Manufacturers should think local for global success

Sarabdeep Hanspal, Chief Operating Officer for KLT South Africa

In the globalised economy, it is crucial for companies to have an international focus. But this cannot come at the expense of grassroots community engagement, writes, Sarbdeep S Hanspal, COO, KLT Automotive and Tubular Products (South Africa) (Pty) Ltd.

Indeed, the boundaries have blurred. What constitutes a local and an international company is becoming difficult to state categorically. A South African company may produce for the global market; a multinational may establish a factory locally and become embedded in a South African community.

An international company is effectively also a domestic company. Wherever it sets up its business, it creates local employment, deals with local labour and social conditions and becomes inextricably engaged in the local community.

While the location of a factory may often be externally determined, or be based on hard business considerations, for the community where it is eventually built, the factory is enormously significant.

Companies being welcomed into a community would generally do well to treat the opportunity with the respect it deserves. It marks the beginning of a partnership that can grow a community, boost the company’s bottom line and in turn provide even bigger benefits for the community. As company of Indian origin, it was very important for KLT to form strong relations with members of the Hammaskraal, community and also employ from the community which we did.

We believe that a multinational company is not only integrated into the global economy, but into several local economies also. It must establish itself carefully and keep those local relationships healthy, if it is to have any hope of building on its global presence.

Before setting up a factory in South Africa we heard reports of crime, unemployment, labour unrest and low skills levels. These reports were not without foundation but we saw these as opportunities to effect meaningful change.

Business is essentially a set of relationships. The better a company’s relations with all its stakeholders, the better its performance.

Therefore, the first step for any company getting established in a new territory should be to start building relationships – with communities, with unions, community leaders, NGOs, social entrepreneurs. These relations are symbiotic. The richer they are, the more invested all parties become in ensuring they stay healthy.

Also the labour relationship runs deeper than employment. If a company has a workforce of 1 000, that will mean about 5 000 individuals are directly or indirectly impacted by the relationship. This will have a multiplier effect on the local economy. It will reduce crime and boost business confidence.

As our company created local suppliers and expands its workforce, these effects started growing and goodwill towards the company increased. Community development projects and enhancements to working conditions have deepen this symbiosis.

Ongoing staff training in Global Best Practice; learnerships for youth in the community; factory tours by families of employees; donations to community upliftment organisations; food subsidies for employees; free transport… Each of these embeds our company deeper into the community and ensured the stable, productive relationships needed to produce to world standard.

Local relations also improve local conditions. After a few years, our company noticed that the parking lot, previously almost empty, has filled up, as staff upgraded from public to personal transport. There were anecdotal reports of less crime, and a sense of the factory becoming a community centre.

As an Indian company with a seven-year history in our Hammanskraal, we have learned a lot from South Africa. We’ve learned the value of committing to our community and employing as many local workers as possible.

We’ve learned that despite cultural differences, we are the same. Give respect, and you get respect back. The voices may be different, but the context is the same.

We now very well understand that how you relate on the local level will ultimately determine how well you will deliver on the global level. For all the automation in modern manufacturing, it is the people who help multinational enterprises meet quality benchmarks, gain international certification and win contracts and that was true for us also.

We also feel that competing globally is not only related to local engagement, it depends on it. People are the strength of any company. Social engagement, skills transfer and job creation strengthen a company and help to make it a global force.

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