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Metal component manufacturing is a unique area of manufacturing — Jude Okpala

By on May 11, 2015

M r. Jude Okpala is the Managing Director/Chief Executive Officer of Lagos-based Cliché Limited, a metal component manufacturing company engaged in precision engineering, metal stamping and finishing. He has a first degree in Civil Engineering from West Virginia University, USA and a second degree in Management and Business Administration from the University of Lagos.

In this chat with Financial Vanguard, Okpala speaks on his business which he describes as unique, the challenges and hopes the business model has come to stay in Nigeria as it will help develop the economy. Excerpts:

According to Okpala, metal component manufacturing is a unique area of manufacturing that is supportive to bigger organisations “in the sense that we produce components out of metals used by other manufacturers as inputs. We are designed to take up any sort of component that comes out of flat sheets, design it, make prototype, send it to the customer and once it is approved, we mass produce. The business is modelled after what obtains in South-East Asia.”

South-East Asia model: “Manufacturing today, is mostly about assembly. You design a product, tear it apart, out-source the production of the components to different companies, then you gather those components and reassemble them. This takes place in every aspect of the production cycle. The trend in the western world is that when you do such designs, you out-source the components to South-East Asian companies.
That is why you see manufacturers of vehicles, aircraft, computers and household products, out-sourcing the production of components to smaller organisations in China, Taiwan, Indonesia, Malaysia etc., and when they produce the prototype, they give it to the organisation and when it is approved, they sign a long-term agreement for material supply for final production.

That is why if you open a computer made in the US, you will see that the components are made in different countries.
That is the trend in manufacturing now. So Cliché Limited is modelled after such, where we can set up a metal component manufacturing company in Nigeria and get bigger organisations to do the same with us – out-source part of their metal-based production to us and we can design and produce for them and have a long-term supply agreement.
“We are at the early stage where we are developing the business and trying to see how that model can catch up in Nigeria. Our products are quite extensive depending on what the customer brings. It is what he brings that we are going to design and produce,” he stated.

Scope of operation: “We cut across almost all the sectors of the economy – household products, packaging, just name it. It is a matter of discovering what and what we can do in a given industry. So our marketing strategy is to look for our type of activity in every productive line. For example, we go to Mr. A who manufactures mosquito coil and say ‘ok, there is this metal you use in your production, let us go and do a sample and send to you.’

If he approves it and signs a delivery order with us, we produce and supply to him and he uses it to finish his product. We do the same with other companies. We can make metal components used to secure currency by the CBN, Nigerian Security Printing and Minting Company and companies that do note sorting. We make seals used to secure ammunition; metal seal used to secure graded produce, uniform accessories like buttons, ranks etc., for the armed forces, small containers used for canned foods, accessories used in producing electrical appliances and so many others.
Once we produce the prototype and send to them and they approve it, then we have an agreement with them to start producing and supplying them. Unfortunately, in Nigeria, we have not developed the habit of having a structured inventory management where you can sign a long-term agreement with suppliers. Everything is short-term so we are hoping that someday, that model will completely catch up with Nigeria where we can sign a two, three-year supply arrangement with bigger organisations.

Abroad, big organisations outsourcing components manufacturing to smaller organisations in Asia, actually invest in building up the smaller companies in order to ensure that the supply chain is not broken,” he said.
Our workflow:

“Enquiries come in form of either samples or designs and sometimes concepts. When we receive enquiries, we first go through the computer and do the electronic design, we then simulate the mould of that design and transfer that design to some other machines that produce the different components of the mould and when those machines produce the different components, we put them together and simulate them and if they suit what we need them for, we do metal treatment where we harden the mould components after which we assemble the parts.

We now have a complete metal contraption called mould. We then put the mould into hydraulic press or mechanical press, feed metal coils through that mould and then the press will punch out the shapes needed,” he explained.

Raw materials: He said they source their raw materials both locally and internationally. “The major component of our activities is metal sheets and metal coils. We do not have rolling mills in Nigeria to produce metal coils, especially steel coils. So we import them. There are other inputs that we get locally. For example, we can source for the metal blocks locally to make moulds. We actually scavenge to use discarded materials to be able to produce our moulds. Other inputs, especially the consumables used in the tools shop such as quenching oil and drill beads, we get locally.”
Challenges: On the challenges, Okpala mentioned power as number one, saying: “The size of Cliché is such that any little increase in cost of production tells a lot on our bottom line. Power is the major channel through which our profit margin is eroded. Second is funding. It is difficult to secure long-term funding for SMEs here so a business like this is hugely funded through savings by the owners.
It gets to a point where savings can no longer drive growth so you keep looking for external funding which never comes because it is difficult to get long-term funding.

Acceptability and policy somersault is another challenge. An organisation like ours is expected to have some sort of protection through government policies; that is how it is done in South-East Asia and that is how small businesses grow. They are given long-term protection in form of policies that ensure they are not exposed to unnecessary external competition.

Our economy is more like a dumping ground for foreign producers so it is difficult for us to compete with similar products that come from abroad because of high cost of production. Then also this idea that nothing produced in Nigeria can be better than what comes from abroad. That is what I mean by acceptability. It is taking us time to make our people realise that we can produce better quality products than what comes from abroad if we are given the conducive environment.

So when you go to government establishments or individuals or even bigger organizations to offer your services, they will ask if yours will be better and cheaper than what they are getting from China? That is where the problem starts.”

M r. Jude Okpala is the Managing Director/Chief Executive Officer of Lagos-based Cliché Limited, a metal component manufacturing company engaged in precision engineering, metal stamping and finishing. He has a first degree in Civil Engineering from West Virginia University, USA and a second degree in Management and Business Administration from the University of Lagos.

In this chat with Financial Vanguard, Okpala speaks on his business which he describes as unique, the challenges and hopes the business model has come to stay in Nigeria as it will help develop the economy. Excerpts:

According to Okpala, metal component manufacturing is a unique area of manufacturing that is supportive to bigger organisations “in the sense that we produce components out of metals used by other manufacturers as inputs. We are designed to take up any sort of component that comes out of flat sheets, design it, make prototype, send it to the customer and once it is approved, we mass produce. The business is modelled after what obtains in South-East Asia.”

South-East Asia model: “Manufacturing today, is mostly about assembly. You design a product, tear it apart, out-source the production of the components to different companies, then you gather those components and reassemble them. This takes place in every aspect of the production cycle. The trend in the western world is that when you do such designs, you out-source the components to South-East Asian companies.
That is why you see manufacturers of vehicles, aircraft, computers and household products, out-sourcing the production of components to smaller organisations in China, Taiwan, Indonesia, Malaysia etc., and when they produce the prototype, they give it to the organisation and when it is approved, they sign a long-term agreement for material supply for final production.

That is why if you open a computer made in the US, you will see that the components are made in different countries.
That is the trend in manufacturing now. So Cliché Limited is modelled after such, where we can set up a metal component manufacturing company in Nigeria and get bigger organisations to do the same with us – out-source part of their metal-based production to us and we can design and produce for them and have a long-term supply agreement.
“We are at the early stage where we are developing the business and trying to see how that model can catch up in Nigeria. Our products are quite extensive depending on what the customer brings. It is what he brings that we are going to design and produce,” he stated.

Scope of operation: “We cut across almost all the sectors of the economy – household products, packaging, just name it. It is a matter of discovering what and what we can do in a given industry. So our marketing strategy is to look for our type of activity in every productive line. For example, we go to Mr. A who manufactures mosquito coil and say ‘ok, there is this metal you use in your production, let us go and do a sample and send to you.’

If he approves it and signs a delivery order with us, we produce and supply to him and he uses it to finish his product. We do the same with other companies. We can make metal components used to secure currency by the CBN, Nigerian Security Printing and Minting Company and companies that do note sorting. We make seals used to secure ammunition; metal seal used to secure graded produce, uniform accessories like buttons, ranks etc., for the armed forces, small containers used for canned foods, accessories used in producing electrical appliances and so many others.
Once we produce the prototype and send to them and they approve it, then we have an agreement with them to start producing and supplying them. Unfortunately, in Nigeria, we have not developed the habit of having a structured inventory management where you can sign a long-term agreement with suppliers. Everything is short-term so we are hoping that someday, that model will completely catch up with Nigeria where we can sign a two, three-year supply arrangement with bigger organisations.

Abroad, big organisations outsourcing components manufacturing to smaller organisations in Asia, actually invest in building up the smaller companies in order to ensure that the supply chain is not broken,” he said.
Our workflow:

“Enquiries come in form of either samples or designs and sometimes concepts. When we receive enquiries, we first go through the computer and do the electronic design, we then simulate the mould of that design and transfer that design to some other machines that produce the different components of the mould and when those machines produce the different components, we put them together and simulate them and if they suit what we need them for, we do metal treatment where we harden the mould components after which we assemble the parts.

We now have a complete metal contraption called mould. We then put the mould into hydraulic press or mechanical press, feed metal coils through that mould and then the press will punch out the shapes needed,” he explained.

Raw materials: He said they source their raw materials both locally and internationally. “The major component of our activities is metal sheets and metal coils. We do not have rolling mills in Nigeria to produce metal coils, especially steel coils. So we import them. There are other inputs that we get locally. For example, we can source for the metal blocks locally to make moulds. We actually scavenge to use discarded materials to be able to produce our moulds. Other inputs, especially the consumables used in the tools shop such as quenching oil and drill beads, we get locally.”
Challenges: On the challenges, Okpala mentioned power as number one, saying: “The size of Cliché is such that any little increase in cost of production tells a lot on our bottom line. Power is the major channel through which our profit margin is eroded. Second is funding. It is difficult to secure long-term funding for SMEs here so a business like this is hugely funded through savings by the owners.
It gets to a point where savings can no longer drive growth so you keep looking for external funding which never comes because it is difficult to get long-term funding.

Acceptability and policy somersault is another challenge. An organisation like ours is expected to have some sort of protection through government policies; that is how it is done in South-East Asia and that is how small businesses grow. They are given long-term protection in form of policies that ensure they are not exposed to unnecessary external competition.

Our economy is more like a dumping ground for foreign producers so it is difficult for us to compete with similar products that come from abroad because of high cost of production. Then also this idea that nothing produced in Nigeria can be better than what comes from abroad. That is what I mean by acceptability. It is taking us time to make our people realise that we can produce better quality products than what comes from abroad if we are given the conducive environment.

So when you go to government establishments or individuals or even bigger organizations to offer your services, they will ask if yours will be better and cheaper than what they are getting from China? That is where the problem starts.”

 

[Vanguard]