Cable company sets sights for a new regional horizon

SINCE COMMENCING operations in 1979, Ducab has grown into one of the region’s leading cable companies. The company is now set to make another step forward with the set up of a new plant facility in Abu Dhabi. Construction Week speaks to Colin Paskins, managing director, Ducab, about the company’s plans.

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By  Colin Foreman Published  September 18, 2004

Cable company sets sights for a new regional horizon|~||~||~|When did Ducab begin operations?

Ducab started as a joint venture between the then leading British cable company, BICC, and the Dubai government in the mid 1970s. The agreements were signed towards the end of 1977 and a plot of land was identified in Jebel Ali.
The construction of the factory took place during 1978 and 1979 and was opened by Sheikh Rashid on the 24 November 1979. At that stage the factory only made low voltage power cables and building wires.

What was the factory’s capacity when it opened?

We had a capability to process as little as 5000 t of copper a year. But in 1992 there was a major investment to double the size of the business. The investment was generated from our own resources and some bank borrowings. We have never gone to the shareholders for more share capital during the entire history of the business.

In 1997 there was a decision to change the corporate structure of the company and bring in Abu Dhabi as a partner. This made the company the first formal partnership in the industrial arena between the two Emirates.

The original shareholding was 40% BICC and 60% Dubai government with BICC having management responsibility for the business. In 1997 this changed so it became 35% Dubai government, 35% Abu Dhabi government and 30% BICC. Abu Dhabi bought shares from both Dubai and BICC.

Following that agreement Ducab began to focus strongly on developing business with the public authorities in Abu Dhabi, in particular ADWEA.

At around the same time the board approved a move to start producing medium voltage cable, which became a major new addition to the company’s range of products.

Who are the major users of medium voltage cable?

It is mostly sold to power authorities, although some major contractors working on behalf of power authorities buy significant quantities. You will find our medium voltage cable being used at the moment on the airport expansion project and Mall of the Emirates, and we have just signed a big contract to supply medium voltage products to a new DEWA power station. It’s a Dhs 52 million contract and it is perhaps the biggest contract Ducab has had from a contractor.

Did the introduction of medium voltage cables increase the factory’s capacity?

By that stage, the factory was more or less as it is now, so lets say the capacity was about 35 000 t. There have been a few bits of plant introduced since then and have pushed up the capacity to maybe 40 000 t. A lot of that depends on the product mix.

Is the shareholding still the same?

In 1999 BICC of the UK decided to leave the cable industry altogether, as did a number of other cable companies in Europe. Everyone was running at rather low capacity and imports were flowing in from Eastern Europe and other markets, so a number of big companies decided that they no longer wanted to be in the power cable industry anymore.

Siemens of Germany, Philips of Holland, BICC and General Electric Company of the UK, Alcatel of France all decided to leave the business. BICC sold a lot of its energy cable interests to the General Cable Corporation of America who then kept the North American parts of the business and resold the rest to Pirelli, who is best known to most of us a tyre company, but also has very big interests in energy cables.

However, the shares remained with BICC who renamed the company Balfour Beatty and concentrated only on its construction-related businesss activities.

In 2001 the Dubai and Abu Dhabi governments bought out BICC’s shares making Ducab a 100% locally owned business, 50% owned by Abu Dhabi and 50% Dubai.

Has BICC’s withdrawal from the industry been good for Ducab?
It has meant that we no longer have a technical and management partner. The advantage is that we can now take technology from wherever we want and we are not constrained by a big international group. We can now expand to and sell wherever we want and overall I think this is a great strength.
We did build up our technical team just before BICC left the business by appointing Jonathan Vale as our general manager, technical. He has well over 20 years technical experience in the cable industry and was previously the group engineering director of BICC in the UK.

Does the company have any more expansion plans?

We have announced that we are building a factory in Abu Dhabi, which will be officially opened on the 24th November this year. This date was carefully chosen, as it is the same date that the original foundation stone was laid for the Jebel Ali factory 25 years ago. We do have ideas for further growth, which will be announced when they are fully developed.

Why was the decision made to set up a factory in Abu Dhabi?

There are several key reasons. First, we felt that we needed to be closer to our customers in Abu Dhabi; second, we wanted to reflect and respect that we are half owned by Abu Dhabi, and third we felt that we should consolidate our position in the market.

Another reason is that we do have aspirations to become a group and a facility in Abu Dhabi is the first step to learning how to manage a remote site. There may come a time when we have other factories in other locations, in which case we need to manage the business in a different way.
We were also getting fairly large on this site. There 450 people working in our Jebel Ali factory and that is beginning to get to the stage where if we are not too careful we will become too internally bureaucratic.

Do you think the region can sustain another factory?

This region is growing. We see massive construction projects in Dubai. Sheikh Mohammed has been quoted in the press as saying that we have still only seen 10% of his ideas, and all of them will need power stations, cabling, and distribution networks. Even the buildings themselves need small building wires.

It is not just Dubai though, Abu Dhabi has got its projects, Sheikh Hamed bin Zayed in particular is trying driving forward industrialisation in the emirate and there are huge things going in Mussaffah.

Qatar is a giant awakening as the North Gas Field begins to be exploited properly, and Bahrain doesn’t want to be left behind so they have built the formula one racetrack, which we supplied all of the cabling for, and are now involved with the building of Bahrain Financial Harbour (BFH), which is another huge project. Oman is also a vastly growing market with many new developments taking place there and in 2002 we supplied a big port development at Raysut in the south of the country.

How much capacity will the Abu Dhabi Factory add?
It will add at least another 25 000 t and will manufacture all our low voltage power cables.

Where does this leave the Dubai factory?

The Dubai factory will produce medium voltage cable and later high voltage cable. The next product step for us is up to 132kv cable, and we have already made a test length that was independently tested by the public testing laboratory at KEMA in Holland. I am pleased to say our cable passed the test with flying colours.

We have also had a system tested which includes accessories provided by a partner in the Far East and we have an acceptance report for that too, so we are now ready to get a test length of our cable into a real circuit and we hope to be in commercial production of this time next year.

Why is testing so important?

This product is much more sensitive as far as the power authorities are concerned. It is much nearer to the power station, and if there is a system failure involving 132 kV cable then half the town may be without power.
It is for this reason that the power companies are keen to work with a company with a proven track record that knows what it is doing and is experienced.

Will any other product lines be expanded?

When we have 25 000 t coming out of Abu Dhabi together with 40 000 t out of Dubai we will be doing 65 000 t per year. This might justify investing in an up stream process. At the moment we start our manufacturing process by buying something known in the trade as copper rod.
These are big coils of copper normally weighing 5 t each. We then draw this raw material down into wire. The copper rods are made from refined copper cathodes that are thrown into a furnace, melted and cast as 8 mm gauge rod. At a certain tonnage, and 65 000 t is enough, it is appropriate for us to start thinking of making rod ourselves. We are currently evaluating this at the moment.

We are also considering expanding our range of cables into a range of more specialist types.||**||

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