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News Stories in 4th Quarter 2006 Edition of DDH Magazine

Cover Story:

GOING FOR THE DREDGE:

The Economy of sand in Nigeria’s rapid development…Ellicott Dredges weighs in.

Paul Quinn speaks the language of envoys. And indeed he is one, for a dredger manufacturer. As the d irector Director of sales Sales for US dredger manufacturers based , Ellicott Dredges, he appears constantly prepared to present the various machines his company puts on the market. He Quinn cites history for the reason Ellicott is where it is today with Nigerian dredging outfits, especially seeing that Nigeria’s present-day developmental pattern is similar to what the USA went through at the turn of the 20 th century. There is also the history that since the beginnings of the 1900s 1950’s, Ellicott has been selling dredgers to Nigerian and other African customers. Then there is the history of his affinity to the Nigerian people with whom he interacts nowadays much more frequently. He pours it all out in this exclusive interview with DDH.

Paul has worked in the dredging industry for more than 30 close to 25 years. His hands-on knowledge of the Nigerian market and environment has enabled have helped him overcome the global phobia and biases about coming to Nigeria and doing business with Nigerians. In fact, as pictures of his visits to customers in places like Bayelsa State show, this American has no qualms visiting the so-called Niger-Delta hotbed known to global CNN watchers for hostage taking. Where others see only environmental degradation and communal violence, he Quinn sees opportunities to put dredgers to work for road construction, land reclamation and other civil constructions. And he said the newfound closeness to Ellicott’s Nigerian clientele was boosted by one Nigerian dredge operator who visited their Maryland (USA) factory a few years ago…!

In this encounter, the widely travelled salesman Sales Manager explains by words and pictures the population of his company’s dredgers around the world and also deep inside the heartland of Nigeria, from Lagos through Warri, Port Harcourt and to Bayelsa, etc! He cites NDDC projects that are being executed with Ellicott dredgers of various sizes. But he also speaks of the very much abundant opportunities for more dredgers to enter the Nigerian field and how seeming obstacles to this scenario can be overcome.

This is an interesting, down-to-earth interview which says a lot about Ellicott’s game-plan in the dredger market today. It also explains a lot to the discerning reader and Nigerian dredge operators how to develop further vision about an obviously profitable and expanding sector of one of Africa’s fast-emerging economies. The This interview was conducted during his recent visit to Lagos Nigeria with his International Sales Manager, Walter Mather. Excerpts:

DDH: You were saying something about your acquaintance with the Niger Delta environment, and that is very important because so many people out there get to hear nothing else about the Niger Delta except its many problems. How were you able to overcome the rumour mill, so to say?

Paul: Well, a lot of it is just good advice and by working with people like Walter who has decades of experience in being African as he is this market. He’s : lived here in Africa; he’s traveled extensively throughout the Continent here, including Nigeria , and the Niger Delta , for decades. We also have a steady flow of Nigerian visitors to our Maryland offices , so much so that dealing with your countrymen has become almost second nature. So, by being associated with people like that with this constant contact, it gives you a more realistic picture and confidence to work here. a lot of more confidence. Also, you do exercise a lot of common sense. But how we started in Nigeria, our recent history in Nigeria is interesting. Of course, we have done business here in Nigeria probably further back than myself or anyone in the company can remember for quite some time, and Ellicott has . Our company has been exporting dredges to all sorts of places since the early 1900 ’s. from the US since 1885 or since the late 1880s…

DDH: To Nigeria?

Paul: No, I don’t know when or where our first export was but certainly it was about 1900s. Our company has been in existence since 1885. I don’t have all the company records at hand, but I know we did send a dredge here in 1959, and certainly many times after that . And certainly we have exported to Nigeria longer than myself or anyone in the company can remember now, though we made recent exports in the 1990s and 2000But at the time we did not look at Nigeria as a market. We did not look at Nigeria as a whole as something we should consider seriously. Starting about three , four years ago, just as I came with Ellicott, we were getting a lot of activities interest from Nigeria, and at the time I had not much experience in international business or international travel this region. And two interesting things happened about right about then. two First of all, we made the acquaintance of Sir Isaac Chuks of Fung Tai Engineering Co. He came to us in Maryland and impressed us as a man of very serious straightforward business intentions, with very good plans, very articulate and quite a serious businessman. Him He gave a face to Nigeria, and this caused us to reconsider all the contacts coming over the phone and i nternet; I said maybe some of these things we see over the internet , we thought, if there’s more people like him behind them, maybe this is something we can consider should investigate. After thatSo, being new to this area my manager guided me to make we made contact with Joseph Latunji in the commercial Commercial officer Office of the US Embassy here. He helped us make arrangements for an exploratory visit come here, and it was just a great start . to here. Joseph gave me good guidance and coaching, traveled with me and introduced us to potential cust o mers. He showed us that Nigeria is a good place to do business, and has good people that the stories that you hear about Nigeria and the Niger Delta .. there is nothing for you to be afraid of. like to work with Americans. So more than anything else, Joseph Latunji and the US Commercial Service Lagos Office gave us the initial confidence and guidance to succeed here. So we started being As we became more involved in Nigeria, we found out he was right and there were more people such as Sir Isaac Chuks, this is a good place to do business and it’s a good place to come to.

DDH: As a dredge manufacturing company, what is the vision of your company in the world dredger market?

Paul: We have a pretty clear vision and it has evolved over our 120 year-old existence O ur an d our mission is to be a leading designer and manufacturer of portable cutter suction dredgers. When you say dredgers, it encompasses a wide array of equipment. It includes hopper dredgers, very large custom-built cutter suction dredgers, it includes bucket dredgers. We want to select one part of that market and be a very good player in that segment, as opposed to having our staff spread out over too wide a product line.

DDH: But that does not preclude that you build very large dredgers?.

Paul: It does preclude that now. When you say very large dredgers, we are talking dredgers 10,000 horsepower and over. So they are not in our plan, and working on those would cause us to lose focus on they size and type dredgers that are needed here in Nigeria. At one point in the past, Ellicott was known for that… but the market has changed. And it’s hard to keep an engineering staff keenly interested in small and medium size dredges, when everybody wants to be associated with the biggest and the most prestigious projects. It’s hard to take those engineers who were designing record breaking cutter drives and pumping systems and then put them on a dredge where they are working with perhaps 750 total horsepower. It doesn’t work. And the same is probably true with the sales and service departments to some degree

DDH: Alright, you have talked about the side of the builder of the dredger, what about the market place, the international market place? Does it figure in this calculation?

Paul: It does figure in this calculation and in fact a good example is in the Gulf area of Middle East right now, where there is a tremendous building boom. There is a call for very large powerful dredges, to work on the capital dredging projects, projects in the hundreds of millions of dollars. That’s a good market right now. But those markets tend to come and go, with pretty big valleys in between the peaks. So we actually decided to focus more on a specific product range than to say we can do anything you want, because it’s very hard for a company to be effective all the way across the board.

DDH: In your own mind, can you name the ranges where you think that specialization is right now for Ellicott?

 Paul: Cutter Suction dredges from 10-inch up to 24-inch.

DDH: In what parts of the world are you represented and where is the highest concentration of Ellicott dredgers right now?

 Paul: We actually market anywhere in the world. We either have agents in certain countries or we market directly. So we are actually represented in all countries, either with an agent or our own staff such as Walter here in Nigeria. Actually here we have both forms of representation, in Port Harcourt we are assisted by Samaeliemma Equipment. Where do we have the highest concentration of dredgers? Well, I’ve not ever done a study on that, but of course in the US there would be high concentration of our dredgers. Nigeria is getting up there. And not just the new ones, but we have a couple of 1960’s vintage dredges here working day in and day out, something we’re pretty proud of. In Egypt, well, we’ve got quite a population of our dredgers there too. It’s spread all throughout the world, we do business on all continents…. I believe over the last year Ellicott and it’s sister companies have exported something like 20 dredgers to 15 countries.

DDH: What would you say are the advantages of using Ellicott dredges? What edge have you got over others?

 Paul: First of all, even before anyone purchases a dredge from us, we listen very carefully to the customer and make sure they will end up with the proper piece of equipment. We insist on talking to them and trying to determine, what type of dredging do they want to do? Where will you work? Who will staff the dredge? We listen very carefully, in understanding what a prospective customer is going to do with the dredge. It’s particularly important in Nigeria because you have many people now just getting into the market, and they know there’s good money to be made in dredging but aren’t so familiar with dredging operations. So the most important advantage is that as a company we listen and work with the customer to make sure they select the right dredge for their purpose. No matter what dredge they finally select, Ellicott dredges are known for being robust in design, very reliable, and easy to maintain them on the field. Those three things you find in any Ellicott machine. We don’t push a higher level of technology on anyone that is not prepared for it. A good example of this is, of course we sell dredges for stockpiling sand here in Nigeria and we sell dredges for stockpiling sand in the US. We recently received a contract from a very large UK-based firm with Sand Mining operations in the US. The dredge will have the same output as what is often asked for here in Nigeria, but it will be a totally different model. It will have absolute state-of-the-art electronic controls, with automated operations that can be adjusted on a touch screen. And even though it’s no more powerful or productive than what we furnish here, it’s a totally different dredge that matches the local conditions.

DDH: Now what is your company’s main interest in the Nigerian marketplace?

 Paul: Our interest in the Nigerian marketplace is being able to serve the entire spectrum of indigenous dredge operators. This would include anyone just entering the business to someone who already has some dredges and wants to add to their fleet. And we want to be known as somebody who can assist them with the proper selection and backed up by good service, which is very important to us. And as I just said, it’s important to us we help them in two key areas: The selection process and offering financing assistance. In fact, this is one of the reasons we have Walter on board; he has a very strong background in financing African purchases. Not only does he know the US programs like EXIM pretty well, he’s on a first-name basis with several of the bankers here.

DDH: You did speak of Nigeria’s ambassador to the USA, Dr George Obiozor, attending a function where Ellicott was presented with an award. In what regard did he attend that event?

Paul: Ambassador Obiozor came to an award ceremony where Ellicott was presented with an Export Achievement award by the US Department of Commerce. We received the award not just for exports to Nigeria but as you heard earlier we’ve exported in the past year to 15 different countries. To France, for example, also Yemen, Belize, Tahiti, the UAE, just about everywhere it seems. It was nice having the Ambassador there, he knows of us already and in fact has come up to Baltimore to christen dredgers before they get shipped off to Nigeria. So Ambassador Obiozor is a good friend of Ellicott and when he heard we were receiving and award, he decided to be there just to show us support and interest. Senator Ike Nwachukwu came as well.

DDH: And I guess he is there to represent Nigerian trade interest as well?

Paul: Oh absolutely. Nigeria is of vital interest to the United States. Having good trade relations between the two countries is really important. And I think Nigeria is much more of a good ally to the United States than what one normally hears in the news. So our export efforts here shows that even for small firms, Nigeria is a good place to do business, American products are well received..

DDH: How familiar are you with the dredge problems of Nigerian operators and does your company has plans to assist in the development of Nigerians’ skill acquisition in dredging?

Paul: We really try to immerse ourselves in this market. And you know, Nigerians are so easy to work with and open, that it’s easy to get a good understanding of the problems of indigenous operators. I am responsible for worldwide sales, United States and all over the world, but even so I come here maybe five times a year just to stay in tune with the local dredging industry. We have one man who spends most of his time working with Nigeria….Walter (Mather). Actually, he is a good example of how we recognize and react to problems. Early on we saw how hard it was for new indigenous companies to maneuver their way around the complexities of making an international purchase. So rather than just tell them, Financing is your problem, call us when it’s all wrapped up, we hired an expert in this area who could help them. That’s a big part of what we do. So, we feel we are very familiar with the problems here. We also see problems in that newcomers to the business often don’t know what is the best dredger to purchase right off, they may be asking for one too big, or too advanced. Or even cases where they’ve bought a dredge but need help in getting a Contract, there we try to use our contacts and local knowledge to help them out when we can. Labour is an issue for some…

One thing that does not seem to be problem here is the pricing. There are good prices for dredging here. That is a blessing. It seems that most of the problems are the ones that come up early on, in the purchase and startup of the dredger. But once they are in it, it can be a very good business to be in. And I think it will be for quite sometime; there’s so many construction projects going on here in Lagos and the Niger Delta, all of which need great amounts of sand. So, certainly some problems as anywhere, but just great opportunities as well.

DDH: Yes, and have you people thought about any ways you can make inputs into any solutions?

Paul: Yes, we are considering establishing a service base here first of all for service as the population of Ellicott dredgers grows. The other thing is having trained crew available. That is a problem for some. We recently entered into discussions with a party who is looking at opening a Nigerian dredge training institute. This would be a school specifically for the purpose of training crews to work on dredgers whether the operation of them or maintenance of them. And we would look into supporting that. So that’s a very new development and also very important.

DDH: So this is a relatively new area?

 Paul: Very new. We’ve just had a first meeting yesterday and very positive and intriguing, the idea of having that. And probably, it could receive good government support too because it’s a good training programme for youths of the Niger Delta, something that has a lot of benefits.

DDH: With that we will like to know your view of the dredging sector in Nigeria as to how lucrative, how harnessed it is right now in your opinion?

Paul: In my opinion, it is a good business right now in Nigeria but will continue to grow. I often ask myself, “is it going to be just another one or two good years here and then the market will be saturated, or will it continue to grow by leaps and bounds?” In talking with some of the more knowledgeable people here in Lagos, you have some very good construction projects such as the new causeway at the other end of Lekki, that will require a lot of sand filling… And as Lagos expands, it’s going to require first the new roads, then buildings will follow… all this construction requires sand-filling; then more sand to go into the building products itself; the demand for sand should go on for years to come. In the Niger Delta, as the NDDC starts spending money on more construction projects, there will also be large demand there, the geography of the area just dictates a lot of sand use. All of this is even before we get into channelization projects, or serving the oil producers. So, it’s a strong market now but there is, we think, much room for growth. …(It is also) an intriguing market because you have, of course, the legal need for much of this work to be done by indigenous contractors. But not only is it intriguing, we find that Nigerians are so entrepreneurial. Everyone, when they see an opportunity, they want to begin their own business. In many other cultures, people see an opportunity, they say, I want to go work for that company, I want to work for Microsoft, because Microsoft is growing. Here in Nigeria, it’s different. People see an opportunity and they say, well, I want to start my own company.

It’s very exciting and what is happening here reminds me very much of growth in the US at the turn of the (20 th) century. When the coastal cities in the US like Philadelphia, New York, Washington had fast growing populations, the cities had to expand into the marshes. Not much different than here, all of these areas were swampy, you could not build on them. They required a large amount of sand filling. So many of the structures we take for granted now, the airports, the expressways, they were all built on dredge-filled areas. What was driving it? Population growth, commercial growth…it’s very similar here. What is going on in the Niger Delta is similar to what was happening in Louisiana in the 1950s, as they developed the offshore oil industry. And the NDDC has very strong similarities to another US programme known as the TVA which was sort of a public/private federal agency that was designed to pump money into impoverished areas so they could start to pick up and grow on their own. And they needed the basics…roads, bridges… and there’s many similarities to that. There’s a great future and Nigerians are such great people to work with. They are so industrious, very entrepreneurial, and, as I found out at a critical time myself, they are all very personal and very good friends. And that means so much to me.

DDH: What final comments do you have for the Nigerian audience?

Paul: You see, we are not looking at this as a temporary opportunity. We have started designing dredgers specifically for Nigeria. We think our dredgers now are good for Nigeria and we select models to market here that are basic, very easy to work on, very strong. But that’s not enough. We are actually making drawings as we speak for dredgers that will allow Nigerians to dig deeper to get sand from greater depths but without being overly complex or expensive. And that may tie back to our earlier question, do we know the problems? You know there is a problem in that the sand from shallow depths is harder to find and they have to go deeper. But rather than offer a much complex, larger, heavier machine, we’ve come up with some new technology that will keep the machine simple. We have engineers working on the drawings as we speak. We are looking at starting a service base here. And in my department we devote more manpower to Nigeria than anywhere else. These are signs of commitment. We are here for the long run.

   
     

4th Quarter 2006

       
     
   
                 

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