Andrew Shaw’s year as of MD at Ducab has been one of growth and expansion.
Andrew Shaw has just completed his first year on the job as managing director for Ducab, a cable company. In that short time he has overseen significant growth.
By the end of the year the company, which finished last year with 62,000 tonnes of copper capacity, will have boosted this to 110,000 tonnes. Sales revenues are also expected to grow about 55%, from AED 2.4 billion to AED 3.8 billion. Shaw simply sees this as delivering on what he promised at the start.
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“From a customer point of view we’ve increased capacity and done what we said we would,” said Shaw.
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Growth drivers
This growth has been driven by improvements and expansion. Ducab bought a second facility in the Musaffah area of Abu Dhabi earlier in the year. It also opened its own copper rod facility, part of a backward integration strategy aimed at controlling material costs.
The copper rod factory allows the company to buy in efficiently shipped copper cathode (sheets) instead of coiled rod. Other examples of backward integration include the fact Ducab now makes its own PVC, creating a cost saving for its building wire products.
“We’ve gone as far we can with backward integration,” said Shaw. “Now we are trying to qualify more local raw materials and reduce costs that way; there’s an opportunity to start testing suppliers who are lower profile and more local. It’s now about efficiently using the plant we’ve got.”
Further facility expansion is on the cards too. One of Shaw’s top priorities for the coming year is to increase the company’s regional footprint. A manufacturing facility in another GCC or MENA country is high on the list, as is increasing Ducab’s territorial hold in the region. Roughly two-thirds of the company’s business is in the UAE. The remaining third goes to other GCC nations and India.
“We’ve publicly stated our intention to be a much more a regional supplier. We’re looking to invest in the GCC or MENA, to acquire a site or set up greenfield sites,” he said.
Added capacity has led to greater market penetration, especially in the contractor segment. Previously the company’s focus was on the big players, but increased capacity has provided the opportunity to reach new customers.
New lines have done well too, with the company seeing more interest in products related to fire survival and resistance. The Metro is using miles of Low Smoke and Fume cable and Ducab also launched an LPCB-approved fire resistant cable at the start of the year.
“We’re pleased with the Metro project,” said Shaw. “We got the timing right, otherwise it would have gone to imported cable.”
Financial times
Despite challenges in the market, massive infrastructure development in the GCC and surrounding countries make the cable business a healthy one to be in. Recent world financial worries have had little direct impact on the prospects for the business.
“The infrastructure development that lies behind the real estate sector continues to drive the business. We can see demand climbing and we’ve had big tenders from DEWA, ADWEA and Qatar.
“An indirect effect could be on commodity prices,” said Shaw. “Copper has hit highs this year, but it’s no longer going up, as much as going sideways.”
Shifts in raw material pricing have had an impact on costs. While the company doesn’t take any risks with the price of copper, passing it to the customer, the challenging materials have been things such as steel wire and galvanized steel tape. Ducab reports price increases of up to 50% in these materials, increases it has had to absorb for its long-term contracts.
“We’ve also had a 20-25% increase in anything oil related,” said Shaw.
“For our products on a price list we’ve had to put up prices by 10-12% because of raw materials (excluding copper). With copper you have to ride the tide as it goes up and as it goes down.”
The economic environment has drawn attention to areas where for cost saving. Shaw describes cables as a business that benefits from customer proximity, avoiding shipping costs for weighty products. A recent contract from EMAL proves the point. With the EMAL site a little under an hour up the road from Ducab’s Jebel Ali facility, proximity was a deciding factor.
Look ahead
The company has been on a busy campaign trail of promotion over the last year.
“We realised that perhaps we had rested on laurels of the Ducab name,” said Shaw. “But with so many new engineers coming into the industry, we’ve done a lot about getting our name out there again.
“We’re very strong in the UAE, and now need to roll out into the broader GCC.”
Growth brings internal change too. The company is now firmly medium-sized and will see out the year with over 1000 employees.
“We’ve got to be able to grow to the next stage,” said Shaw. “Regional expansion is definitely number one.”
“On balance, I’m reasonably pleased with the progress made, but there is still so much more to do. So much more opportunity.”
