Electrical Industries Ltd's (EIL) contract with the multinational, General Electric (GE), highlights the company's advances globally despite challenges in the international economy, says director Hayden Kublalsingh. "At a time after the global crisis, we in our strategic planning discussed our way going forward. Are we going to be scared or are we going to fight? We decided to boldly go forward and think strategically." Kublalsingh was speaking on February 9 at the Arthur Lok Jack GSB's second annual Distinguished Alumni Series 2012 at at the school in Mount Hope.
In response to questions from the Business Guardian, Kublalsingh e-mailed additional information last Monday. Last month EIL signed a contract with GE, which allows Agos Manufacturing Ltd, based in St Augustine, to manufacture lighting fixtures. Kublalsingh describes the EIL Group as the largest electrical company in the Caribbean with locations in ten islands in the Caribbean and in Florida, US.
The group employs 585 people and 50 per cent of its sales are in exports. These markets include Puerto Rico, Panama, Dominican Republic and the Caribbean.
Kublalsingh calls GE "one of the largest and most recognised companies in the world." "Agos currently manufactures UL listed fluorescent fixtures, 80 per cent of which is sold into the US market. The GE contract allows Agos to manufacture a special lighting fixture under the GE brand, which GE will distribute in its markets in Central and South America." He said the company is able to stand up to international standards. "Agos was able to pass GE's meticulous factory manufacturing standards and Agos being an ISO 9001 registered company, a UL listed manufacturer of lighting and a company run by using the balanced scorecard, has made the local firm an attractive partner for this multinational," he said. "It is EIL's intention to successfully manage this contract with GE and possibly expand on opportunities as the relationship further develops."
Kublalsingh said EIL's subsidiary in Florida was set up to allow EIL to compete on pricing and time to market advantages, two areas in which US suppliers of wire and cable had the competitive advantage.
"EIL has partnered with a company in Florida that is well positioned to service large electrical wholesalers and retailers in Florida. It has also allowed EIL's wires and cables to be supplied in a large electrical retail chain with over 350 outlets in the US. "The model minimises risks to EIL as EIL maintains inventory ownership, carries inventory insurance in the US and controls the range of customers and receivables in the US. EIL is currently expanding the range of products to include its Agos fluorescent fixture range and its Century Eslon pipes and fittings," Kublalsingh said. Speaking about EIL's entry into the Dominican Republic (DR) market, he said the company had to come up with its own model to survive and compete there.
"The DR model was developed as a market entry strategy to replace EIL's competitor with the second largest chain of electrical stores in the DR. It is recognised that as a large buyer, the customer needed to have competitive prices that matched fluctuating raw material prices (copper prices), readily available inventory, what they want when they want, and payment terms that were better than their existing supplier. "By supplying our customer with 'consignment' stock that would only be paid for when sold by the DR customer, EIL created competitive advantage at time when the global recession had put uncertainty in the mind of the DR customer." Kublalsingh gave additional advantages of this model, saying it has "established an awareness of EIL's brand" in the DR. "By having EIL's 'free' wires and cables in their warehouses, EIL removed the risk involved in the DR's customer shift to a new supplier. The model also leveraged EIL's advantage of having lower cost of financing from T&T as compared to DR customer's cost."
Acquisitions and investments
How and what did they do to develop growth?
Kublalsingh gave an account of the origin of the business and where it has reached. In 1982, Dave Ramkissoon started the business with a $10,000 investment. In 1987, his company Electrical Distributors Ltd (EDL) acquired the cable manufacturer Trinidad Cables Ltd (TCL) from the Ram Kirpalani Group of Companies. The Trinidad Electrical Manufacturing Corporation (TEMCO) was then formed as an amalgamation of EDL and TCL. In 1997 TEMCO Ltd acquired EIL from the Neal and Massy Group. In 2009 EIL acquired Agos Lighting, a fluorescent light fixture manufacturer from Agostini's Ltd. In 2011 EIL acquired Century Eslon Ltd, the PVC pipe, tank and packaging manufacturer. Realising that the local market was too small for the company, EIL took the risk to invest abroad.
"We developed a strategic plan for the three-year period 2009-2012, based on marketing, acquisitions and operational excellence was the strategic key for us. What type of companies were we running? We took our strategic plan and increase on revenue through marketing and through acquisitions, we drilled down on ways of getting these markets." "The second pillar has to do with investment over the years in significantly acute areas. We realised the local market could not sustain us in the medium- and long-term and that we had to take our products out there. How did we take the products into the international market? So over the last ten years, we spent $80 million. Those were times when people were holding back."
The $80 million in investment from 2000-2011 resulted in increased plant capacity, higher quality products, lower unit costs of production, newer product development and improved customer delivery.
He said that more than $5 million have been spent in helping EIL get accredited with international quality certifications like UL, British Approvals Service for Cables (Basec), KEMA, ISO 9000 and HSE Systems. Kublalsingh gave results of some acquisitions. Speaking about Agos Manufacturing and the acquisition in 2009, he said it resulted in fluorescent lighting fixtures that were added to the range of products. There was also an increased presence in the US market with EIL shipping 15 containers monthly. The acquisition of Century Eslon in 2011 resulted in added PVC pipes, new distribution channels in the Caribbean and added 15 per cent to the revenue base.
Kublalsingh attributed the company's success to how it utilises its human resources. One of its strategies for growth was to hire smart people and the best talent. "We looked at our governance model and, as a private sector company, we strategically went out and brought in on our board of directors people who were smarter than us and who had much more experience than us. We brought in directors who were able to add tremendous value to our organisation. "If we wanted to grow and get into international markets, if we wanted to take a local manufacturing plant and take it to the rest of the world, we have to take the best people and we strategically went about getting the best people who can take us forward. It is about how we build a competitive organisation."