Published 2nd Quarter 2007
With A 20” Shark Dredge Delivered To Ibile Holdings In Lagos, DSC Rouses Nigeria’s Dredge Industry… Flaunting Options!
The venue was the Nigerian Naval Dockyard along Ahmadu Bello Way in Victoria Island Lagos. In one of the graving docks in this massive facility, some local and foreign engineers are working around a mammoth-sized brand-new dredger that has just been delivered from the Apapa seaport in Lagos. Dateline: May, 2007. It took eight lorry loads of consignments bearing various parts of this gigantic dredge to have the assembly process commence. The flurry of activity by the technical workers assumed a frenetic pace as all the cranes and heavy lift machines required to put the massive parts in place were available. The DDH reporter moved closer to Charles Sinunu, the international sales director of DSC who arrived Lagos a few days back with his field engineer, Carl. He was inquisitive to glean from Mr Sinunu tidbits about the Shark Dredge that might interest dredge aficionados, etc. Mr Sinunu has worked for over 30 years selling dredgers made by other manufacturers before his current engagement with DSC. The following exchange ensued:
DDH: Talking about this new dredge you have just delivered, what are your engineers doing on it right now?
Sinunu : We have a local Nigerian team who are factory trained who can do most of the assembly work. For this project, we had our Nigerian team assemble all the steel components of the dredge prior to our arrival. Our mission is to hook up the hydraulic and electrical systems. It should only take us a few days. This saves our customer both time and money. All of our dredges are completely assembled and tested at our factory in Louisiana prior to shipping. We also test the dredge pump under full load. We then disassemble the dredge, complete final painting and transport it to the port for shipment.
DDH: Do you follow up?
Sinunu : We can provide dredge assembly at site using our Nigerian team or we can provide our field service engineer from Louisiana to supervise the customer’s crew or both. Our field service engineers from Louisiana travel worldwide to supervise assembly and to provide crew training in operations and maintenance of our dredges. They know every part and every system of DSC dredges. The field engineer who will be going overseas for the dredge assembly is the same one who is in charge of the dredge testing in Louisiana prior to shipping. Only when he is satisfied and has signed off is the dredge ready for shipment. If there is a problem, we want to find it in our yard rather than on the other side of the world. I typically will travel with our field engineer when they are going out on one of my projects.
DDH: What are the characteristics of a dredge like this?
Sinunu: We manufacture a complete range of dredges and the Shark Class dredge is available from a 10” dredge pump up to and including a 36” dredge pump. The dredge we just delivered to Nigeria is our 20” Shark Class dredge. This is a heavy-duty contractor’s dredge that can be used for many types of projects including channel sweeping, marine contracting, sand mining and sand filling projects. This unit can dig down to 45-feet below the surface and is outfitted with Caterpillar diesel engines. Our Shark Class dredges all feature hull mounted dredge pumps manufactured by Metso Minerals, the premier dredge pump manufacturer. Most of our dredges are custom designed to meet project requirements. We know that one dredge size or type does not meet all conditions. Let us know the digging depth you require, and we can make whatever modifications are needed to give you the exact unit you require. All of our dredges from the smallest 8” to the largest 36” are outfitted with our touch screen controls. There are many advantages in having these controls. They are quiet, do not produce heat and you do not have any hydraulic oil leaks. The 1960’s style controls we see on other manufacturers dredges being delivered to Nigeria are very noisy and produce heat as the hydraulic valves are under the dash. These old style vales also tend to leak and make a mess in the lever room. We have been using our touch screen controls for almost 15 years. In fact, for the last 5 years we have had these controls on a dredge in Madagascar operated by a crew who does not speak English and had never seen a dredge before. The controls we use are very user friendly and are self diagnostic.One very important distinction between DSC and other dredge manufacturers is that we are the only manufacturer to give you all the necessary spare part information so you can purchase parts from any source, not just the dredge manufacturer. Other manufacturers remove the original nameplate on the machinery components so you do not have the name of the original manufacturer, the serial number or specifications. They replace the original OEM tag with their own part number. This forces you to go back to the dredge manufacturer for all spare parts. When the dredge manufacturer has the monopoly on parts, prices go up and delivery times get longer. DSC has another philosophy for keeping a customer for life. We provide our customers with a superior dredge and after-sales service and provide them with all the opportunities to keep the dredge in operation, so they can continue to make money. You can purchase spare parts for DSC dredges anywhere in the world. In addition to leaving the OEM tags on the dredge components, we also take a digital photo and place this in your manual. We also keep a copy on file at our headquarters in Louisiana. If you need a spare part, you can always purchase it from DSC but most importantly, we give you the option to purchase it from the local distributor in Nigeria or any place else in the world you wish. We do not expect our overseas customers to purchase parts from us and pay for airfreight and have customs duties and delays when they can purchase it in the local market. When you have multiple sources of parts, you will have the lowest price. It is simple supply and demand economics. If a dredge lasts 25plus years with good maintenance, what is the savings if you can save 50% on spare parts by being able to purchase from multiple sources rather than one single source? I understand that others are only offering a 4-6 month warranty. DSC’ warranty is at least double of our competitors as our dredges feature a 12-month warranty from date of start-up at site.
DDH: Why is the time lag between order and delivery increasing amongst manufacturers?
Sinunu: Right now I believe everybody has the same problem. Caterpillar delivery times are getting longer and longer. Under normal conditions, we can have a dredge ready for shipment approximately 10 weeks after we receive the engine from Caterpillar. If Caterpillar deliveries are 7 months, then our delivery schedule will be ready to ship in 9 to 10 months.
DDH: What is the best advice for dredge buyers if you really want a dredge delivered urgently?
Sinunu: Place your order. We have been talking to people for years and they know if they have a dredge in country, they will find work for it. We have had several people offer to pay cash for the new dredge we just assembled.
DDH: But they may not have the money at that time?
Sinunu: Then they need to get together with people who do have the money and work out some arrangement. We can also assist credit worthy customers with financing using the US Exim Bank programs. With Exim, you need only a 15% down payment in cash and 85% of the purchase price can be financed including the freight. Once we have the 15% down payment, we can start building the dredge.
DDH: Can you confirm that 10 months is about the lead time for dredge deliveries now?
Sinunu: Ten months is what we are looking at today but it could change tomorrow. The delivery schedule depends on many factors including our engineering and manufacturing backlog and the Caterpillar delivery schedule. To give you an idea, 2 weeks ago we signed 5 new dredge contracts within a 3 day period including a new 18” dredge for Nigeria. Now if our Nigerian customer wants to place a second order today, the delivery will not be the same as the first unit. At this point, all we can do is give our best delivery estimates and we can confirm once we have the down payment and have entered the contract into our manufacturing schedule. We have been talking to people in Nigeria for years and most of them are very close to arranging financing. What happens if they all order at the same time?
DDH: Which are the product lines which you want to bring into Nigeria?
Sinunu: DSC has a full range of dredging equipment ranging from an 8” pump up to and including a 36” pump. We also manufacture booster pumps and we have an outstanding multipurpose workboat called the KenMar. The workboat is outfitted with pusher knees, fuel transfer capability, A-frame to move anchors and a telescoping hydraulic crane to handle pipeline and spare parts. Our Shark Class dredges have hull mounted dredge pumps and generally go down to around 15 meter digging depth. If a customer wants 20 meter digging depth, that is not a problem but they may wish to consider looking at our Marlin Class dredge which features our submersible dredge pump. Due to atmospheric pressure, a hull mounted dredge pump becomes less effective the deeper it goes. A dredge with a submersible dredge pump is much more effective and will pump greater material at deeper depths. At depths of 16-20 meters, a dredge with a submersible dredge pump is going to outperform a larger dredge with a hull pump any day of the week. We have an order now in the USA for a Marlin Class dredge that will dig sand from a depth of 60 meters, 200 feet below the surface. I believe that this is going to be close to the world record for a non self propelled cutter suction dredge. DSC has built more dredges with submersible dredge pumps in the 10” and larger size than all other dredge manufacturers in the world combined! Our Barracuda Class dredge is a swinging ladder dredge and is ideal for dredging in narrow canals and confined areas. It is also very useful for dredging pipeline trenches and sweeping projects in Nigeria. Our Amphibious Class dredge is part swinging ladder dredge and part Marsh Buggy. I believe this will have a good market potential in Nigeria as well. DSC has a very large engineering group so changes in dredge specifications are welcome. I would guess that 90% of our dredges are modified in some way to meet project conditions.
DDH: Does this mean that DSC does not run an assembly line kind of thing?
Sinunu: We don’t run an assembly line at all as all of our dredges are built to order. Whenever we have the opportunity, we will build a standard dredge for inventory. Dredges don’t stick around in inventory for long; most are sold before they are even completed. We currently have a US$ 30 million backlog and have record sales figures for the last several years. We are selling dredges as fast as we can build them.
DDH: How about spare parts; if every dredge is custom made, how do you supply your customer’s spare parts?
Sinunu: Our spare parts policy is a huge advantage for our customers. First of all, our spare parts sales and after sales service is second to none. Second, we are the only manufacturer, as far as I know, who provides customers with all the OEM spare part information.
DDH: What is OEM?
Sinunu: OEM stands for Original Equipment Manufacturer. Dredges are designed and built using equipment components provided by many different companies. For example in our case, the engine is from Caterpillar, the dredge pump from Metso, the hydraulic valves could be from Vickers etc. We give you all of the direct contact information and all of the technical information so you can go directly to Vickers to get a spare part. We do not replace the Vickers part with our own part number and force you to come to only us for spare parts. Caterpillar, Metso and Vickers just to name a few, have distributors and inventory all over the world including Nigeria. If you need a spare part, there is no reason in the world to force you to come back to me when you can purchase it locally. Why lose production time waiting for an air freight shipment and paying the freight, import duties and other costs. The downtime is the most costly. The DSC policy giving you all the information on spare parts saves you time and money. While we are very pleased when our customers come back to us for spare parts, we do not force them to do so.
DDH: It’s curious that you don’t want them automatically to come back to you. One would have thought you want them to come so you do a lot more business…
Sinunu: We have a lot of repeat business from our customers. I think one reason we get a lot of repeat business is that we treat our customers fairly and with respect. We give our customers all the tools to be successful. If they are successful, they will grow their business and hopefully, order additional dredges from us. In order to be successful, they have to keep their dredges in operation. When the time comes that they need spare parts, we give them the ability to purchase parts locally and get back into operation quickly and at minimum cost.
DDH: What is the marketing plan you have for your dredges in Nigeria?
Sinunu: Now that we have a showpiece with the new 20” Shark in Nigeria, the main focus is to get our name out into the market. There is another choice for dredges. The Dutch have been in Nigeria for a long time and so have other manufacturers. The majority of our sales come from customer referrals and word of mouth. It will not take long for customers in Nigeria to realize the advantages of purchasing a DSC dredge. We have a complete product line and we are not afraid of making custom changes, in fact, we encourage it. We are able to arrange financing through US Exim bank, we provide OEM spare part information, we have the longest warranty in the country and we have factory trained personal on the ground. Within the next 2 months we will have opened an office in Lagos and Port Harcourt. All of this combined with the low cost of the US Dollar makes DSC dredges a great investment.
DDH: Talking about finance, there is this seminar slated for May 3 which you are headed to, is that where you want to spread the word?
Sinunu: We are going to showcase our product line and we are going to have representatives from US Banks who will be there to explain the US Exim Bank programs. Mr. Joseph Latunji from the US Commercial Service will be there to offer his assistance to our potential customers.
DDH: Talking about finance again, there is your association with Mr. Ganiyu Dada of Kofa International. How does he match what you are doing?
Sinunu: Mr. Dada is our representative for Nigeria. He has been doing an excellent job as a financing consultant and arranging financing for several of our customers in Nigeria. He lives in Chicago but travels to Nigeria every few months. He has opened an office in Lagos and in Port Harcourt. Nigeria has become a very important market for DSC and we know that a presence on the ground is necessary. We are taking the steps with Kofa International to be a force in this very active market.
DDH: There is your new product you are highlighting now, the Amphibious Dredge. What about it?
Sinunu: Amphibious Marsh Buggies have been working in Nigeria for years. Most consist of a Caterpillar backhoe or excavator mounted to an amphibious undercarriage. This allows you to enter and work in a swamp or soft mud area without getting stuck. You can mount any manufacturer’s equipment on the amphibious undercarriage. Most in Nigeria are Caterpillar and now you can have DSC. A couple of years ago we were sitting around with some of the people from Wilco, the premier manufacturer of amphibious undercarriages. We thought it would be a great idea to mount one of our small swinging ladder dredges on top of their amphibious undercarriages so you would have an amphibious dredge. We had a requirement for this type of equipment in India for a very narrow canal project that was many kilometers long. Every 200 meters there was a foot bridge over the canal. The bridge was too low to go under and the customer did not want to keep a crane on site to transport the dredge around the bridge. The amphibious dredge solved this problem. It could dredge up to the bridge, then crawl out and go around the bridge and then crawl back into the canal.
DDH: It was cooperation between Wilco and DSC…
Sinunu: We are people of action. We started with an idea, and then sketched it out on a paper napkin and two weeks later our engineers met with their engineers, decided on the design and built it. We used the first unit on several different projects in order to completely test it and it did everything that we expected and more. It is a special piece of equipment that can handle projects and work in areas that no other equipment can work. I think this will have many applications in Nigeria. We thought it was the perfect piece of equipment to assist with the tsunami relief efforts in Indonesia as they couldn’t get trucks or equipment into the area due to the soft mud. This machine would have been a great asset to have on the ground during this disaster.
DDH: And the cost?
Sinunu: It’s in the range of US$ 650,000-700,000 ex-works our factory depending upon optional equipment.
DDH: How are you faring business-wise with your interaction with potential customers?
Sinunu: We have been asked to present proposals for seven different companies, some of them for multiple dredges ranging in size from a 12-inch to a 24-inch dredge. We are after quality customers, not quantity. All of these are serious buyers and they have been qualified by their banks and their banks have been approved by US Exim Bank for financing. We are confident that these will be approved and fast-tracked by US Exim bank. We recently had a new 18” Shark Class dredge for Japaul Oil and Maritime Services Plc. fast tracked by US Exim bank. We are currently building this new dredge and we hope to be building other new units shortly for other customers in Nigeria.
DDH: Are you saying that probably in one year to one-and-half-year’s time about four, five, sex DSC dredges would be coming to Nigeria?
Sinunu: Ten, eleven, twelve (General laughter). It’s been a great trip. Lots of hard work, many meetings and not enough sleep. Being the new guy in town, everybody wants to learn more about DSC. They are excited about what DSC brings to the market, a choice.