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PLANS TO INTRODUCE ELECTRICAL POWER DISTRIBUTION PRODUCTS BY THE END OF 2017

Nigeria 2018 | INDUSTRY | VIP INTERVIEW

TBY talks to Jude Abalaka, Managing Director of Tranos, on the business environment, Nigeria-made products, and expectations for the year ahead.

What has been the business environment like for Tranos over the past year?

In 2016, we were working on a major power system project for telecoms that was completed early 2017. We have now moved from producing power systems to providing support for the equipment we produced. At the moment, we are focused on industrial customers. Historically, we have always had a B2B model; however, we now seek to expand into the B2C market. We seek to put our name out there and become more “consumer facing” to promote our products. When we tell people about our company and what we do, a lot of people doubt that such a company exists in Nigeria. We plan to introduce several new products by the end of 2017 related to electrical power distribution. The design is complete and we have purchased new machines, with some of them currently on their way.

How much of Tranos' raw materials are sourced locally?

It depends on what we produce. On the mechanical side, for products like enclosures for example, the main raw material we use is sheet metal. We have a local factory for sheet metal on the outskirts of Lagos that we buy from. Generally, depending on what we produce, up to 90% of our products could be made from local raw materials. If we are producing a generator for example, only a handful of companies produce engines to a high enough standard so we have to import engines. If we take engines and alternators out of the equation as well as accessories such as hinges and locks, we aim to localize everything else.

What do you hope to contribute to the “Made in Nigeria” brand?

The philosophy behind our strategy is not to just manufacture here and source raw materials locally to be able to say, “we did it in Nigeria.” We look to localize production and make our products affordable and of a high quality. We are looking at it from the perspective of being able to compete internationally. Our target is to be able to compete with companies in Europe. We see that at the moment, we are competing with products from Turkey. We clearly produce better quality products than China; however, cost-wise we cannot compete with China because the quality is lower. We want to continue to improve so that eventually we can be at par with the best international brands. On some levels, we are already doing that; still, we have a great deal of work to do in terms of training personnel and putting systems in place. We have come a long way; we have contracts with international companies that operate in Nigeria that seek to be more localized. We are substituting what they used to buy from their foreign affiliates and have certainly made significant progress.

How do you intend to change the mindset that products from Nigeria are as good or even better than products made in Europe?

First, we benchmark ourselves with brands from the EU or US. We are in fact currently working with some of those brands. They incorporate our products and we appear with them at conferences as partners. The problem is that there is the current perception that if something is made in Nigeria, it must be much cheaper. However, this is not necessarily so. In local manufacturing, our main advantage is cheaper labor and elimination of some importation. However, when a company still needs to import raw materials, equipment and spares, some of those will certainly affect overall cost of production. Apart from that, there is still a great deal to do with regards to training personnel. It takes a toll on cost and time, and it is something that we need to look at. It is easy for us to sell our products through a different brand; however, we have a great deal of work to do to be able to market our products with our own branding.

What are some of the challenges that Nigeria's industry sector faces, and how does Tranos deal with them?

Looking at demand, we see many competitors importing products that we produce here, or substituting them for cheaper Chinese products. First, we need to look for the sweet spot in the market where we are most competitive and try to focus on that. Most times, we lose market share based on our pricing; we need to identify where in the market our value will be appreciated and customers are willing to pay the right price for it.

What do you want the government to do to help your business?

Looking at the economy, there isn't sufficient purchasing power. However, compared to 2016, we have seen things pick up. Other challenges have to do with finding experienced personnel and also supply chain challenges. If we purchase a new machine, we will still have to fly someone in to train people on how to use it. These are real business issues, but there is not much that the government can do about them. Still, my wish is for a solution regarding the ease of imports and exports. Currently, importing and exporting is relatively cumbersome. As a manufacturer, one of our biggest headache is with the supply chain. We have a situation where we have to order materials three months or six months ahead because of clearing delays.

What do you expect for 2018?

My outlook is that we will do the setting up of our new product line as well as train personnel given that we have concluded our design for the new products. We aim to have the new line of products launched in 2018. There is also a brand awareness campaign to introduce our products to the market under our brand and get people to recognize us. We will also begin to get more business from multinationals that need what we produce and are currently importing.


 

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