Local tech firm on the forefront of Africa opening up
Cathtect has turned out to be an entrepreneur’s dream: cutting-edge technology, a whole continent opening up, the chance to make a real difference to the development of Africa, and limitless opportunities.
News bulletins and headlines constantly mention the potential benefits for South Africa of the expansion of the African economy, the roll-out of major infrastructure projects in South Africa itself, and even the recent weakening of the rand for exporters. But what is it really like to be on the forefront of all these opportunities?
Exciting, without a doubt, says Aaron Raath, general manager of Cathtect Engineering, a fast-growing Johannesburg based firm specialising in the fascinating field of cathodic protection, the maintenance and integrity of pipelines and other metal infrastructure through electrical flows.
But the juicy opportunities facing the family-run firm of 40+ employees are not low-hanging fruit. It has taken years of specialisation, ups and downs and growth pains to come within reach of such lucrative possibilities – not only for the company as a whole, but also in the personal lives of the entrepreneurs involved.
Aaron’s father David Raath, an engineer, started the firm with a partner in the early 90s when his exposure with Eskom needed contractors to fulfil such services. It was a specialised field, and at the time there was no opposition firm offering cathodic protection, a method based on the control of electrical flows through metals to control corrosion and to increase the lifespan of the infrastructure.
The firm rapidly expanded and took on clients all over the world, deepening its knowledge of the science and engineering of cathodic protection and adding design, consulting, manufacturing and installation to its maintenance services.
But just after the turn of the century disaster struck. David’s partner, who was in charge of the finances of the business, died suddenly of a brain tumour, exposing serious shortcomings with the books which David, who focused on the engineering side, was not aware of. In a traumatic transition, the business had to liquidate and start from scratch in 2002.
Aaron was at university at the time, studying a B Com with a focus on entrepreneurial management, and started spending his days after class helping in the business. By that time his younger brother Garreth had also joined the company, helping his father through the crisis on the engineering side of things and being a right hand man.
The challenge was to keep the doors of the business open while liquidating the previous partnership so that they did not lose their drive and client base. This they managed, but they had to withdraw from international expansion and consolidate their base in South Africa.
Because of the liquidation proceedings, no bank would finance the restructuring and restart of the company. “As my dad says: The banks want to give you an umbrella when the sun shines, and take it away when it starts raining,” says Aaron.
Business Partners, however, saw the potential, and provided Cathtect with working capital to get back on its feet.
This, and their revered status as specialists, helped smooth the way to rapid growth once again. Although much-vaunted infrastructure roll-out in South Africa has not yet reached its promised levels, Cathtect can attest to the fact that at least some of it is taking place. The company was able to grab opportunities with the expansion of Transnet pipelines, among other parastatal work.
The expansion of economies in the rest of Africa is also more than just talk, as Cathtect’s projects in Kenya and Ghana, among others, show.
Meanwhile, the company has made a breakthrough by building the first SABS approved working model of a decoupler, a device that can bleed excess currents in a pipeline to make it safe and work within corrosion protection parameters. The most recent development is the acquisition of software that will strengthen Cathtect’s position on the forefront of its field by creating pipeline analysis ability.
The company soon outgrew its rented premises, and recently acquired its own building in Roodepoort, again with financing from Business Partners, who took co-ownership of the building in lieu of a cash deposit, which could be put to better use in Cathtect’s operations.
For Aaron, the challenges of business and helping to turn Cathtect around was difficult, but arguably not as difficult as the personal process of joining his father’s firm. “I can safely say that no-one in their right mind will decide to join their dad’s company,” he jokes. It is a tough relationship.
As a young graduate in entrepreneurial management he was looking for an opportunity to implement a new vision, and knew that at Cathtect it would be difficult, because his father would always be senior. The inevitable clash of ideas strained family relationships, and Aaron had to work hard to prove his credentials as a manager and entrepreneur.
It is still difficult, says Aaron, now 29, but the two brothers and their father has forged an understanding that work is work (no preferential treatment for family members at the company), and family is family (don’t let business issues strain family ties).
For all Aaron’s misgivings, Cathtect has turned out to be an entrepreneur’s dream: cutting-edge technology, a whole continent opening up, the chance to make a real difference to the development of Africa, and limitless opportunities.