Starting off in 2008, driven by the sole desire to add a different kind of value to the target customers in the oil and gas, power, and telecommunications industries, the foremost manufacturing and innovative engineering solutions provider, Tranos Contracting Limited, has added value to its customers and the Nigerian economy through the production of quality products. The wholly Nigerian company has diversified into renewables, focused on easing Nigeria’s electricity generation crisis, by constructing a 100MW solar panel manufacturing plant. The determined founder and Chief Executive Officer of Tranos, Jude Abalaka, tells Peter Uzoho about the company’s journey, future plans and other issues. Excerpts:
For 16 years, Tranos Contracting Limited has been a major manufacturing and engineering solutions provider. How did the journey begin?
Tranos Contracting Limited started by looking at ways of being of value to customers, and, in the beginning, we were looking at how to provide services for oil and gas in terms of engineering, fabrication, some procurement around our equipment and even process equipment, rotating equipment, things like that. Very quickly, we realized that to achieve our aim, which is to grow in this space we were in – providing services or products to customers, we also had to look in other places because we realized very quickly that the products and services that we were trying to provide to oil and gas were also valuable to other industries.
So we’re now still having customers in telecoms, customers in manufacturing and, by listening to those customers, we also realized that if we’re going to be able to survive the tough business environment and grow, it was important that we increase the number of customers that we have in the industry. So we increased the value that we were providing, and it was that there were companies that probably stayed around at the same time we did, who just wanted to do supplies. These companies want item X. They just buy and deliver. But we realized that if you’re only providing value at the lower end of the pyramid, then anybody can do what you are doing, and it means we are not really doing anything special. So we then determined that we have to keep building up, increasing the sort of value that we can provide, and, in our space, the only way you can do that is to do more.
So, we started investing in our first factory in Ilupeju. And when we outgrew that one, we moved to this current one where we are now. We currently also have a second factory just down the road. And we’re already planning to even move to a bigger place. This whole thing is based on the focus of finding where people need what you can do, doing it well enough at a good price, and building on it.
What products and services does Tranos manufacture and render?
So we have a wide bouquet of services. We produce things that generally involve power distribution or power generation. And for oil and gas, we also have oil and gas industry ceiling solutions. Currently, we have the power distribution equipment we manufacture: power panels, main distribution panels, and motor control centres. We design and build all those for customers, mainly industrial. We also have these special gas generators we produce now that run on LPG. We’re not talking about converting maybe your 2.5kVA generator. Our generators are built from scratch and designed to run on LPG. The difference between that and the regular ones you see is that we are talking about higher power, from about 7.5kVA up to about 75kVA.
A large chunk of our generators have much longer service intervals. And what I mean by that is, your typical petrol generator will probably need to be serviced, maybe, every 150 hours. Diesel generators will be about 250 hours. But our gas generators can last up to 3,000 hours before you need to service them because of how it’s designed. In addition to that, it will also last longer. So we have customers who have been running our generators for more than 40,000 hours. A typical diesel generator, after 16,000 hours, you can manage it; maybe it gets to 20,000 hours, and you are happy. We have ones doing 35,000 hours, but you wouldn’t know if you didn’t check the running hours. So that’s our technology, it comes with a lot of advantages.
Besides that, you also save on fuel because our customers who use LPG have confirmed that. We have customers, especially in the telecoms sector, that have sites that will run on diesel as well as those that will run on gas. You see that they are saving so much. Continuing with our products, we also produce a lot of enclosures, and enclosures is a general term we use for technical enclosures. For example, you need an enclosure if you want to start a power generator. So we have those that we would build enclosures for power plants. For example, if you want to containerize a two-megawatt power plant, we also do that.
From something that is that big to even smaller units like small plastic enclosures that we make for meter manufacturers. So we’re building in the electricity and material industry that will require it. We make a very wide range of enclosures. In steel and plastic, we also have a product line.
We also manufacture another product line we call cable management system. Now, there’s a power supply in every industrial environment, and you need to run cables all over the place. In your house, you wouldn’t need cable trays or cable ladders. So you’d probably be running your cables either through conduits. We manufacture cable trays and cable ladders for industrial cable routing if you’re routing a lot of cables, and we’ve produced a lot of that, especially for oil and gas. So, you are talking about something that would typically be important. We now make them. That’s mainly what we do in our second factory.
Now, talking about our second factory, another product we have that we make there is gaskets. Gaskets are sealing; what you use to seal between two connections. If you have a pipe carrying any fluid like water, petrol, diesel, or crude, you have to seal it so there’s no leakage at the connection point. So, we make different types of gaskets for sealing. We also have customers, not just for oil and gas, but customers with power generation and gaskets across that range.
Again, we also have this other product group called the warehouse storage system. So, if you go to the proper warehouse, you will see that they have racks where they store things. We produce those racks. The only company we have in all this is the big racks you see, the small ones you probably see in the supermarkets. We make all those.
Now, I mentioned the idea that we are also looking at expansion.
Because you see that we’ve been at this current location for almost 10 years, and as a result of that, we are looking at expansion. I mentioned earlier that the ethos of what we do is to find the customer’s need and then try to solve that problem, always trying to solve it by adding value. Among the customers that we have currently, we have a lot of renewable energy customers, mainly solar power customers, for whom we make enclosures for their products. Some are enclosures. Some are power distribution panels.
So we’ve now decided that we made diesel generators at some point, but we decided that diesel is not clean. The world is moving towards clean power, so we moved into gas generators, which we are producing. Now taking it further, we’re now saying look, ultimately, everybody wants to move to clean fuel, clean source of power, and we’ve seen that we have customers using our enclosures for solar, we have customers, we have products for, you know when you mount solar panels, we have products for mounting solar panels.
So now, we want to build a renewable factory. As I said, we have enclosures for solar products, power distribution panels for solar, and we’re also making mounting brackets for solar. If you want to mount solar on your roof, you need a mounting system to hold the solar panels. If you mount it on the ground, they want to see the lights and installation. You’re still going to need different sorts of mounting. So we produce that. But on top of that, we’re now saying, ‘Look, how can we add more value?’ We see that our next step is to begin manufacturing solar panels.
And our focus is to build a new factory producing 100 megawatts of solar panels per annum. That’s where we are going now. That will greatly help the country because we all know there’s a huge power shortage in Nigeria. One of the solutions that government policy is looking at is driving towards decentralization, which means that any local government that can either work with an investor or find the investment can set up a 50 megawatts or 100 megawatts power plant. There are a handful of mini-grids already popping up here and there. So you can imagine having so many of those. Imagine having 1,500 megawatts of power plants in each local government across the country. That will change a lot of things.
So we think that that’s the way to go. We will start producing our solar panels. We’ll also start packaging the energy storage systems, using battery energy storage systems in containerized units.
So those are the kinds of things that we intend to do to ease up things because for a lot of the solar installation companies, the solar power companies that we have, we see that there’s always the challenge of having to import solar panels, having to find the foreign company to build a battery energy system. So those are things we intend to start doing in the future.
How far have you gone with setting up the Tranos solar panel manufacturing plant?
For this sort of project, we have a lot of challenges. We have a lot of development. We want to site the plant somewhere across the border between Lagos and Ogun states. So, we are currently in the process of acquiring the land. We’ve done our feasibility studies. We’ve done a lot of technical work. We have partners from Europe with whom we are working to develop the product because efficiency and quality are important with solar panels. We don’t manage products. Our products must be able to stand side by side and possibly even be better than what’s currently being imported.
It means that the panels will have to be very high quality and high efficiency. So we are working closely with a good company that is experienced and knowledgeable about this to design the right product and then build the factory. This will certainly help to cushion the foreign exchange challenge we are having because everybody is now finally aware that for us to progress as a country, we are now talking a lot about exchange rate issues, and it’s now dawning on everyone that for us to make progress, we have to be productive. So, the keyword is productive. We have to be productive. We can’t survive depending on other countries to produce for us. Of course, we can’t produce everything, but we have to be productive.
What’s Tranos’ production capacity and the level of acceptability and patronage of your products and services?
So, doing business in Nigeria is not easy and a bit cyclical. If you get something good today, then you have to wait. What has helped us is that, because we have a wide range of products and work with different sectors of the economy, even when one sector is down, another keeps you going. But it’s still not a lot of times we are producing with low capacity. But percentage-wise, we typically run at 30 to 40 per cent capacity. And that’s on average. What I mean by that is, at times, we can go up to 80 or 90 per cent, and then it drops down. And that’s also because what we produce are industrial products. So we are dealing mainly with industrial customers.
So if there is a lot of work in oil and gas and new fuel developments, we’ll probably get a lot of demand. If there are expansions in telecoms, we’ll get that. So, It fluctuates, and we hope it will stabilize, but it’s a function of the environment. So the frequent changes in policy, the policy mismatches you get, and also the general downturn in the economy do affect us, but we keep working hard to try and mitigate its impact on us,
This is part of why, in the past, we have been producing new products to show that if we are not selling a large volume of one, at least we can also complement it with a different product.
How do you guarantee quality products and services for your clients?
We are an ISO 9001 2015-certified company. We’ve been certified for many years now. But besides our ISO certification, we ensure that our products are designed and manufactured according to a particular standard. Typically, it will be an IEC standard, like a European industrial standard that governs how you design or build particular products. Besides that, for various products, as I mentioned in the caskets, for example, we have to do what is called a Type Approval, which means that we design the product to meet the standard through lab testing and have certificates to show for it.
What sort of value in terms of job creation can Tranos boast of?
So, I think we currently have a staff strength of about 180 people. We hope that when we move into our new facility, we’ll probably double that figure depending on the demand for our product. But for us, it’s not just about the directly employed people. There are a lot of indirect people. So, for every employed person, the person has a wife and children. So you need to ensure that for simple things like health insurance, everybody within that family can go to the hospital. But that’s even a sub. It’s not just the number of people. It’s also the quality of the work that you have created.
In five to 10 years from now, where do you want Tranos to be?
Well, I don’t know about 10 years. But in the next two years, our new facility should be running, which means we will produce the best quality solar panels across Africa, supplying them to Nigeria and other countries around us. Other manufacturing operations are running, and we are exporting them across the continent. One key element in renewable space (solar, for example) is solar inverters. So, we should have our own manufactured solar inverters on the market. Then, we should also be going into manufacturing lithium batteries because those are all the ingredients that go into renewable power generation. So, our focus is to continue building and making good products, and with time, we expect that the people currently importing into Nigeria should feel threatened by us. Really, between now and the next five years, we should be solid on the ground doing those things, improving power availability across the country with our products and doing that on an ongoing basis.
From your experience, what would you say are the major challenges facing manufacturing in Nigeria?
I will give you four challenges facing manufacturing in the country. One affects us, but not as much as it affects some other manufacturers. The first challenge in manufacturing in Nigeria is a dearth of the right personnel. Most people don’t seem to talk about it, but if you have good people, they will solve most of your problems, and when I say personnel, I’m not just talking about the people who do the production. For manufacturing, you will typically start with product development because you need to develop the product, set a system to produce it, set a system to market it, and set a system to sell it, then provide after-sale service. So, it’s a long chain of activity. Most of the time, we only focus on manufacturing because you have to develop the product, which will be what customers actually want. How do I make the product appeal to what the customers want? Then, set up a process that can be produced efficiently.
Now, if you go through that whole chain of activity, finding people to do every step of that is very challenging. I’m not saying we don’t have human beings; we have human beings, but people who know what to do are very few. So, from my perspective, many companies are looking for good people. So, when we say that we have an unemployment problem, I think it’s more of an employability problem; the people available are not employable. So, you have a lot of engineers, but how many of them can actually do the engineering work? And if you look at countries where manufacturing is done well, you must also know how to market your product. There are gaps in the technical product marketing space. So, finding good people is difficult across that whole chain of activity. That’s the number one problem.
The number two problem is the supply chain. Now, a part of that problem is people-related. We don’t have many people who actually understand what supply chain means. We have people who just do what I would call fire fighting -something goes bad or is delayed, and you now start running around and trying to solve it. Meanwhile, it would have never happened if you had made a better plan.
Also, a big part of that problem is government-related. If you want to import something today and it’s going through the Nigerian ports, of course, you are going to deal with customs. Customs as an organization is designed to raise revenue, not to facilitate trade. So, a customs person will frustrate trade to increase revenue, forgetting that by frustrating trade, you are jeopardizing revenue generation because it means if you frustrate my business and I make a loss, I don’t pay tax. So the money you get by frustrating me when it’s time to bring I’m my goods, you lose more because I’m not going to pay tax. You will even lose more because I won’t employ more people. So, there is a domino effect on that.
But the mentality of the Customs is, ‘We want to increase revenue. How do we increase revenue? We want to make sure people pay more’. And part of what I’m saying is that it’s not just telling you to pay more in terms of your duties, but you have situations where you bring something in, the duty is five per cent, but because they want to raise revenue, they want to see how they can make you pay 20 per cent. Now, in the course of going back and forth to resolve that, you pay a lot of demurrage.
Unfortunately, in Nigeria, there is no recourse. So, you can’t say Customs have held my goods; let me take it to a higher authority that can quickly resolve the problem. So, that’s a big issue, and that’s just Customs alone. At the ports, you will still deal with SON, NAFDAC, and Marine Police. Talking about NAFDAC, you don’t make any food or drugs, but you will be surprised to know that we make plastic enclosures, and to bring in our plastic pellets, we need a NAFDAC licence. For some of our processes in treating steel, before we powder-coat them, we use chemicals to clean the steel; we need a NAFDAC permit to bring in that chemical. You now have other funny things like when you bring in things, they do an inspection, and so many agencies go to inspect. You go through all that, and eventually, the goods come out. Then, as the truck is coming to deliver to you from Apapa, they get stopped on the way by some group that says they are from SON, but you had SON people at the port who had inspected the same goods. So, you have all those sorts of interruptions in your production. So, it affects your supply chain.
How can the government support the growth of the manufacturing sector in Nigeria?
I don’t have a list off the top of my head, but the objective of anything the government would be doing would be to say, how do we make companies in Nigeria more competitive than our next-door neighbours? Because the reason why we easily buy from China is because they’ve designed a system to sell to the world. So, it goes from some of the things I had explained. Let’s invest in education. You can sit down as a government to say, in the next five to 10 years, I want Nigeria to be the go-to place for solar or anything.
The first step is getting as many people as possible educated at all levels of solar knowledge. If you want it to be software engineering, do that. So, all these things have to be built. So, when you find a particular county doing well in a particular area, it’s usually not a mistake. It was a deliberate effort made to build things in that area. So, if you want us to be a good manufacturing destination, first, you must make sure that if anybody lands here and wants to set up a factory for making anything, the kind of people he would need are very much available. If not, is he going to spend 90 per cent of his time looking for those kinds of people? That’s important. So, the government has to deliberately decide to say we are going to take education seriously because that’s the bedrock of whatever we are going to do.
The second, of course, is to look at the impact of government regulations and policies on the manufacturing sector. I’ve said the KPIs of the Nigerian Customs is revenue generation, not trade facilitation. So, they actually do not keep an eye on trade facilitation. So, rather than saying that the KPI of Customs should be about the turnaround time. How quickly do containers arrive at the ports and move out? Or what’s the volume of goods that come in and leave the country? If you use that as the KPI, they will keep an eye on saying we need to ensure that more things move out of the country. But that’s not the KPI of the Customs. So they are measuring themselves based on how much money they collected, and all their focus is on that. Nobody is asking whether companies have died in the process, raw materials that were imported spoilt, or agricultural goods that were exported got rotten at the ports because of those delays.
