandates in support of the
current operating model and King IV Report have been established • implement solar lighting on perimeter fencing in all centres and
to provide strategic direction and monitor performance. depots, but this will be depend on budget availability; and
• upgrade old substation equipment to energy-efficient and safe
equipment.TRANSNET Engineering 8 Water management • A desktop assessment on significant water users within Engineering’s operations was concluded during the 2017/18 financial year. The remaining challenge is the existence of water meters in some areas. Best possible sustainable solutions such as rain water harvesting, recycling and reuse of water from other operational activities have been recommended. Implementation of some these solutions will be explored and executed in the 2018/19 financial year. • Assessment for the installation of boreholes in water-stressed depots was concluded. Based on the outcomes, the Plant, Equipment and Machinery Maintenance Department has started implementing the project, with the Western Cape being a priority due to the water crisis. • Engineering forms part of the recently formulated Western Cape water crisis team which will drive the implementation of water conservation initiatives in the province. Pollution management • In an effort to deal with historic pollution, a service provider was appointed to drill and install monitoring wells in areas that were previously identified as potentially contaminated. This exercise was completed in all six regions and reports were submitted to Engineering with recommendations. • A total of 20 boreholes will be monitored at least twice a year for two years and seven boreholes at least once a year to determine whether there are any changes in the concentration of contaminants. • The Germiston site where hydrocarbon pollution was previously discovered is being remediated. The clean-up process was unfortunately delayed due to more pollution being discovered and as a result of no funds being available. The funds have since been sourced and a new service provider has been appointed to conclude the remediation process. • Remediation solutions are still being sought to deal with the buried asbestos in Koedoespoort. Social accountability At the heart of the Operating Division’s corporate social investment is the commitment to make conditions and life better for all communities, particularly those closest to our operations. We believe that well-structured, impactful social investment will contribute positively to nation building and drive positive change in the surrounding communities. We align our social development projects with national developmental imperatives, underpinned by a need to make a measurable impact through investment that empowers the nation to reach its social development and economic upliftment goals. In line with Transnet’s philosophy, the Operating Division’s drive for social transformation finds expression in the empowerment and upliftment of those who are most vulnerable, especially those in areas of the greatest need. Highlights for the reporting period include a donation of sanitary packs and toiletries to learners at Mason Lincoln Special School and Mzingezi High School in KwaZulu-Natal. To maximise the impact of our community investment, Engineering only gets involved in the following areas of focus: education, employee volunteering, socio-economic infrastructure investment and health initiatives.
TRANSNET Engineering 9
The following table details Engineering’s top five risks and the key mitigation activities.
Key risks Mitigating activities
Poor competitiveness due to poor • Finalise the Shared Services Operating Model with respect to support requirements of the
performance management and poor quality customer-facing businesses
of rolling stock products leading to failures in • Conduct the cost of poor quality management awareness through the screens pop-ups
achieving the strategic goals and objectives, • Hold Exco accountable for implementing the Performance Management System in their
and loss of market share and customers respective functional areas
• Human Capital (HC) to train the extended Exco on the Performance Management System
• Conduct poor performance management training to address the culture of accountability
for performance (levels B to G)
• Conduct quality management awareness campaigns
• Develop and roll out the quality management curriculum
• Introduce the new operating model
• Fill vacancies in the quality management structure
• Develop the R&D Strategy in line with Engineering’s new operating model
Reliance on non-existent or privately owned • Develop and roll out future Market Intelligence/Segmentation Roadmap to guide future
intellectual property (i.e. locomotives, product development innovations
wagons and coaches) due to the • Hold regular workshops between Product Development and Business Development to
misalignment between market intelligence determine information required, frequency and format of the market intelligence
and Product Development’s product planning • Benchmark with other external corporations (e.g. Denel) to leverage on their existing
needs or expectations (i.e. inadequate market intelligence capabilities and skills
market intelligence driving the product
• Manufacturing the first prototype of the TransAfrica Locomotive
development); and inadequate skills and
• Manufacture the second prototype of the TransAfrica Locomotive
knowledge regarding product development
initiatives or innovations (i.e. re-active • Market, sell and manufacture Africa Wagons that have been designed and prototyped.
approach to the market) leading to poor • Revise Product Development’s process flow to meet the requirements of Engineering’s new
analysis of product portfolio risk and operating model
inadequate understanding of the setting up • Develop and roll out Engineering’s Collaboration Strategy to partner with other suitable
service providers
• Source the benchmarked methodology to consolidate the market intelligence into the
Research and Development Strategy
Lack of organisational market intelligence to • Appoint four Regional Business Development Executives (SADC, West Africa, East Africa
inform the business concept feasibility and and North Africa/Middle East)
viability, which could potentially lead to poor • Ensure deployment of resources in markets/countries with the greatest opportunities
investment decisions and penalties/fines • Develop marketing operational plan for each country of focus
• Find credible partners which will advance Engineering’s strategy in the target market
Volatile market conditions due to changes • Transform Engineering’s cost base from fixed to variable costs to respond better to market
in the macroeconomic environment leading conditions
to a negative impact on revenue- generating • Develop and roll out the Shared Services leg of Engineering’s new operating model
contracts and thus not meeting set
objectives and strategic targets
Inflexibility of Transnet’s supply chain • Apply to the DTI for exclusions/exemptions/lowering the set requirements from the DTI in
management process terms of legislation, including the long-term partnership with suppliers
• Workshop the long-term contracting processes
• Obtain demand plan for work currently executed and for future demand to secure long-
term procurement
• Engage with Product Development and Business Development to determine which products
and where to determine suppliers for relevant components and develop suppliers (Supply
Chain Development Plan)
• Engage with the DTI on ways to implement and excute the National Treasury’s supply chain
policies without hampering deliveries and thus further developing industry capacity and
capability
• Develop and roll out the Supply Management Change Management Plan.
Opportunities
Zambia Zambian Railways Ltd Support TIH on rolling stock and maintenance
Zimbabwe National Railways of Zimbabwe (NRZ) Revitalisation of railways in Zimbabwe
Guinea Rusal, CBG and ONCFG Supply of locomotives and wagons
Senegal Ministry of Transport Remanufacture the current locomotive and wagon fleet
Uganda Uganda Railways Support for technical and rolling stock
Nigeria Nigerian Railway Corporation Supply 100 wagons and five locomotiveswww.transnet.net
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