Deman Manufacturing: beyond ‘just’ manufacturing

By Ilana Koegelenberg

With over 30 years of experience, Deman specialises in the design, manufacture, and distribution of high-quality controllers for HVAC and energy-saving applications in commercial buildings.

The Deman teamThe Deman team
Image credit: Deman

Deman was founded in 1987 and strives to deliver innovative and cost-effective products to the commercial building contracting environment. The company is based in Koedoespoort, Pretoria.

Initially, when first starting out, they did fire detection installations in commercial buildings. They were then approached by Tedelex to make controllers for their console range of air conditioners. And so, they moved into the manufacturing game.

Back then, this was easy to get into as it was a very manual process and you could get away with not having to purchase super-expensive machines as part of the start-up cost. The components were imported and laboriously assembled by hand and then welded manually. As the business grew, Deman gradually expanded their production, importing various machines to automate some aspects of the process.

The range expanded, and they now make controllers for fan coil units (FCUs), air handling units (AHUs), and diffusers. Deman also makes products for occupancy sensing and controllers for green building applications.

Deman consists of two companies: Deman Manufacturing (Pty) Ltd for contract manufacturing and Deman cc for distributing the air-conditioning products. The development and marketing of these manufactured products are done by Deman cc, while the normal line production and testing is done by Deman Manufacturing.

They are a fully independent, proudly South African company and all of their products are designed, tooled, and manufactured in their own facility. But it’s not just about manufacturing the same product time after time. The company also has a development team with development facilities to accommodate the upgrading of existing products and the creation of new products.

Presently, the Deman team is 71 strong, despite the manufacturing side being highly automated.

They are also getting involved in the training side of things these days, helping contractors get familiar with the products and how to install them properly.

Challenges

According to Hugo de Bruyn, one of the owners, the biggest challenge is the actual number of manufacturing days because of public holidays and the like. This year, there are only 226 manufacturing days.

Another issue is over-regulation. He explains that it is possible to stay competitive with international counterparts, as they have the same cost of production equipment and materials. But when regulations become too stringent, it adds extra costs and makes it a tad trickier to stay competitive.

Power cuts are hazardous to the operation, especially since it involves so many machines. But luckily, they only experience a few of these a year. They are considering backup power, but this would be a very expensive exercise.

Staying competitive

So, how DO they stay competitive despite all the challenges? “By implementing ISO 9001-2015 as a tool rather than seeing it as a burden,” explains De Bruyn.

That being said, there are about 35 contract manufacturers of electronics in Gauteng alone, according to De Bruyn’s last count. “The industry is quite competitive.”

The good news is that because the process is so automated, and there aren’t really as much labour costs, they can compete with imports as they do not have the cheap labour advantage on such products. But they have the added benefit of being local.

Currently, they use about 80% of their labour for 20% of the work while the rest is automated. Interestingly, De Bruyn explains that their need for labour has never decreased despite production becoming more automated. “People always assume that machines are replacing labour but in fact, without the machines, you won’t be competitive enough and then you’ll be forced to get rid of some of the jobs.” It’s the machines that actually ensure a growth in labour.

But automation isn’t cheap. With all the new equipment they require and the constant inevitable upgrades, it becomes costly to stay up to date with modern manufacturing requirements. Which also makes it harder for new players to enter the market.

Deman also has in-house technicians and engineers to assist with design and development work, giving them that edge. But this does not come cheap either. “From design to first product and selling is a long road with many challenges,” explains De Bruyn. “I think most people, especially engineers, underestimate the cost of developing a product.”

They also buy components in bulk to make it more financially viable. This means that when an order comes in, they can easily put it together without having to wait for components to come from overseas. Sometimes they buy a million of a certain component.

But this is also where the biggest challenges come in for Deman: keeping the right components. Almost all the components they need have to be imported and cannot be sourced locally. Sometimes a certain component goes out of use and then they are stuck with large volumes of obsolete stock. Just the stock alone amounts to millions of rands and pose some kind of financial risk at any time.

“I think most people, especially engineers, underestimate the cost of developing a product.”

After the global recession, many component factories around the world closed down because of the decreased demand. However, now that things are slowly picking up again, this means that production cannot keep up and manufacturing companies have to wait very long to get their orders, explains De Bruyn. This in itself is quite a challenge. He says they are getting lead times as bad as 40 weeks on certain components!

Why go local?

The most obvious reason to go with a local product instead of an imported alternative, is backup support and local knowledge. The Deman team is always available and understand their product, as well as the local market and climate. They always go the extra mile for clients. They have lasting relationships, as can be told by the fact that Deman still supports products supplied to Tedelex in 1995.

It is important to get this buy-in from consulting engineers and contractors who now have the peace of mind that they have the support from an experienced and local company.

Or to summarise, as De Bruyn says: “We do not stop speaking English when there is a problem.”

They also manufacture their own maintenance stock on all their products manufactured and have in-house technical staff to assist with planning and problem solving. Not to mention in-house repair and test facilities.

Future

The Deman operation is always improving and growing as they upgrade products and identify new gaps in the market. But their long-term goal is to look at exporting — particularly Australasia and South America. “The local market is small and rather patchy. There is no reason why we cannot compete in the world arena,” says De Bruyn.

However, the challenge is that none of their products are simply off-the-shelf products. You have to sell them with expertise and know-how, too. That is why they are also looking at making a few generic catalogue products that can be customised for individual international markets specifically to suit their requirements without complicating the product.


Click here to read the July 2018 issue of RACA Journal

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