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First Cut: 60th Anniversary Media Event

Keynote speech by Ian McCrystal, CEO

As we’ve looked back over our first 60 years, at the stories, the people, at our innovations and evolutions, at the ups and the downs, and at all the challenges and opportunities we’ve faced in our business environment, there’s a phrase that keeps popping up in our journey from our beginning in 1956 until today. It’s more than simply a phrase. It’s a deeply held approach that you’ll find at the core of this company, brought to life in the actions and attitude of all the people who have worked and do work inside and alongside First Cut, which has driven and continues to drive everything we do.

As you walked in today, through our reception area, you may have noticed it written boldly onto one of the large blue squares hanging from the ceiling? And hopefully, if you ask any member of the First Cut team, what gets us collectively out of bed in the morning, I’m sure they’ll tell you, it’s our desire to be ‘One Step Better’.

Thank you for joining us today as we continue to celebrate the 60th anniversary of First Cut. If you will allow me, I’d like to, on behalf of the entire First Cut team, take a few minutes to walk you through a few highlights of our 60 year old story, and then outline some of our current and future challenges and opportunities, along with how we will ensure that in 40 years’ time, someone far younger than I, will be standing here for our 100th Anniversary, leading the celebration of an even stronger and more significant First Cut.

Where else does one start than at the beginning – the very beginning. Our genesis finds itself rooted in a cunning plan by a gentleman named Hugh Neil, from Sheffield, England. He had both a keen sense of business, and strong streak of passion. In our case it was his passion that drove the initial decision to set up a factory in Cape Town in 1956.

Sir Hugh, through his many travels discovered the fairest Cape. He needed to find an excuse to spend more time in this beautiful city.

A timely upgrade of some of the equipment at the James Neil factory in Sheffield provided the perfect ruse to motivate for the old equipment to be relocated and a factory to be established in the new world.

First Cut was born.

Initially we were a blade sharpening business for the timber industry. However, that wasn’t enough. We wanted to get closer to our customers and stay ahead of our competitors. And so it wasn’t long before we had become South Africa’s first bandsaw and then subsequently hacksaw blade manufacturer. Today we manufacture more than 60% of all hacksaw blades used in South Africa.

According to Time Magazine (http://time.com/3768559/company-mortality-rate-survival-study/), the majority of listed companies last less than 10 years before they fail, are merged, or acquired. We’re not a listed company, and will probably never appear on the cover of Time Magazine, but using that as a marker, one of the questions we wanted answered as we looked back over our 60 years was, what were some of those things that have enabled us to celebrate this significant milestone? Not just survive 60 years, but consistently out-last and out-perform the majority of our competitors.

Certainly one of the key determining factors has been the partners we’ve had along the way. We realised early on that is was going to be the quality of the relationships we forged that would enable us to succeed.

It’s easy to say that relationships are important. It’s much more difficult to actually build robust connections with people that will stand true in both the easy and the tough times. We’ve always understood that the relationships we wanted were going to require that we never compromised in areas like honesty, integrity and openness. You don’t set characteristics like that into the culture of your business and then leave them to grow. These are areas we work on every day.

As we look back, it’s clear that we’ve been able to build those partnerships that have been instrumental to us standing here today.

The late Hershy Marcus, then the MD of Matus Tool, SA’s largest tool wholesaler, on the strength of a handshake, committed to supporting our factory manufactured product over imported product due to his desire to support ‘made in SA’; and due to the long-term relationship that we had shared with him. Nearly 20 years later, this commitment still stands.

We employ 240 people at our offices in Johannesburg, Durban, Port Elizabeth and our factory in Cape Town. Our longest serving member of staff recently retired from Sawrite, our branch in Port Elizabeth, after 53 years of service to the company.
We have 2 employees with more than 40 years’ service, 5 in the 30’s and 29 employees with 20 to 30 years’ service. We have fathers and sons, mother and daughter, husband and wives, brothers, cousins, uncles and in Durban we have 3 brothers and their father all working at the branch.

Our shop stewards have brought to us information on for, example, theft within the business. And our staff has worked with us in finding ways around continuing to provide customer service during times of national strike and under and against immense external peer pressure.

In the early 2000’s First Cut had another one of those moments where we saw an opportunity to get closer to our customers and stay ahead of our competitors. It seems so obvious when we look back now, but at the time it was a significant inflection point for us.

Customers were telling us that our blades were failing them. They either weren’t cutting as well as we claimed they would, or they were wearing out faster than they should have. This is a concern when you’re South Africa’s leading blade manufacturer, and so we sent technicians out to see what was going on. Blades were brought back to the factory and scrutinised in our test laboratories to see why our customers were getting the results they were. Our findings were that it wasn’t our blades, it was the machines our customers were using.

And so the Machine Sales division of First Cut was born. We realised that if we could help our customers buy quality machines, not only would they get the best from our blades, but they’d improve the efficiency of their entire business.
The model is a relatively simple one based on our products and our customer base – if we sell bandsaw blades then we sell bandsaw machines and similarly if we sell circular blades then we also sell circular machines. In 2002 we acquired the agency for the Everising brand in Southern Africa. We have sold in excess of 1 000 Everising machines into the SA market.

This business model was then extended into more sophisticated machinery and more sophisticated cutting. We expanded the machine division into structural steel processing, drilling and cutting lines, tube bending, such as the machine on display here, sheet metal bending, the machines on the side, and then into water jet and laser cutting of both sheet metal and tube. These being Bystronic and BLM.

Another set of determining factors that have enabled us to celebrate 60 years, has been what we call ‘A Can Do Attitude’. In short, we’ve eradicated the phrase ‘can’t do’ from the First Cut lexicon. In business literature words like ‘innovation’ and ‘solutions-focused’ are used, but inside of First Cut we strongly believe that when we get stopped by an obstacle it’s just temporary while we re-group to find a way to remove it, go around it, or over it, but we won’t allow it to stop us for long. Obstacles are just pause moments before we do something remarkable.

And we have some of those stories in our history.

We were up against some formidable opposition at a large customer in Newcastle. We believed in our blades but just weren’t getting the results that we believed we should be. Two of our salesmen determined to prove our product packed their sleeping bags and set up camp next to the machine – they stayed there, determined that they would operate the machine and blade to its optimal performance. They stayed next to the machine in the middle of the customers production line for 4 days – non-stop. We proved our blade. We got the business. That was 14 years ago, and we still have that business today.

We approached a potential customer in Durban that was cutting a standard composite beam into planks for the production of doors. With their combination of machine and blade they were able to attain 4 planks from the beam. Through our input of combination of blade and machine advice and product we were able to convert their production process such that they were able to attain a 5th plank out of the same standard beam. An improvement in their raw material usage of 25%.

Following the establishment of the machine division, once again First Cut set out to get closer to our customer and stay ahead of our competitors. And once again it seems obvious in hindsight. We realised that if we were going to supply machines to our customers, that we couldn’t rely on technicians we didn’t trust to service them and repair them. For our customers to get the best from their blades and their investment, they needed quality machines, and if their quality machines were going to give the best return then they needed to be serviced and repaired by qualified, experienced and skilled technicians. And so we set out to find the best technicians we could, and begin to train them with the best skills and so it was that the First Cut Service Division was born.

Our technicians are all trained overseas by the respective machine manufacturers. In the last 2 years our technicians have spent a combined 201 days of training at our overseas suppliers.

When I started this morning, I alluded to an approach that you’ll find deep inside the DNA of First Cut. It’s an approach that governs our actions and our attitude, and it’s captured in the history I’ve shared with you during the past 15 minutes. It’s a phrase that not only captures everything I’ve said, but we believe it’s what has gotten us to this milestone today. As I change tack and talk about our future, it will also be what ensures that we celebrate our 100 year anniversary as an even stronger and more significant First Cut.

We have faced many challenges over the years, including the merging of acquired businesses into First Cut, the economic meltdown in 2008, industrial action, and the resultant financial stress such events have on a company.

Our most significant test has however been dealing with the growth and structural changes that our business has experienced over the last 10 to 15 years. There is no doubt that the ‘can do’ attitude that manifests itself in First Cut has played a significant role in overcoming these challenges and in the implementation of our corporate strategy and culture.

Going forward we consider that the main threats to our business are largely exogenous and either at a global or national level. Primarily, these would include;
– A structurally changing economy both globally and in South Africa, where there is a trend away from the primary and secondary industries towards the tertiary industries,
– No or at best slow growth in manufacturing in South Africa,
– A deteriorating power grid that impacts directly on both production and on the electrical components within the system – necessitating a number of work around solutions,
– New technologies that have the potential to disrupt industry dramatically, the digitisation of the world, mechanisation and automation being such technologies.

Our ability to address these issues is a function of;
– our people,
– our culture and,
– our relationships.

With 60 years of history, our staff is highly experienced in the fields of cutting and cutting related solutions. Our management team is diverse, experienced, brave and committed to our future. We have a culture alluded to earlier that is ready to tackle these challenges head on. Our customer relationships tend to be long-term, being founded on a combination of quality product, high levels of service and trust.

Our supplier relationships have similar characteristics including honesty, openness and trust resulting in a longevity that is highly valued by both sides.

These overseas suppliers are at the leading edge of their respective technologies; and will provide guidance and clues which will assist us while we formulate the strategy to deal with the technological, economic and socio-political challenges in front of us.

If you had to pick any point in our 60 year history, and zoom into the detail, whatever elements you found playing themselves out, you’d also find that approach that I have mentioned a few times earlier, a deep drive and desire to be ‘One Step Better’. ‘One Step Better’ for our customers. ‘One Step Better’ for First Cut people. ‘One Step Better’ for our suppliers. And quite proudly, ‘One Step Better’ for South Africa. We count ourselves as a company proud to be South African, and proud to show the world what South Africa is capable of.

It is our rallying call, and it will serve us well into the future.

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