Jude Abalaka, MD, Tranos
If Jude Abalaka had reasoned like a typical Nigerian graduate, he would have taken a route that could keep him off the unemployment pool. As a first-class graduate, that route would lead to the academics, and that means enrolling for his Master’s upon completion of his bachelor degree programme. But he chose to follow the hard path as soon as he completed his engineering programme. The graduate of Federal University of Technology, Minna, partnered with his friend to establish an “unpopular” company that had to compete with the big names in the market. And they survived. In this interview, the MD of Tranos tells The Nigerian Xpress, the story of how he started from scratch and built a business that is thriving in the competitive Nigerian environment.
How did your way lead to Tranos?
There is always that time and chance to build a name and a company. After I left the Federal University of Technology Minna, graduating as the best student, all thought I was going to acquire my Master’s degree. but I stayed to start the company with my friend because I saw that there was a lot of potentials. I decided to be an entrepreneur because it gives the ability to create that regular job can’t give you. So, after NYSC, I started a company with a friend of mine in 2002 called Nadabo Energy. I was there as a director until 2009 before I moved on. What I was doing at Nadabo Energy was more of oil and gas engineering projects. Then we did a project with Total. We were the only Nigerian company that was on the project and we delivered it on time and below budget. Those projects are still running on Floating Production and Storage Unit.
So I moved on to establish Tranos. When we started, our customers were people I knew personally, family. They were four or five customers. Because I had already had a lot of experience in oil and gas, I brought it into work. I put diversity into it. Then the business boomed. As we diversified, the space we had in Victoria Island became smaller and we had to move to a larger space in Ilupeju. Presently, we are in Ogba which is the largest of all the spaces. We have moved from oil and gas into other things; because the other small companies that we were ignoring were giving us income as well and we embraced them for many reasons. The oil and gas business comes once in a while, and the procedure is quite tedious, but these other ones take less time.
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How would you describe what you do?
We are a solution-focus company. We have a customer who we have produced hybrid generating sets for. We did that because there was a clear problem that requires us to produce that. We do contract manufacturing. We have all it takes to say we are a generator company, but that will be narrowing our capability. We started with engineering and automation but now we have combined that with a world-class manufacturing standard. If someone comes now that he wants a thousand server rack, we would build it for the person, the same thing is for some that want a distribution panel. We have the same capability that can help in both cases. We don’t want to see ourselves as a generator company; we are more than that. We have unique capabilities that can do various projects.
Your company is over a decade old. What do you think contributed to your success?
Training. I have been on this journey for about 18 years. I trained as a physicist and I’ve attended a lot of training institutions, notably Lagos Business School and at Cambridge Georgia, the business school for engineering in Cambridge. We focus on training and it applies to everybody, me and everybody else. In the last 16 years, I have been through many trainings, not just the training in a classroom environment but experiences as well. I mentioned that we started servicing oil and gas companies. We’ve done quite an extensive work in oil and gas. We did some work for Shell, through one of our customers, we built for them an automated generator. We’ve done work for a containment system that is about 15 tonnes used for pipeline repairs.
How do you cope with challenges?
I don’t see challenges, I see opportunities. For example, the shortage in power supply is an avenue for us to build more generators. In the Telecom industry as well, we’ve done a lot. We had this customer who we were doing some other things for and we noticed that they kept on having issues with their power system, so we took it upon ourselves to do some experimentation, to understand their problems and find a solution. That was in 2015. We finally finalized on the solution and we deployed them in 2016. Eventually, we have not less than 2,000 of their sites running on the hybrid power systems we developed. The system is automated. That means they have sites that have generators connected with solar systems, so they don’t need to run the generator all the time when there is solar power it uses solar and turns off the generator.
How do you source your raw materials?
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 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 localize everything else.
So, are you pushing to become a 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 high quality. Our target is to be able to compete with companies in Europe. At the moment, we are competing with products from Turkey. We 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.
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Nigerians have a mindset that products from Nigeria are not as good as those from Europe. How do you hope to change that?
First, we benchmark ourselves with brands from the EU or the US. We are 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 labour and the elimination of some importation. However, when a company still needs to import raw materials, equipment and spares, some of those will certainly affect the 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 branding.
Generally, what are some of the challenges that the local companies face and what are the remedies?
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.
In what way can the government intervene to help the manufacturing sector?
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 headaches is with the supply chain. We have a situation where we have to order materials for three months or six months ahead because of clearing delays.
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