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Interview

with Louwrens Erasmus`, General Manager, Rand-Air

04.04.2012 / Energyboardroom

Today, Rand-Air is part of Sweden-based global player Atlas Copco. What has been the historical role of the parent company within the Rand-Air story?
Atlas Copco is a player that is already present in the international markets. Rand-Air is a very small proportion of the global Group, representing the rental business within the Compressor Technique Division. The specific focus is on oil-free or specialized rental. Atlas Copco has centers in Scotland, Europe and in Houston that are highly focused on refining and offshore operations. From there, a lot of knowledge and information has come our way.
In South Africa, there is only one offshore space really active at the moment, which exists of the government-owned PetroSA operations in Mosselbay. When it comes to refining, Sasol, Shell, BP, Engen and Chevron are the key players with refineries in the country.
For the last 20 or 30 years, Rand-Air has been a supplier to Sasol, both in Secunda and in Sasolburg. We have dealt with them significantly and have acquired significant operational knowledge from them. We have also been involved with Chevron in Cape Town, as well as Engen and Sapref in Durban in the past. This is a market we have been supplying extensively. From an offshore perspective however, exposure has been very limited because demand was so little. Moreover, this is specialized equipment that is specifically made for the industry, i.e. Rig Safe units built purposely to withstand the different risks that can be found in such environments.
In recent years, we have also taken the responsibility for rental in Angola and have also been looking at Nigeria. Unless you have the right equipment in place and on the continent, the industry will continuously hire from the UK or a European port. On the continent, no such equipment is available to the industry locally. This may change in a timespan of about 5 years, when we would have a specific local footprint with specialized equipment.

What do you see as the key challenge to do so?
The sourcing of equipment is a challenge. We are trying to change the awareness and define the demands from our customers, which change all the time. More than Rig Safe standards, the industry is already talking about Zone 2 equipment which will also bring additional investments.

When Rand-Air joined the Atlas Copco Group, it kept its own brand name which it still has today. Was it not easier to leverage the globally well known Atlas Copco name throughout Africa instead?
From a rental perspective, Rand-Air has been in existence since 1972, which now gives us a track record of 40 years in the industry. We have had an established name with high values and a strong customer focus within the industry. From this point of view, we have historically been regarded as “the rental company.”
In addition to that, we do not only serve specialized industries like oil & gas, but a range of sectors. We service the whole spectrum of the economy, including sectors such as mining, construction and so forth.
We mainly hire compressors, generators to a lesser extent, and auxiliary equipment. This is very specialized and has been our focus for 40 years now. Atlas Copco, however, is an established player and market leader in South Africa for the sale of equipment.

While you can obviously acquire knowledge from being part of such bigger Group, in turn, do you feel that the Group can also learn from Rand-Air?
We have best practice in place and have open discussions on a national basis, which creates a knowledge base that can be tapped into from all over the world. We always look at continuous improvement. Whatever we do, we will pick up best practice in the UK or the USA for example, which is a reciprocal process. The fact that –as a Group- you work in different environments, cultures and economies brings an alternate point of view when it comes to local implementation.

On the ground, minimizing downtime can be an essential part of the work you do. This is particularly the case when it comes to companies such as DCD Marine –with whom Rand-Air has a long-standing relationship- that aim to have the vessels and rigs out of the docks as soon as possible. What role do you see for Rand-Air to minimize such downtime and optimize productivity?
First of all, one can not only focus on one proportion of a complete line of business, but rather take a holistic view instead. Our focus starts with buying the best equipment available. We continuously improve and renew our fleet to bring it in line with the latest technologies as well as the latest customers’ requirements. Once the right equipment is in place, you need to ensure that it is being maintained continuously. We do quality checks on 33 points every time a machine comes off-hire. Moreover, if a hire exceeds 21 days, we will make sure we see the compressor within that timeframe for ongoing quality checks. If it is a difficult site where pollution is for example even more hazardous, we will ensure quality checks on a more regular basis. Generally speaking, proper maintenance leads to better reliability. Lastly, you also require people that are available and responsive 24/7. This focus is what makes Rand-Air different.

When you mention the importance of continuous fleet renewal, what can you tell our readers about your current renewal plans?
We continuously invest in oil-free compressors which are more environmental-friendly. We have seen their demand increasing in a variety of sectors. With the differences in engines, ranging from tier 1 to 4, we also continuously renew the fleet to decrease fuel consumption. These are all benefits that are passed on to the customer. The reality is that the rental cost is normally the smallest proportion of the cost. In theory, the energy cost to run the equipment is much higher.

Going green is a general trend in the industry. Have you felt this in the demand for oil-free compressors?
We have been ISO certified for the last 8 years on ISO 9000, 14000 and 18000. We maintain these standards and have taken cognizance of the demand to take the environment more into account. We also do clean-ups of any spills that might occur and every service person will have a spill kit at hand to address any issues. For bigger issues, we will call in a third party. Furthermore, we continuously look at enhancing the safety aspect of the equipment.

For longer rentals, you have a so-called “Industrial Plant Rental Program.” Can you elaborate why a customer should choose for this option?
For specific demand over a longer period of time, we will supply a compressor where we take all the responsibility for all the maintenance. In case of a breakdown, we will also replace the equipment in order for the customer to continue production and have peace of mind.

From a business perspective, are the long term or short term contracts more beneficial?
The strategy goes both ways and both markets are different. We concentrate on long term rentals as well as specialized equipment that is only used on a short-term basis. We do ensure that quality levels are equally high regardless of the duration of the rental. For particular sites where we deploy a lot of our equipment, we will have a service person on stand-by all the time. We also work with very strict Service-Level Agreements (SLAs) in agreement with the customer that indicate the time span in which we respond.

What times are we talking about here?
We need to be onsite within 2.5 hours of a breakdown and will get the machine up and running in 4 hours. We are situated throughout South Africa to do so.

Is that why you have also just opened the branch in Kathu in the Northern Cape?
This branch was opened in February 2012 because there is a specific demand coming from the mining industry. This demand has now become sufficiently large to justify the setting up of a new branch.

Considering that Rand-Air has been present for 40 years in this market, is there still market share to be captured?
There are always new areas to look at and specialized equipment to be utilized. Botswana and Namibia, for instance, are right on our door step. We consider them as part of our South African footprint.
While growth has been slower in Botswana, exploration will start in Namibia in 2013-14. There will be a greater demand for equipment and these areas will be part of our future focus.
Our focus in the next 2 or 3 years will also exist in bringing in equipment that can be utilized on rigs in such environments.
We are also active in Angola, where it is now time for us to establish a footprint with equipment locally. To do so, we have started discussions with the local Atlas Copco branch, from where we aim to operate.

Zimbabwe is next door, yet it is a market you have decided not to move into. What makes a market viable for entry?
It has to do with potential as well as political (un)certainty. Atlas Copco is established there already. What is also worth noting is that if there is no rental history, the concept will take quite a while to be established. From this point of view, it will be more difficult to enter and set up rental operations. We do believe this market and its political situation are improving on a month-to-month basis and it is an option that can definitely be considered in the longer run. Right now, however, we are much closer to moving into Mozambique where there is significant gas and mining activity in the Northern part.

In Namibia, you recently took on Desert Airpower as a new distributor. These are people you need to put a lot of trust in, as they are the face of the company at the end of the day. How do you decide on the distributors you choose?
When we look for a new distributor, we would first look at the established distributors of Atlas Copco. If they have got the knowledge to maintain equipment, they would know how to technically support our operations. From a sales and operational point of view, we would help to establish this.

Local content is also an important aspect of doing business in Africa. How does this impact your HR strategy?
We develop people within the company. From an HR perspective, we ensure our people are trained and knowledgeable to meet our demands, as well as to grow within themselves. Moreover, we now also have a process in place for them to become qualified and earn diplomas and degrees. This forms part of the Atlas Copco Academy, which has been established roughly 5 years ago. It is part of our responsibility to get people employed and educated to ensure that they create a future for the company.

Apart from this training, what would be some of the other factors that attract new staff?
We are customer-focused, which creates a very interactive environment. Without having internally satisfied people, you cannot satisfy the customer. This is a principle that stretches throughout the Atlas Copco Group.

What will Rand-Air look like in 5 years?
We are on a focused drive to grow the company and ensure that we grow profitably. If there is no profitability, you are unable to sustain growth, quality or customer focus. In 5 years from now, we will be much bigger than we are today while maintaining a sustained focus on the individual customer.
As far as our equipment and products is concerned, we will be highly technologically advanced. We will have implemented far greater safety features within our product range.
Further to that, we would hope to be established in our neighboring countries and ensure that we have assisted countries like Ghana, Nigeria and Kenya with equipment and a thriving rental division within the Atlas Copco operations.

Do you have any further final words to send out to our readers?
I do believe it is important that –with Atlas Copco- we are in Africa and that we are players in the market. We bring the customers quality, reliability and peace of mind.

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