Kabelmetal Sets the Pace for In-Country Manufacture of Umbilical Component Parts

Kabelmetal Nigeria Plc has been admired for its cable making expertise for 40 Years now. It has established itself as the leader and pioneer in the Nigerian cable market because of her drive for excellence in quality of products and passion for innovation.

Founded by Kabelmetal, Hannover, Germany, the Company is now a subsidiary of Nexans S.A Paris, which is the worldwide expert in the cable industry. It is the largest manufacturer of power- and instrumentation cables in the West African sub region.

Benefiting from the parent company’s cable making expertise and from over 100 years local manufacturing experience, Kabelmetal provides the nerves and sinews of the Nigerian economy.

At the beginning of the 1980’s the development of cross linked polyethylene (XLPE) for low voltage insulated cables opened the door to new market segments including the oil and gas market. The introduction of airfield lighting cables and cables with enhanced fire performance features over the following years further strengthened our product range and expanded our customer base.

Kabelmetal Nigeria Plc was the first cable manufacturer in Nigeria, certified to ISO 9000 in the year 2000. The Company also boasts itself as a Nigerian Industrial Standards (NIS) Diamond Award winner. Our products conform to IEC standards, Nigerian Industrial Standards and other EU standards. The company recently acquired the certifications from Lloyd’s Register and Bureau Veritas to produce shipboard cables

Today, Kabelmetal Nigeria Plc is the most advanced cable manufacturer in the West Africa Sub Saharan region. As an innovator in cable products in Nigeria, Kabelmetal serve a wide range of industry groups, including oil and gas, manufacturing, process, business and residential construction and of course power utilities. Their product range covers low voltage power, instrumentation and control cables. Cables for power distribution and several special cables supplement our product portfolio.

When ORIENT ENERGY REVIEW’S team made a facility tour of their fabrication yard in Ikeja, Lagos, it was indeed beyond what they had written about themselves on their website. We met with the Kabelmetal Nigeria and Nexans Norway Teams, who are among the bidders for the Zabazaba deepwater project. Kabelmetal is a sister company with Nexans Norway, with a 29% ownership by Nexans S.A while Nexans Norway is owned 100%.

In this roundtable interview with Robert Kretschmer, Managing Director, Kabelmetal Nigeria Plc, Franck Guiet, Plant Manager, Kabelmetal Nigeria Plc, Sten Evjeberg Hansen, Country purchasing Manager, Nexans Norway, Winifred Patricia Johansen, Business Development Manager, Africa and sales Manager umblicals; Hybrid Underwater Cable and Guilaume Lardin, Tendering Director, Nexans Norway; we get a comprehensive view of the Nexans family and their knack for quality and excellence in project delivery; with a deliberate drive for local content which makes all the difference. Excerpts!

Obviously you are not an indigenous Nigerian firm yet you seem to be doing very well in Nigeria; how does nationality affect your operations?

We are aNigerian company, as we are incorporated in Nigeria as a Nigerian Plc. And have been here for over 50 years! Besides myself, there is only one other expatriate in this company – two expatriates which make 1 percent of our staff strength. That means 99 percent of our staff are Nigerians and this is another reason to see us as a Nigerian company.

In our line of business, it is of course beneficial to be affiliated to a foreign  company, which gives us access to the necessary know-how needed to produce the right quality in Nigeria. The oil and gas industry is very challenging in regards to quality. The expectations on our product are exactly the same compared to what you would expect to buy in any other country. We are proud of our achievements, and we do not compromise on quality in any aspect. What we produce can be fully recognized as world class standard.

In terms of local content, what would you like to see as an improvement in Nigeria, having spent 50 years in the country?

The Oil and Gas industry is the power house in Nigeria. Therefore, it is not surprising that the local content policy is in place for this industry. We would like to see similar legislation in other industries. This has been discussed, for a long time now but is not yet regulated by law.

I believe the local content regulation in the oil industry is a good thing because it forces our customers to look for inward sources. It increased the possibilities to engineer, fabricate, manufacture and buy in-country.

There are too many pre-set minds that believe you cannot source high quality goods from Nigeria. Following this, they end up going outside without even trying to source in country. We see it often when new customers of ours are surprised that they are getting high quality products in Nigeria. This is not just with regards to our cables,  but also other competitive products produced in Nigeria.  If it would be further assisted by the law in other industries, it would boost companies to develop.

How do you source your raw materials?

We source our raw materials both in-country and abroad, depending on availability and price. Unfortunately, I must say that the biggest part for our cable-making raw material is imported because the main components we use in our  cables are either not available in-country or not in the desired quality, thus the need to import the larger part from abroad. We have however seen some developments towards making more and more raw materials available in-country, though it is a gradual process.

 What are the ranges of products you manufacture?

We produce low voltage cables for the broad market which are so-called infrastructure cables, power cables which you normally spread from the low voltage side of the transformer. It is what you use to power industries and also ordinary residential houses. We also produce overhead lines for power transmission used in Nigeria, which are from aluminium.

As for cables to the oil and gas industry, we produce so-called conventional cables, with enhanced properties that go beyond the standard. These cables may have special features like fire resistance and other properties like oil and hydrocarbon resistance. This makes these products tailor-made to each customer’s specification.

 What role would you be playing in the Zabazaba project?

Our intention is to be a major supplier of low voltage umbilical component cables to Nexans Norway, our affiliate company, who together with their local partner, FODE, are bidding for the supply of subsea umbilicals. This is a new business segment we hope to see developing.

There is another product group not completely related to the umbilicals but for offshore use as well – so called shipboard cables. These cables are very specific in design and we can produce some range of this scope – e.g. for the Zabazaba FPSO.

 Tell us about Egina and a few other projects you have participated in.

During the construction project of 6 new vessels in Korea by SHI & HHI for Bonny Gas Transport Limited (NLNG) project, we were able to develop our local content capabilities further. It was the first time that we could participate an industry development project under the NCDMB’s supervision. The Umbilicals were recognized by NCDMB to have a low-voltage cable scope which should be manufactured in-country. However, due to the time schedule and technology gap, it was not possible to manufacture these cables at that time. Nevertheless, we used the opportunity to identify the technology and equipment gaps needed to be closed in order to bridge the gap for the future. We finally ran trial productions and tests.

We are looking forward to the execution of the first major project for this sophisticated product and to establish a continuous manufacturing process.

Another project was cables for NLNG´s FPSOs. The local content model proposed that some special cables had to be manufactured in-country and shipped to Korea for assembly on the vessels. This was a historic export of specialized (shipboard) cables from Nigeria to Korea – and an important milestone for us.

Should you be engaged for production of the umbilical cables and shipboard cables, what are some multiplier effects you think would accrue to the country across the entire value chains?

When we execute the first project and it turns out to be successful, there are high expectations to win further contracts in order to maintain continuous use of the equipment acquired. We need this for the return of capital employed and permanent employment generation. We see also other benefits from the umbilical projects, such as electrical jumpers.

 Can you mention the kind of projects you have executed in Nigeria so far?

When we look at oil and gas, we have executed several projects to oil and gas majors, such as Total and Shell. The latest one which we just delivered was an onshore associated gas solution project for Shell. Before that, it was the OML 58 with Saipem as EPC contractor. We have been highly successful in the country Put in monetary terms; it is about six million dollars over the last two years alone. So, the cable part alone is already quite substantial in these projects.

 Do you export some of your products?        

We are ready to export and deliver whenever there is a business opportunity. As an example, we had the already mentioned shipboard cables for the NLNG project which were exported to Korea.  Exports to African neighbouring countries have so far been challenging in terms of logistics and export processes. Usually, it is unfortunately easier for African countries to buy products in Europe, US or elsewhere instead of buying it from a neighbouring country. It is a pity that even within ECOWAS there is not much traffic between the neighbouring countries.

 What kind of training programmes do you have for your Nigerian engineers?

There is training on the job, and we take it very, very serious. We have been established for many years now, and have a very low rate of staff turnover because we only replace our staff that goes on retirement. Our workers and engineers must be competent to operate our equipment and everybody´s qualification is assessed as he or she is entering the company. Everyone has a job description and job qualification matrix on which basis we select training on the job to close out the gaps…

Do you have provision for engineering students and fresh graduates to gain internship?

We have provision for engineering students to do their internship with us. When we have needs to employ engineers, we start with those from internship because they may have proven their ability to learn and their motivation on the job already. If we need further professional experience, we use our network to source people who are already on a similar job. We have a huge database to pre-select people and do not need publishing on newspapers or so.

 I am interested in your strategy to replace ageing workforce with young professionals. Is there a plan in place where you are able to transfer such knowledge and put young professionals in managerial roles? 

It is our company’s policy to always look inwards first to see if we have somebody who can fill up a vacant position. We are also a unionised company because of our old industrial presence where we partner with our worker´s representatives for the progress of the company.

 For some of your past projects, like Egina project, were there specific knowledge transfers you engaged your engineers for?

For this kind of project, because it is beyond the normal scope of cables we usually do, we leverage on the experience our partners to provide necessary knowledge and training on site.

Future training on umbilical cables will be two-fold, firstly, part of the trainings abroad in our partner company’s facilities, secondly, we do training on the job here with the supervision from overseas trainers on site to train our staff until we are sure that the process is 100 percent under control before we move on to regular production.

 Give or take, how many engineers do you think will be needed to carry out the Zabazaba project?

We estimated that it will require about 40 additional people for the project to be executed. It is a mix of both experienced staff from the factory, which we believe are competent to do the job, and some new staff to fill up the gaps as we acquire some additional equipment. This gives us a 50/50 approach of experienced staff and new ones to work together. On every machine and every equipment, we must have adequate staff to man it 24/7 because we shall be running about three shifts daily on these processes.

  How law-abiding is Kabelmetal? What is your relationship with the government; how much of government’s patronage do you enjoy as a company?

Of course, we are a law-abiding firm. We are a Plc company and by nature, abide by the highest level of compliance in the country. Nigeria has stringent laws and we abide by them. Unfortunately it is sometimes a disadvantage to be 100 percent compliant to the rules if you see others who cut corners. But in the long term, it always pays off to do the things right. We also observe Nexans internal rules for business ethics and code of conduct it they are more stringent than national regulations.

As for government support, there has not been as much support as we wish. On a critical note, Nigeria is known for multiple taxation and regulations. A lot of government’s organizations and parastatals put their efforts on a limited number of companies. If your company is more famous than others, you get more attention which it is not making our lives any easier. However, we are compliant anyway and it´s not a real challenge in the end.

 In certification and standards is there any difference between yourself and your competitors?

For many years, we have been certified per ISO 9001. Last year, we made a transition to the latest edition which is the 2015 edition. What makes us different is that we are certified by Bureau Veritas while most other companies in the country are certified by Standard Organization of Nigeria (SON). We did this due to specific requests from IOC´s or their nominated EPC´s. I believe this is another prove that we maintain a very high standard.

 Just a hint on your LTI figure?

We had two Loss Time Injuries in 2017. LTI is a key performance index for us and we take HSE very seriously. .

What is the relationship between Kabelmetal and Nexans Norway?

Founded more than 100 years ago, Nexans Norway AS is a leading supplier of power, telecommunications, installations and heating cables in Norway, and is among the world’s leading manufacturers of offshore control cables and high-voltage submarine cables. The name ‘Kabelmetal’ in Nigeria is used because it is having a connection to Kabelmetal Germany which became part of Nexans itself. We do not use the name Nexans in Nigeria because Nexans holds a minority stake only. As such we are not allowed to use the name ‘Nexans’ in our name. But of course, from an industrial point of view, we are a complete subsidiary of Nexans in terms of know-how and technology.. Therefore, we call ourselves a Nexans-affiliate company while still bearing our name ‘Kabelmetal’. In this context, we have an uninterrupted relationship with each other.

  Answers from the representatives of Nexans Norway:

 What is your assessment of the team and what possible collaborations are we expecting to see in the nearest future?

 Sten: So far it looks very promising. I think they have already explained what they need to deliver to be able to become the supplier to the next project we are competing for in Zabazaba and Bonga.. The quality focus they have presented follows the regulations. I am confident that we will have a valuable co-operation with Kabelmetal and Nexans Norway.

 From your inspection of the yards, do you think there are any way standards or quality might be compromised?

 Sten: From what I have seen so far, I am quite confident that we will find good support for our projects in Nigeria. There is of course, a reason why Nigeria is running a local content programme and that is because you want to make sure that the companies and organisations enter more international level and to gain the experience that international players must bring into the oil and gas market. So, what we see is that there are different materials in different companies but nothing that particularly is of concern to us. We will definitely be able to find solutions for the deliverables that we want to do in Nigeria.

 After this, what is the next thing you are likely looking forward to in terms of technology transfer and in-country manufacturing?

 Sten: If you are referring to Kabelmetal; that is no one answer. It is not so obvious if Nexans Norway knows where it will be. They have the right equipment and facilities; they are an affiliate of Nexans. So, it is great to see more shipboard cable. On the oil and gas activities, I think the first thing is to qualify and get running with the umbilical low voltage cables before we start to focus on the next step. I think it is important we get the quads in the coming project, to deliver them in Nigeria. There is a lot of uncertainty, as we all know, the time frame is difficult to predict and we need to be a bit patient, I think.

 How does local content play out in Nexans Norway?

 Winifred: I think we need to emphasize something about local content. Local content is not CSR. It must be good business for it to succeed. It is a discussion we often have when we are with the authorities with NCDMB. Solutions proposed should be with business cases and it should not be such that if a project is not in Nigeria, Nigerian industry cannot compete. The dream scenario for successful local content should be for the custodians to ensure that the industry is competitive internationally. At least, if not internationally, they should start within the ECOWAS region on the African continent and then take it further internationally. But if local content is a whip that is entirely pushed through, the cost levels not competitive, it will not be successful in the end.

 Sten: International trade agreement is not very uncommon. Within governments, this has been on for centuries; if you must buy something from abroad, then you’ll have to sell something similar to them. So, these kinds of conditions relate to purchase and sales between countries and have existed for a very long time. It is very well known within government and industries like the military activities and all other kind of industries like that.

Now, when it comes to local content in Nigeria, it is an expensive solution as of today. So, it is difficult for us as a supplier to companies in Nigeria to find cost-efficient and logistically simple solutions. This is something we must accept as part of doing business abroad, which means you come back to the same topic. The local content has a goal: to train, to raise competence, expand the economics and knowledge of the country you are working in, making it a form of technology transfer help to the country.

 What is your advice to the Nigerian government in terms of making local content more economically viable?

 Winifred: I think the challenge is not only with the government, but it is also with the local suppliers or the local vendors of services and deliverables. They should be more geared to look beyond Nigeria as a market; to look at how they can compete on the global scene because that is where the sustainability of the industry is. There will not always be a project such as Egina in Nigeria but something could be in Ghana, in Senegal or in Mauritania and those are actually younger industries; I think my idea is to challenge, “don’t look at government protection; look at where you are.” Again, it is not charity, it not CSR, it is a business.

 Given what local vendors do in the name of local content here in Nigeria, do you think we are ready for local content as a continent and how does it make business sense to a company like Nexans?

 Winifred: If you want short term, it may not always make sense but if you want long term, you have to start from somewhere. There is a custodianship. You ought to start climbing the tree from the bottom and growth is always painful. For growth, we start from the birth. But once you are up and running and you can strive to make your industry competitive, you are in a far better position economically because again you have the international market to play in. If your country is in recession, not everybody is in recession; if there are no projects here, there are projects elsewhere and that is what you need to look into.

Now, if you are looking at local content on an African scale, there are so many countries coming up with their own regulations and most of them are looking at Nigeria to be the flag bearer on where to go and what to do. But I think each country needs to look at where they are starting, what the merits are, what the institutions, what the infrastructure, what capabilities they have and start from there, instead of taking a blind copy of what Nigeria has done, and wanting to do the same’.