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Mike Benfield has always regarded himself as a jack of all trades, able to add value to any company he becomes associated with. “I’ve worked in entertainment, in mining, in consulting, in engineering – even in aviation for a short period of time,” the qualified accountant tells The CEO Magazine. But into his third year as CFO at mining group Metorex, he felt the pull to explore new experiences in a new industry: steel.
This is how, in September 2015, he found himself walking into the Ekurhuleni headquarters of leading steel manufacturer, merchandiser and distributor Macsteel Service Centres as its new Group CFO.
“Macsteel is a very big business in South Africa, a household name. It’s a very powerful brand with a good reputation,” Benfield explains. “From a financial perspective, I saw an opportunity to grow myself in a bigger business.”
“When we can understand the customer’s needs and pain points, we can mold and shape the business around that.”
He’s long known the benefit of being the “finance guy” on the team. “It allows you to understand at a very high level what makes the business tick, from the drive to the people and culture, or the context that drives its numbers and financial outcomes,” he says.
Yet he was also aware of what he had to bring to the table himself. “I knew, through my energy, personality and pragmatic style of managing people and processes, that I could add significant value to the business.”
After two years in the role he became Group CEO, an appointment that allowed him to further dial up his contribution to the business. “Being in charge enabled me to add significantly more value and drive a new strategy that the company had never thought of before,” he says.
Still considered a new face in an organization where many have notched up over 25 years of service, Benfield also brings a fresh perspective to the leadership team. “The company doesn’t have too many external influences in terms of how things are done elsewhere, but I have an outsider’s advantage and can look in and explain where we are not seeing the wood for the trees,” he says.
Macsteel was founded over a century ago, in 1904, and constant pursuit of reinvention is in the company’s DNA. The past four years under Benfield’s leadership have been no different. He talks honestly about the difficult climate for business in South Africa.
“The economic growth rate is very depressed, and as a business we are linked to the gross domestic product,” he says. As a steel service center, Macsteel has the capacity to move upwards of 1.2 million tons of steel annually; currently, it is operating at only 50 percent of that figure.
To take into account this drop in demand, Benfield and his team have examined operations from four particular angles – sales, procurement, production, and warehouse and logistics – as they’ve worked to reshape Macsteel into a lean and sustainable modern steel service center of the future. “We’ve re-created the business from that perspective,” he explains.
The traditional branch-centric model, where “each was run almost as a standalone little chiefdom with its own overhead structure, management team, distribution network and customer base”, as he explains it, has been reined in. In its place a wider business, run nationally, with matching strategies to optimize its overhead structure and customer centricity at its core, has emerged.
“When we can understand the customer’s needs and pain points, we can mold and shape the business around that,” he says.
If remaining robust and profitable, even in a diminishing market, is his current priority, Benfield still has one eye on the future direction of the business. “Our medium-term objectives are to grow market share and diversify our product portfolio to mitigate the risks associated with a slowing or sluggish economy,” he explains. “That ultimately leads to the long-term objective of above-average shareholder return.”
“I knew, through my energy, personality and pragmatic style of managing people and processes, that I could add significant value to the business.”
And the building blocks to reach these goals? “It’s about sticking to the basics and managing our inventory, because we’re essentially an inventory business,” he says. “We marry supply and demand and, if we can get that perfectly in balance, then we’ll know what type of resources and overheads to allocate to each of our offerings.
“As a result, we can flex with how the economy is running and how our performance, relative to our competition, is tracking,” he adds.
There are plenty of risks to look out for, especially price volatility in the sector. “From one quarter to another the prices can go up and down, and in an inventory-intensive business like ours, if the prices go down and you’re sitting on stock at an old cost, then your margins come under pressure,” he explains. “So it’s very important for us to manage our working capital cycle so we turn over stock as fast as possible.”
Of course, the opposite is also true when prices increase. “We then have the advantage of selling yesterday’s steel at today’s pricing,” he says, adding that the global steel sector was able to benefit from such conditions during 2021 as the world emerged from COVID-19 lockdowns to supply chain disruption and a steel shortage.
“We can flex with how the economy is running and how our performance, relative to our competition, is tracking.”
If there’s one constant in the business, however, it’s the supplier partnerships that bring mutual benefits to both parties. “We cherish our suppliers and are very thankful for those relationships, and continue to work openly and honestly to further enhance them,” Benfield says.
And he’s always open to new collaborations. “There is absolutely room for new relationships in the business. And, given our culture and the manner in which we enter into commercial arrangements, we believe we’re a very good business to partner with.”