Jay CabozBy Jay Caboz|November 1, 2020|13 Minutes|In Billionaire Tomorrow

How These Entrepreneurs Survived COVID-19 With Stickability

Whether it’s a luxury yacht, an aeroplane, a Ford Ranger and a rickety taxi got in common? They’re all stuck with the same factory.

I’m parked outside a nondescript factory in the middle of Ottery, the heart of industrial Cape Town. The traffic driving past is a lot more to look at.

It’s a Monday morning and the street is busy with taxis hooting as they pick up commuters from outside the factory. Every day in South Africa you wouldn’t give the work of this rich colourful factory a second glance.

From behind the walls of this plain jane, building emerge the bright badges that create a splash of colour on everything from four-wheel drives planes taxis and luxury yachts. It’s more of an exact science than you may think.

“To produce a product is easy. To produce a product that meets spec is another whole animal. A lot of these formulations are ours. We’ve developed the chemistry and the technology behind it after many years.”

So says Shaun Rosenstein, Managing Director behind Creative Graphics International (CGI) that has been responsible for manufacturing for taxis, planes and cars for 40 years.

“Except BMW and Mercedes Benz, we manufacture products for every single vehicle in South Africa to a greater and lesser degree depending on the vehicle. The product could vary it as well could be a decal, it could be a badge. It could be a label that goes under the bonnet. It depends where the application is,” says Rosenstein.

But what it will maybe most remember for is the splash of colour it prints onto Quantum taxis. It is the colour of the South African flag and you could recognize it on a foggy day and it appears to have a bright future in the market.

“The Toyota Quantum taxi epitomizes what we do in the South Africa space. The Quantum taxi is mainly manufactured and assembled in Durban by Toyota and we supply the taxi flag; we supply the emergency exit decal, we supply the fuel economy label; we supply the certified to carry x number of passengers decal. Someone has to make those things because it’s a legal requirement,” said Rosenstein.

“The taxi flag is actually a Department of Transport specified reflective material which needs to be used to make the taxi safe”

For 40 years CGI called originally Omni Graphics, now owned by a UK-based private equity fund. It has punched out millions of badges and stickers for vehicles around the world.

“We supply approximately 5-6 million parts per annum. This would include at least one million parts to the automotive OEM’s (Ford, Toyota, VW, Isuzu etc.) and the rest being aftermarket parts,” says Rosenstein.

To produce a product is easy. To produce a product that meets spec is another whole animal.

- Shaun Rosenstein, Managing Director behind Creative Graphics International

“A lot of people perceive Cape Town as being far off the map. But we’ve developed a phenomenal customer base globally. We supply one of the largest RV manufacturers in Australia; we supply Ford in Thailand; Yamaha in India; decals in the UAE and even the branding for the Navistar yellow school buses in the United States,” said Rosenstein.

“People just assume [the branding] comes from overseas, meanwhile we are the ones producing it here and for overseas,” said David King Financial Director CGI.

One of the oldest clients in the South African market has been the Volkswagen Citi Golf. The company was the original supplier of the blue, yellow and red stripe decals that became its trademark. It is in an operation that has grown into sticking badges to around 500,000 vehicles a year.

“In our game, there are very few people that do screen printing, it’s a very old school type of technology but the difference is it gives you a very high level of control over the amount of ink and varnish that you put down which gives the longevity of the product and which allows you to meet the customer specification,” said Rosenstein.

But don’t think it’s easy. According to the printers, the reason they have stayed in the business so long is because of the science behind the brand has equal longevity.

“If a label is going onto something like a radiator cap and your engine it’s at 150 degrees Celsius it requires an extremely specific performance in terms of material. You can’t just put any piece of the sticker on there because it will just pop off in a day.”

If the label falls off there is a liability issue. The stickers must stand up to stringent certification. They’re exposed to oil, grease, dirt, and heat and all kinds of chemicals.

Inside the bland walls of the factory, it is a hive of activity. It is surprising how much fingerwork goes into each sticker before it goes on the road. Silkscreen printers whizz about. Laser cutters burn into resin turning out a batch of badges destined for Ford Rangers. Staff work with efficiency born of years of experience.

CGI is a self-contained ship. It has built its own ink lab here where they do their colour testing and a testing lab where they trial raw materials and the durability of the product. They’ve got tubes that bombards badges with metal balls to see if they’ll snap and even a device which speeds up the ageing of the figures to see if they will stand the test of time.

Unfortunately, the raw material the company required is a very specialized product. Outsourcing, forget it. There are virtually no local manufacturers that meet the standards the company requires, which is why when the Covid-19 lockdown left the company in serious trouble.

Like all businesses in South Africa, at 5 pm on 26 March 2020, the company was faced with the huge challenge of Lockdown, shutting its doors and sending its staff home.

To survive the Cape Town-based manufacturer went from making car badges to making 250,000 face shields to help South African’s protect themselves against the virus. In those desperate days, it was one of the first companies in the country to do so.

“One of our Original Equipment Manufacturers asked us to support them with manufacturing face shields. So [we] came in one Saturday morning that was how prototype number 1 of 250,000 was born,” said Rosenstein.

People just assume [the branding] comes from overseas, meanwhile we are the ones producing it here and for overseas.

- David King Financial Director CGI

Lockdown presented several challenges for management – including a collection of debt, settling debt and paying staff. The cash to cash cycle for a manufacturer is incredibly long (Raw Materials need to be ordered, deposits paid, shipping, payments, clearing, production, shipping, collection) which places immense strain on cash flow and as a result, a large amount of cash was tied up in stock.

“One of the key lessons we learnt was this business which had been so automotive focused can diversify and we could think out of the box. We took the opportunity to produce a product that could go into the commercial world as opposed to just the automotive space…Within days we set up new systems to deal with this intense cash tsunami,” said King.

Because the company had a well-established plug and play system as well as equipment perfectly suited for high volume production, within days they were talking to suppliers and before they knew it they had ordered up to the roof.

“I still have prototype 1 that we made in my office. The way we pivoted so smoothly is a real testament to the systems we’ve got and the management team that was working from home giving it everything we got,“ said Franklin Moses Operations Director CGI.

Known as the Survisor, their mask has been worn by everyone from the Minister of Police to surgeons.

“It was the saving grace for our business. There was no focus on making money. It was to keep cashflow alive so the business could survive through April and May. By May it was a complete feeding frenzy.”

But with an order of 250,000 shields, the business was able to weather the Lockdown storm and shielded jobs for other local businesses that would have gone bust.

So what’s changed since Covid-19 hit their business and the lessons they’ve learned and what sorts of adjustments have they made?

“Once the business got back to normal business it was a logistical nightmare. Accessing the raw material has been the largest challenge since restarting the business. We’ve not just had shipping delays, we’ve had delays thanks to climatic challenges with hurricanes and foul weather,” said King.

One thing they will be cutting back on is travel.

“I was overseas every month last year. I haven’t been overseas since March. You’ll never get away from the physical interaction, people want to see and touch our product, but we’ve certainly come a long way in seeing the value of video conferencing… Now I’ve got 150 people on a zoom call and you’re sitting in the office. The time saving and the cost saving is huge. I don’t think people are going to move away from video conferencing,” said Rosenstein.

“You also didn’t necessarily need to be on-site to be productive. I was in quarantine twice and was still able to function and perform my work from home.”

The company intends to stay afloat in these turbulent times by focusing on diversifying its customer base. They intend to move away from merely supplying automobile manufacturers to more commercial operations like Iron Man and Dakar Rally limited-edition vehicles.

They may have survived the first wave of Covid-19 but they think it could take two years to get the business back in shape.

But after 40 years in the game, you can be sure the company will stick at it.