Carl Grim, MD of SA's largest construction company Aveng, quotes Albert Einstein on the challenge of accelerating change.
"The story is told that Einstein informed his quantum physics class he planned to set precisely the same final examination as the previous year. Asked if he was not concerned that students had access to past papers, he replied: Not at all. The questions may be the same but, this year, the answers are all different.' "
Like the students, engineers have to constantly seek new answers to old problems. Grim says that, in his experience, the appropriate response to the accelerating pace of change is to anticipate it. He decided in 1999 that in a globalising world Aveng could not afford to remain a broadly based SA company, providing a wide range of construction services.
He sharpened the company's focus to three areas of expertise: mining services, energy services and heavy infrastructure. And he moved aggressively beyond SA's borders, driving into Africa, southeast Asia and Australia.
The moves paid off. In 1999, the company set a target for itself: to increase the ratio of hard-currency revenue from 3% of the total to 30% by 2003. It has already outstripped that figure, achieving 47% in the second half of 2001.
There is more ahead. Aveng is part of a consortium that has won the contract for Sasol's R1,7bn pipeline to pipe gas from Mozambique to its network at Secunda. Aveng subsidiary Grinaker-LTA has the major share in a joint venture between construction companies building the 865 km pipeline, part of a larger US1,2bn project involving gas extraction from wells and a central processing facility in Mozambique.
Engineering company Murray & Roberts (M&R) is also expanding into neighbouring countries. The SA market accounts for only 36% of the company's order book, while the rest of Africa accounts for about 37% and the Middle East 27%, says CE Brian Bruce.
M&R has formed a joint venture with SNC-Lavalin of Canada, to build the $406m Mozal 2 smelter in Mozambique. The project is owned by a consortium of BHP Billiton, Mitsubishi Corp, the Industrial Development Corp and the Mozambican government.
M&R was also involved in Mozal 1, a $1,2bn development which was voted the International Project Management Institute's 2001 Project of the Year.
An increase in trade with, and investment in, neighbouring countries has created an urgent need for better road links.
M&R is taking part in the R3,2bn Bakwena Platinum Corridor Concessionaire, with local groups Concor and Wilson Bayly Holmes-Ovcon and Spanish toll road contractor Grupo Dragados. They have won a 30-year contract for construction, operation and maintenance of the N1 between Pretoria and Warmbaths and part of the N4, stretching from Pretoria through the Rustenburg area to the Botswana border.
Technology has been another powerful agent of change. Information and communication initiatives have generated major infrastructural projects. A big player is Siemens SA, a subsidiary of Siemens AG in Germany. In mid-2001 it was awarded a $221m (R2bn at the time) contract to build Cell C's network infrastructure. It is also providing the $90m expansion of the GSM network in Tanzania.
Motorola operations director Fred Coetzer estimates the Southern African Development Community countries, including SA, spent $400m-500m in 2001 on mobile network infrastructure, excluding the cost of the handsets. "In the past eight years, since the inception of mobile telephony, investment in the industry has grown by leaps and bounds," he says.
Gauteng's R1,7bn Blue IQ initiative to make Gauteng a "smart" province is well under way. It consists of 10 megaprojects, all public-private partnerships, which are being implemented in phases.
The motor industry was responsible for a number of large projects, including Toyota SA's R1,1bn upgrade of its Durban assembly plant and BMW's R2,5bn upgrade of its Rosslyn facility, near Pretoria (see page 240).
Property developments in progress contributed significantly to 2001 capital spending.
The first phase of the R4bn Melrose Arch development in Johannesburg, with 44 000 m² of offices, 8 000 m² of retail space, and flats has been completed. About R1bn was spent on infrastructure and roads to support the rest of the development.
The R3bn Capricorn Business & Technology Park at Muizenberg is part of a drive to establish a Silicon Valley in the Western Cape. Construction started in 1997 to develop supporting infrastructure and is scheduled for completion in 2014.
Also in the Western Cape is the R3bn, 250 ha Century City, which houses a retail and leisure centre, 8 km from central Cape Town and away from existing business nodes.
In Umhlanga on the KwaZulu-Natal north coast, the R1,4bn, 127 000 m² Gateway Shoppertainment World was built by developer Moreland, the property division of the London- and Johannesburg-listed Tongaat-Hulett group.
Government expenditure is gaining momentum. Spin-offs from additional budgetary allocations to infrastructure made by Finance Minister Trevor Manuel in 2001 have started to come through.
And, last year, public authorities contributed most to fixed-investment spending, according to a schedule of capital projects compiled by Nicky Veldtman and Lesley Erasmus of the Nedcor Economic Unit.
The schedule shows that the total value of public-authority capital expenditure rose from R6,5bn in 2000 to R9,3bn in 2001. But public corporation spending dropped from R20,7bn to R1,7bn, while private-sector spending fell from R31,7bn to R15,5bn. The total value of capex fell from R58,8bn to R26,4bn, say Veldtman and Erasmus.
The Nedcor figures capture announcements of spending and not actual monetary flows in a period. They do not include projects beyond SA's borders.
The Reserve Bank, which records flows, says real gross fixed capital formation grew at 3,5% in 2001 - considerably higher than the 0,5% growth in 2000. And, in the fourth quarter, total fixed investment grew a real 5,5% (seasonally adjusted and annualised).
The Bank says that in 2001 expenditure was widely spread through the economy: expanding platinum production ; expanding capacity in the communication sector to accommodate the third cellular network operator; increasing manufacturing capacity so as to benefit from new opportunities in export markets; and replacing obsolete stock and increasing capacity in the agriculture sector after good revenue streams in 2000.
More capital spending by government will come on line as amounts allocated are eventually spent.
So the outlook for industries reliant on capital spending looks positive. And contributions to GDP from this sector should continue to rise.