ONE STOP SOLUTION …
THE CONCEPT MR AKIN FAYOSE IS USING TO BIRTH A MULTIBILLION-NAIRA HAULAGE, DREDGING AND CONSTRUCTION EMPIRE.
Where do you suppose the big civil construction companies in Lagos are getting all their sand from? If you ask Mr Ayo Fayose, the chief executive officer of Oceansands Marine Services Ltd, the answer ought to be scientific in view of the peculiarities involved. Simply put, the sand come off his haulage trucks. In practice though, its delivery has to be timed to a highly programmed regimen. This service is about the first of its type now in Nigeria by a specialized stand-alone company. For example, one of his clients requires about 20,000 cubic metres of sand at its construction camp in Lagos city centre delivered daily at night. The contract is so specific. This takes eighty truck movements shoveling sand from a dump-site about 25 kilometres away from 10pm to 6 am every daily. The logistics are some of the exciting part of this contract apart from the lucrative sums involved. To know more, we got closer to Mr Fayose for an exclusive interview.
In this no-holds-barred revealing interview covering many varied topics of Oceansands Marine Services business and other allied companies floated by Mr Fayose to birth the empire, there is the impression of a brilliant business plan that has forecast developments along the Lekki corridor and other parts of Lagos and the Niger Delta for the better part of the next 25 years! Once he started, he just formed companies and even now is in high gear on that trail. This will see a seaport developed within the Gulf of Guinea waters, on a freshly dredged location at the fast developing Olokonla Free Trade Zone commissioned by ex-President Obasanjo last April. In the coming months also, another of Mr Fayose's companies will kickstart granite production on a quarry site, most likely around Abeokuta near Lagos. The demand for granite in Nigeria at the moment far outstrips supply, and will likely remain so for the foreseeable future. The granite will be trucked by Oceansands haulage trucks using the one-stop solution concept. And to fully galvanize the concept of sand-fill to construction site, Mr Fayose's company is aiming at procuring about 100 trucks in the next few months, up from a fleet of less than 10 presently. In addition, Oceansands Marine has reached an advanced stage of planning on opening a very large dump site at Lamgbasa, off the Lekki-Epe expressway and close to the Epe Free Trade Zone. A plan is underway to construct a ten kilometre dual carriage way leading from the expressway to the dump site which Mr Fayose sees as a contribution towards developing the host community where they are making so huge an investment.
But dredging is at the base of it all…. Fayose worked for multinational firm, John Holt, at various top management positions in Lagos and Port Harcourt. He came away with invaluable experience and deep knowledge of the Nigerian transportation, logistics and marine business as well as the social environment of the Niger Delta business situation, and this partly accounts for his continuing smooth operations where others fear to tread. He called his first owned company Equipment and Offshore. Find out how he has been operating in the Niger Delta since the past 10 years without hitches or collateral damage from the surrounding skirmishes of communal agitations. We started off by asking his opinion of the direction of real estate development along the Lekki corridor and its environs. Excerpts:
DDH: Current real estate development pattern around Nigeria and Lagos…?
Fayose: Housing is a volume thing. Looking at the way housing has been attacked abroad, they just build estates and skyscrapers, volumes, so that at any point in time, people have availability. If you want to be giving individuals housing loan, how many are they going to give? It wont be enough and that is what is about to happen on the Lekki corridor, even towards Ibadan, you see a lot of estates coming up. And because there is a new concept in pensions, in mortgage, there are free funds…
Fayose goes on to explain that to cater to this building boom, his company is looking towards expanding the product offering by his company to include not just sand but also blocks, paving stones, granite, etc, prompting our question on how their service package will look like in the new dispensation…?
Fayose: (Our outlook will be)..what's your sand requirement, what's your granite requirement, what's your blocks and interlocking (stones) requirement?
DDH: That is taking the one-stop solution which you fashioned for your dredging arm forward. How did you come to this approach?
Fayose: We were working for a company and the trucks will go to Ibadan and spend three days because (a foreign company, names withheld) is the only efficient quarry in the whole of the south west. And you have 300, 400 trucks queuing everyday to buy granite, already paid for. I said, ah, what are these people doing that we cannot do? Is it not to get the machinery, get the right people and, of course, lay hands on the right money. And demand is more than supply. I said what kind of business is that when your consumers are now doing everything possible to (get the product). That's the kind of business one should be doing. So, I did a small independent private research, traveled to East Europe to look at availability of the machines. So, right now, it's to locate sites, so some teams of people I commissioned them to go and look at various sites and come back with four. And from four, I can choose. I am bringing my partners in over the next few weeks to look at the sites because we are not just looking at the machinery now, we are also saying look at the sites and determine your site plan.
DDH: Your partners are Russians?
Fayose: Yes. They will come in and manage it. It's not like they will sell to me and leave me blank. I have insisted that they will also give me technicians and operators and spare parts for one year.
DDH: This is a huge development that will take Oceansands Marine company to another level entirely…
Fayose: I actually have another company called Richard Wells. So I plan to use that one (for the quarry).
DDH: On the issue of haulage, how many customers have patronized your one-stop solution, that is, when you dredge sand you bring to their site? What is the demand like?
Fayose: As a matter of fact, right now the likes of PW, Lagoon Homes, Cityscape, Hitech, that's what they are looking for. And you know they don't even have very large sites to accommodate very large quantities or volumes of sand. They want a contractor that can deliver the volume they require on a daily basis so that they don't overstretch their sites. Their site is directly opposite Lekki Phase 1 Gate. So, if they want 20,000 cubic metres of sand everyday, okay give us 20,000 cubic metres everyday.
DDH: So that leaves you with the task of getting a dump site, filling it with sand and getting ready…?
Fayose: Yes, on a daily basis to just transfer to them. In the night, which is even better. Because imagine that you are pumping in Ajah and you have to deliver sand to Victoria Island, how many trucks can you do in a day with the current traffic situation? So we then said, okay we will propose and deliver from 10 pm in the night, 6 am in the morning, we stop. Eight hours. That way you conserve fuel and become more efficient.
DDH: How many truck loads does it take you to deliver that?
Fayose: Well, we are looking at 80 trips of 30-ton trucks. We believe that in every one hour we should do 10 trips. And a truck will deliver within 45 minutes, so that's like 30 trucks every one-hour.
DDH: This is a little bit more scientific…?
Fayose: Yes, (we) take it to the next level. If not, you will lose it. And you must have a dump for diesel. You must never run out of diesel. You must have two shifts for your drivers and auxiliary people.
DDH: And how many trucks do you have now?
Fayose: We have five, and have ordered for ten more; delivery in October.
DDH: This seems a huge business; are you coping well or being overrun like that granite company? (General laughter).
Fayose: Like I said, there are three ways to business. You have the technical, the logistics and the marketing, and maybe personnel, that's like human resources. The financial can always take care of itself once you are able to control those three areas. In personnel basically, 95% of the people will do better if they feel that they are well paid. Not what you pay them but inside them if they are satisfied that they are well paid.
DDH: How did you come to this realization?
Fayose: You know I worked in John Holt for 10 years. I was sales manager, fleet manager, branch manager, area manager. So at some point when I became area manager of Port Harcourt in 1996, I had to deal with 140 boatmen. That's crazy. One boatman can make you insane not to talk of the 140.
DDH: What were they doing for John Holt?
Fayose: Shell (SPDC) gave us 35 boats to manage for them, so we had to employ 140 boatmen, four per boat. Apart from about 35 staff that we had in the office, we now had 140 new hands all of a sudden.
DDH: And you were managing all these?
Fayose: Oh! So, I started studying human behavioural patterns. Some people come your office and by the time they leave, they give you another impression of the world.
DDH: But when it comes to determining the incentives for these your truck how do you arrive
Fayose: Well, we tell you that we realize your efforts on every trip you make, the hurdles on the way, etc. Therefore, we are giving you N5,000.00 on every trip you make. Once you to the quarry and come back, N5,000.00 up front. On their own they want to make two trips a day and make N10,000.00; apart from their salary at the end of the month. Our company says you and I know that in five checkpoints between Lagos and the quarry, even you that is driving a private car, by the time you go every day for one week, everybody on all of those checkpoints would have become your friend. So, you can't be paying the same thing, they will even say go; it's human relations. So, that N5,000.00 they are actually getting it for themselves.
DDH: You do this because you want results without questions?
Fayose: Exactly, we want to be efficient. The first thing we want to achieve with all these companies (clients) is that we want to be seen as the preferred company, to be seen as efficient. Because it will get to a level, when we have 40, 50 trucks, we will say oh, we know that for others you pay N70,000.00 per truck but for us you pay N80,000.00 because we will deliver. It's about service and when the service is efficient, it means that you are meeting your targets or sometimes you are overshooting them. And then time is money and so you are reducing cost indirectly.
A $500m Marine Logistics Project …
There's something I am involved in right now with an American firm. You might not know that I am also M.D. and chairman of a company called Equip and Offshore in Port Harcourt. We own vessels, crew supply vessels for offshore, we own houseboats. What that means is that we are supporting the production and drilling part of the oil business. And I will give you a scenario where if you have … this your rig (drawing on a plain paper), somewhere on water. This rig will have 108 people working in it on a daily basis. You have all sorts of equipment that must support drilling operation. You have storage for AGO (diesel), water, potable water, drinking water, all sorts of things. And then you have a port and a jetty. So this vessel supporting this drilling operation, on a weekly basis will probably have to come here twice, either to offload or to take new supplies. This supplies may range from drilling mud to cement to water to diesel. Then of course, the vessel has 16 tanks under the deck for all these materials. But this vessel comes to the port. It has to load all these 1, 2, 3…10 items. That, if not properly handled, takes between two to three days; sometimes 24 hours, sometimes 48 hours, just to load. Then she embarks on the trip, maybe another one day. That gives you about three days. So I am engaged in something that will enable you to reduce the turn-around time from 96 hours to maybe like 24 hours. Which means that what we are trying to do is, we are constructing a brand new seaport that will allow about 20 loading bays. The vessel comes in, you already have overhead cranes, pumps, tanks, everything. So, you can load the vessel all at once and then go. This is a $500m project.
DDH: How are you financing that?
Fayose: They are doing all the financing, I am providing land and everything called local content, and that gives me enough equity.
DDH: And Oceansands dredging arm is there also to be patronized?
Fayose: Yes, and we are talking of dredging…. Of course, we have to deepen the draught of this whole place (pointing to the rough sketch of the new seaport scenario on the paper). We are looking at 5 million cubic metres worth of dredging to be done.
DDH: Is this in Port Harcourt?
Fayose: No, are doing it in Free Trade Zone, Olokonla.
DDH: That is nearer Lagos?
Fayose: That is what we are trying to do…deep water, the deep water locations around Ondo; some are even closer to Lagos than to Onne. Onne is the major port serving the oil industry, the only oil port we have in Nigeria. We are creating something that will be faster than Onne. It will be bigger than Onne, more efficient; most likely it will be closer to the deep water rigs than Onne.
DDH: So Onne may eventually be just for pipes, etc?
Fayose: We will do stacking areas too. We have applied for 5km x 5km land space. So, what I am saying in essence is, if we can do this on water, why can't we do it on land? It's all about logistics.
DDH: I was going to say this is in tandem with your one-stop solution…?
Fayose: Exactly. You know this construction thing brought us to this. I wanted to let you know that I have also been involved in logistics on water for over ten years.
DDH: So, logistics on land is actually easier?
Fayose: For everything I do on water, I get paid minimum times 50. I tell you, if you have a land location like Lekki and you want to take 200 tons of sand or granite from Lekki to Surulere, you get 6 to 8 trucks, pay them N60,000.00, they will deliver it. That's N500,000.00. But for water, you must get a barge, get a tug boat, and then you deliver onto the barge and the tug tows it to the location. So, even to load the barge will take one day, that means one day's rental is gone. And then when you get to the location, you must put logistics in place that will remove this sand from the barge again to the site. Which means you need another barge with a pay-loader on top to move to that place to await the arrival of this barge carrying the sand. So, on a daily basis, plus AGO, you are talking of N500,000.00. And if that barge arrives, you keep paying the rental until they remove the entire stuff and then comes back. It is the day that it comes back that you stop paying rental. So, you are already on N2.5m to N3m just to move 200 tons of sand. Logistics on water is something else. We have vessels that they pay us $10,000 to $11,000 per day.
DDH: Is that offshore supply vessels?
Fayose: Yes (pointing to the picture of one of them on his laptop). All my vessels are painted yellow because it's all about branding. It's a 166 feet long.
DDH: And you said you have two of that?
DDH: Incidentally this also ties in to the one-stop solution concept of your company. In dredging proper to serve this option, that means that you must have a dump where the sand is stockpiled, etc? And the dump site must be full of sand?
Fayose: At all times.
DDH: How do you arrange that? Of course you have a dredger?
Fayose: Yes. But we have also realized that based on the volume of estates and projects coming up between Lekki Phase 1 and Epe over the next 10 years, what a proper company needs to do is to position itself in such a way that you locate where you have very large volumes of sand, locate a very big dump site, and just pump sand and leave it there. They will come, you don't even to look for anybody to come and buy. Just make sure that you provide the logistics which is basically two big dredgers, trucks, pay-loaders, bull dozers, all the associated dry equipment and get ready. The business will automatically come to you. This road (indicating Lekki-Epe expressway) is going to be expanded, Fourth Mainland Bridge, FCMB (First City Monument Bank) have given the guys full go-ahead, 100% funding, N56 billion. They were with the ( Lagos State) Governor yesterday, they have signed a memorandum of understanding. I mean, it's just sand, sand, sand, sand…….they want to create this other coastal road that runs from Victoria Island to Epe. A refinery is coming up. Free Trade Zone is coming up. Even Central Bank of Nigeria has said that Lekki has been nominated as the financial hub of West Africa which means that a lot of banks are moving into Lekki. They all have to reclaim (land).
DDH: Now you are talking about owning two big dredgers. Where are you now, you have one?
Fayose: One small dredger.
DDH: You are planning to get another one?
Fayose: Yes, it's just about volume, capacity, what you can deliver. Everyday you are doing so-so cubic metres of sand.
DDH: Your dump site must it be by the waterside?
Fayose: Yes, because you don't want to haul twice.
DDH: Are you going to use your site at Chevron Drive?
Fayose: No, I am moving down to Lamgbasa towards Epe on the left side of the expressway.
DDH: But that road is so sandy, how are you going to go about it?
Fayose: That's what we are talking about, capacity. You start off, you do one million cubic metres (of sand), that will give you N1 billion. Two big dredgers will give you one million cubic metres of sand in one month. That's a billion Naira. So why can't you plough back some of this profit to tar that road.? Put N200 million Naira there, you are getting sand almost free of charge, you are getting granite almost free of charge. Do a road, let people know that you are serious. (General laughter). Not just ordinary road, a double carriageway. The multiplier effect will automatically come. Even the Lagos State Government will say this is a very good corporate citizen. Because if you are doing a road of N200m to N250m with your own money, then the Governor will automatically be the one to commission that kind of road. So you leverage your relationship, and he says 'okay for anything Lagos State Government is doing, buy from this people'. 'All Lagos State contractors, buy from this people'.
DDH: So you are going to take delivery of more trucks?
Fayose: Eventually we are looking at a 100 to 150 to 200 trucks over the next one year.
DDH: Now, on your staff strength, your truck drivers are they fully employed?
Fayose: Yes, fully employed. But very soon I believe that we will get to a level that we will create a subsidiary to take care of trucking, haulage, only. So we can concentrate on our core business and get other people to manage that part of the business. Which is what the likes of (Aliko) Dangote have also done. You have Dangote Transport exclusively to lease all those other trucks to all the other subsidiaries, so they pay. They run that business, make profit.
DDH: We know that you were with John Holt, how did you make the transition from there to self-run business enterprise?
Fayose: I started off at John Holt as a trainee manager for six months and then I became sales manager, motors (leasing). Then I became fleet manager, motors (leasing). And that time in Lagos I was as fleet manager, we had 480 vehicles. We had 28 drivers. And you have to monitor all these 480 vehicles, each of these vehicles had a potential owner, which means you get calls every minute…'eh em, I have a problem, can I send my car now to (J.) Allen? When do I get it back? 4 pm tomorrow.' You have to follow that up to make sure that you deliver; it's all about management. After two years as fleet manager, motors (leasing), I was then transferred to Warri as sales manager, marine (leasing). So, I got into the marine business. I was there for three years and was moved to Port Harcourt as branch manager, marine (leasing); and area manager, marine (leasing). Then I left in 1999 October to set up Equip and Offshore.
DDH: So Equip and Offshore was your first enterprise after employed life?
DDH: How did the idea of Oceansands Marine come up?
Fayose: We started working for a company, we provided them an accommodation barge popularly known as house boat in 2001. Shell (SPDC) was paying us N200,000.00 per day. We felt, oh, this is too much money…N6 million Naira a month? This is too much money. And then this company came and said they wanted a houseboat, they were prepared to pay N250,000.00. I said what are you doing, they said dredging. I said what is dredging? By December 2001, we had registered Oceansands Marine Services Ltd. That was how I set up Oceansands, I did not do any dredging until 2006. there was another company were working for, Transocean Sedco, a drilling company, number two worldwide and they were paying us (much) dollars. What are you doing, they said they own rigs. So, I set up Richard Wells, to drill. Like every other business, they said this one is highly risky. I later found out that it is better start with 10 rigs or minimum of five than to start with one because on one, you must have operational staff, minimum of 50 ground staff in the office and 100 people on that rig. So, you can't break even. And then you have the unions to deal with, so you cannot just pay any kind of money. So, I said just wait, this is not the way to go just yet. And then in 2002, we started doing offshore business. All these barges, houseboats are basically for the creeks, swamps and all that. Shell said we should provide them two vessels offshore. Then we went around, looked for companies that owned vessels, took them, and gave to Shell. Then when Shell paid us I said this is too much money. So, I said we must strategise and look for how to own our own vessels. So, in 2003, we bought three vessels at a go. And then when we were buying them in America, somebody told me that these vessels had just come out of maintenance. Basically, they just came out of a shipyard. So, I said I would like to see what a shipyard looks like. So we went there, I looked at it: it's really no big deal. So I asked how much they were willing to sell one, they told me. I said okay that's another business with a lot of money. A shipyard is like a mechanic yard. You can take your ship to a shipyard and all you do is to pay rental to the owner of the shipyard. You can come in with everything you need to maintain your vessel, it's not his business. If you choose to give him (the maintenance), fine; if you choose to just use his shipyard, he is still making money. So, we came about a dry-dock, $2m they told me. I was almost buying one. But I said let me go back home, set up a company. So I set up Marine Utility Company to take care of shipyards, dry-docks. And this will be part of the larger picture of the $500m project, it comes with a shipyard, all the works.
DDH: So this is the concept of the one-stop solution moving on?
Fayose: It's still going … Then I said sometime (in the future) we may become very large. All these companies will need properties. So I set up Propcorp, Property Corporation of Nigeria for my property division. We are still dreaming. I have decided to use Richard Wells which is basically about mineral resources, getting them out of where they are for the granite business.
DDH: But the quarry business will still require haulage?
Fayose: Yes, haulage. Of course, we own a company that leases vehicles to oil companies in Port Harcourt. It's called Vehicle Serve. Eventually the entire haulage business will come under Vehicle Serve to take care of the transport needs of all the other companies.
DDH: What time are you thinking the quarry will come on stream?
Fayose: It's a function of availability of funds. I believe that my own equity should be ready by October and then we can start off January next year.
DDH: Will your sand dump site be the same dump for your granite?
Fayose: Definitely, it makes a lot of sense. But we already have off-takers. I have spoken to two companies and in terms of naira and kobo for the next one year, if I start today, I have people already that are willing to buy granite up to N1 billion. Therefore I might not even need a dump site; I might need to just buy those trucks and move them to their sites directly for the first year. I have letter of intent from Stabilini Visinoni, N400m worth of granite for the next one year. And I spoke with Hitech and I am expecting their letter for N600m worth of granite over one year. Hitech is the one promoting the move of the Bar Beach, six kilometres in, two kilometres by the side. That's another island on its own. It's going to take them four years to reclaim, four years of non-stop dredging, to even reclaim; and then imagine the granite need. By the time you put sand, you must then put a whole lot of granite to solidify. So, the business is just booming and 75% of that (reclaimed) land sold already. Chinese investors have bought over the land for five-star hotels, all sorts.