TransNamib's returns have been on the decline for years. The new TransNamib Chief Executive Officer, Titus Haimbili, talks about the company's turnaround strategy. By Catherine Sasman What kind of restructuring have you brought about since you took over the reigns at TransNamib and what informed these? I started as the new CEO in January but TransNamib did not start with me. There have been negatives and positives. Experience has taught me that you do not dwell on history. You merely learn from it. Hence, you build on the positives and try to learn from the negatives. There are different views concerning TransNamib. There is also a confusion with TransNamib Holdings which was established in 1998 - the current one dealing with rail and transport - as opposed to the previous TransNamib Limited which had components of Air Namibia, and sea transport. These are different institutions; the revenue and the size are different. Sun Tzu in his Art of War says before engaging your troops in war you have to study your battle terrain and identity the enemy. Why I'm mentioning that is because TransNamib is seen in three different perspectives, which are important. There is the external and internal perspective and who we really are. By looking at who we really are, we came to the realisation that our real enemy is the internal stakeholders. Train accidents happen, but we should look at the rate of accidents. These are only symptoms of the core disease, which is the efficiency of the management, the motivation of employees, and so on. These are the things, which need to be addressed. I would like to compare TransNamib to a sick body. Any organisation in decline must be seen as a sick body. An introspective view - an internal analysis - will bring progress. I have recruited a new management, and now the transformation process has to start. The sickness comes from the culture of the organisation and the neglect of the human resource asset. Business is not carried out by equipment, but by people. When I came to TransNamib there were only two managers: the manager of engineering, maintenance and services, as well as the manager of operations. There were no heads of the marketing, finance and resource divisions. The philosophy gui-ding the Tanalau project - the turnaround strategy started in 2002 - is 'back to front'. This has one principle driver, and that is to find out what has gone wrong. It is an exploratory approach. Everyone has to buy in to reshape the company. When one looks at the performance of TransNamib 2002 trend going up, 2003 peak and since then a decline. We want to take TransNamib back to the glory years. For the next three years this is what we would like to do. Most businesses take the approach from the business to the client. We work from the client to the company - hence the 'back to front' philosophy. For example, mining and railways are twinned. Hence, we need to go back to our core business that is rail, supplemented by road. The 'back to front' philosophy will point out that something has been neglected; something was not done. Rail freight was neglected all over the world, but the trend is changing; we are not an isolated case. The Italian railroad sector also went through tremendous losses of 2 billion Euros. The same happened in TransNet in South Africa. These are now busy with a renaissance. Our approach is pragmatic, learning from our own experiences so that we shall prevent reoccurrence of the negatives. This is where your experience becomes critical. This is where the old experienced workers come in. Although we now have a new management team, we will work with the old staff from top to bottom. We also have to look at international trends - your rolling stock and upgrade of infrastructure ... The railway is owned by the shareholder and represented by the Ministry of Works and Transport. The upgrade is very expensive; it is approximately N$1 million per kilometre. TransNamib is responsible for maintaining and the upkeep of the infrastructure. European expenditure on the upgrading of their infrastructure up to 2009 is cost at 195 billion Euros. We, in tandem with the Government, are in looking at the Walvis Bay-Swakopmund railway for upgrading. It is a 50-km railway, costing US$50 million. This is the responsibility of the Government. What are the company's strategic projects for the next few years? In conjunction with the Government, we will consider the upgrade of the railway from Swakopmund towards the inland, the rail from Kransberg to Tsumeb. The northern railway must be accompanied with traditional ululation because it is one of the best railway tracks in southern Africa. We are dividing our strategic intent into phases. The immediate ones are the upgrading of the locomotives. The Chinese trains are the only ones that are currently working. For a train to be effective, a good track is required. The older general electric trains - the blue trains - are being upgrade by a company in South Africa. The initial five has already been sent. Some will be returned this year. This should boost the performance of the company. A rating from the International Railway Journal of 2008 showed that the competing emerging manufacturers of rolling stock cited China, India, Korea and Taiwan. Our strategic intent to buy stock from China would therefore make sense. There is nothing wrong with that. But we have found that we would have to upgrade the track because at the moment it is like taking a Mercedes Benz on a gravel road. This would result in breakdowns. Freight and passenger trains should be viewed as separate businesses to be able to judge what the contributions are to the various elements. There were times that passenger trains were very popular; now it is on the decline. We will look at our tariffs, comfort, or consider mixing freight with passenger wagons. We will also do an exploration of what went right in the past and see how we can emulate that. How is TransNamib affected by the unprecedented increase in diesel prices? Fuel is a major factor. We have to look at the balance between our tariffs and costs. This also needs to be addressed at government level. I think we need to get some type of rebates. There are certain fuel levies that are, for example, paid to the RFA, but we do not get rebates for upgrading the railway. This is a legislative issue. We have addressed that with the Ministry of Mines and Energy. What was the agreement between TransNamib and the Chinese manufacturers regarding the purchasing of trains in terms of supplies and back-up services? And why is there only a one-year guarantee on these trains? With any deal there are loopholes, which may need to be revisited. But the issues concerning the Chinese trains have been corrected. Those trains, which are grounded, are due to normal breakdowns. But the 17 red trains pull most of the freight wagons. But we have started to revisit these issues. A Chinese delegation is here in Namibia to address some of these issues. We prompted this visit because we want to deal with these matters. TransNamib has built a dry container harbour primarily used by Ramatex. Since the closure of the textile factory, what is to happen to this facility? Containers are the way to go globally. Everywhere goods are put in containers. Walvis Bay is becoming the hub in southern Africa. This one dry harbour may not be enough. Ramatex was the client at the beginning, but there are other clients coming in. Botswana, for example, also has a very big container terminal. The business is a decline cycle, and the fact that Ramatex has folded may have resulted in some of the decline. But we are looking at new business, and we are going to change to a market-oriented approach. We are looking at attracting foreign direct investment. For example, a Korean factory wants to establish a sleepers' factory in Tsumeb. Through these ventures we can increase capacity to upgrade our railways. A Botswana company is considering re-routing its goods via Walvis Bay. This would be another boost. Similarly, we have entered into an agreement with Rites from India - a railway company operating in Mozambique and Swaziland - to establish a centre of excellence for skills development and upgrade of locomotives. If everything goes according to plan, we can become the centre of upgrading of locomotives. What a good outlook! We have already started negotiating with strategic partners to work on this. How does TransNamib plan to involve small and medium enterprises in its maintenance support services? TransNamib's core business is rail and road. But we are sitting on a gold mine. This is in terms of our properties - commercial, residential and land. In some towns TransNamib owns as much as two-thirds of the land. This will be managed as a separate business unit from rail and road. It may even bring in fifty percent of our profits. Selling of these properties is not an option; it would be a last resort. The property will be put into good use, where we will go into public-private partnerships, but we will stay involved. Through properties we can attract investment. As far as SMEs are concerned, there are the issues of maintaining the properties. There are many opportunities. But for this to happen, we need to establish the property business unit. TransNamib is looking into establishing its main repair service centre in Usakos. What is the thinking here? This underscores of philosophy of 'back to front'. Previously there were operations there. We have a situation where if a truck breaks down in Walvis Bay, it has to be trucked to workshops in Windhoek. This loses time. It would, therefore, make sense to go to Usakos. Through this, we will create employment to the residents of Usakos. It will also be to our advantage. We will first move the vehicle workshops there.
2008-05-23 00:00:00 10 years ago