with Luis Fernando Flores Beteta, Managing Director – Sub-Saharan Africa Region, MSA Africa
Until 2 years ago, South Africa has been MSA’s third biggest market worldwide, after the USA and Germany. Outside of North America, South Africa is also MSA’s first affiliate established as early as 1940. Can you elaborate on the historical role these operations have played within MSA globally?
Historically, casualties were very common in the mining sector. In Pennsylvania, USA, where the company was founded in 1914, 3 out of 10 miners would die. In an effort to address this problem, John Thomas Ryan – MSA’s founder – convinced Thomas Alva Edison – the inventor of the light bulb – to power an enclosed electric circuit and develop the first electric Cap Lamp. This was a significant change to the coal mines in the Pittsburgh region, where many of the explosions were caused because of the use of traditional oil flame lamps.
After selling its products in the USA, other mining countries entered MSA’s radar, such as Canada, South Africa and Australia, and today we reach the market of more than 140 countries in 5 continents. In South Africa, we have more than 70 years of presence, whereas South Africa officially overtook Germany as MSA’s second largest market last year. In 1940, MSA was in fact first looking to enter Australia. Due to the War however, we first opened the company in South Africa. At that time, we were the only safety company here focused on saving lives. The truth is that, today, the South African standards are very well advanced compared to the rest of the world.
When you arrived as the new MD in 2007, your ambition was not only to save lives, but also to double the African subsidiary in 3 years. Four years later, has this target been achieved? And if not, what have been some of the key challenges?
Yes, I was expecting to double our turnover, a target we have nearly reached now! Of course, no one could predict the 2009 economic crisis. The positive aspect, however, is that safety has become increasingly important in the industry. South Africa in particular has been enforcing its safety laws in recent years. We help the different mines to comply with these laws by ensuring that they have the right safety systems in place. Through our Select PPE division, we send our people on-site to issue miners with the necessary personal protective equipment (PPE) according to the job category and issuing protocol (IP) agreed with the mine. We control the spending according to this IP and produce management reports that help the safety manager to make decisions. We even keep the records of the PPE that the mine has issued to employees per individual over the last 5 years of operations.
The share of PPE of the total production cost of a mine is very low: perhaps only 0.1% or 0.2%, but the impact of fines, problems with the community, closing shafts and so forth, can however cost a company millions of dollars. Without a good partner in safety, a mine can lose a lot of money. This is why we have been growing increasingly. More than mines alone, we now also have contracts with the upstream and downstream oil, gas & petrochemical (OGP) industry, as well as some other industries.
How important is this OGP industry for MSA?
While we already had a line of gas detectors, we bought the California-based company General Monitors in 2010, a transaction valued at USD 280 million. You may ask why a company with a turnover of roughly USD 1 billion per year would buy another player for such a sum. We bought this company, because it brought us a new technology in gas detection. As a result, MSA has become the most important OGP gas and flame detector producer in the industry.
Now, MSA provides a complete offering of products and solutions for flame, gas and leak detection for the upstream and downstream OGP industry .
The products offered are all designed to integrate into full emergency shutdown systems (ESDs), and all products have recognized approvals to ATEX, UL or FM standards.
The vast majority of MSA products are certified to a safety integrity level (SIL), thus ensuring high performance with an exceptional time before failure (MTBF) performance.
The products offered by MSA are designed with the latest technologies and provide very cost-efficient solutions through an easy installation method, simple change out of sensors and equally efficient calibration processes.
The comprehensive range of products addresses the needs in offshore drilling, FPSO, sea transportation vessels, gas pipelines, off-loading docks, storage tanks and farms, refineries and processing plants and support processes, train and truck-loading docks, as well as all downstream storage and distribution.
The range offers detectors based on technologies such as metal oxide silicon (MOS) technology for H2S detection, ultrasonic leak detection, infrared detection, conventional catalytic sensing for combustible gases, and electrochemical (E-CHEM) sensors for toxic gas detection.
These sensors are packaged with efficient transmitter boards, providing industry standard outputs of 4-20ma, and /or RS 485 MODUS Protocol.
Support controllers complete the offering and are designed to receive the inputs from the sensor / transmitter combinations and supply outputs required for safety shutdown, control purposes and alarms. The range is comprehensive and offers a solution for all applications.
MSA has products that cost-effectively address OGP customer requirements in all upstream and downstream processes, offering reliable, tried and tested solutions for a comprehensive safety system.
So beyond saving lives alone, there is a cost saving aspect as well?
This new technology ensures a wider coverage. While one area previously needed to be covered by 3 or 4 sensors, we may only need 1 or 2 using the new technology. While the sensor itself may be more expensive, the total cost of ownership is lower because of the broader spectrum. All mining and OGP companies measure their production cost because prices are determined in the commodities market. We really focus on saving lives. As I mentioned, this safety is so important because of its role in a relative lower production cost, but significant impact when there are fatalities. That is why the growing OGP industry has become a sector for us to invest in.
By bringing these products to market, you are actively raising safety awareness in the industry. The African continent however, remains a rough place. Is there more work to be done – in terms of awareness – compared to other continents?
The African continent has many global players, who are focused intently on applying global safety standards. Even though many African governments push for local content, they are also committed to safety for their workers.
In certain cases, some companies become too focused on cost, rather than quality. In comparing an MSA product with one of our competitor’s, you may find that both products are well in line with the South African Bureau of Standards (SABS); however, our products will usually even exceed these standards. We want to be the best and deliver the top products in the industry. We aim to go beyond the normal standards when we design our products.
Are there still a lot of products of inferior quality in the market today?
There are indeed. Moreover, it also happens regularly that our products are being illegally copied. In some countries, they even put our brand name on imitation products. We have very important quality controls in South Africa for the products we sell. We need to create awareness that all our products are being tested regularly, which generally is not the case for inferior quality products.
In South Africa specifically, you also supply the downstream industry, such as the SAPREF refinery for example. Minister of Energy Dipuo Peters has already indicated that a lot of these refineries are in decay and that refurbishing needs to take place. To what extent is there still budget left to be spent on safety?
Companies such as SAPREF, Petro SA and Sasol are very serious about and committed to safety. Some of the local companies – in OGP or mining – outside of South Africa may be tempted to use cheaper products, although the PPE cost is minimal compared to the production cost. While some of them try to invest less in safety to save money, they do not yet see that they end up with higher costs at the end of the day. To realize this is a process that takes time.
So how do you convince them?
We visit different mines and customers to provide technical training where we explain safety and show them the key statistics on accidents. We also promote safety in the mining sector, in particular through the John T. Ryan Award, named after our founder, which has been launched in South Africa for the first time last year. It is a day-to-day task, but it is in line with our vision to be the world’s leading provider of safety solutions that protect workers when life is on the line. We pursue this vision with an unsurpassed commitment to integrity, customer service, and product innovation that creates exceptional value for all MSA stakeholders.
Is OGP an easier market as compared to mining then?
That is a tough question. Africa itself can be a tough continent that requires a lot of investment, particularly in places such as Angola and Nigeria, where the cost of living is very high and the logistic infrastructure is not well developed yet. To provide good service to the OGP industry is as difficult as servicing the mining Industry. I don’t think OGP is easier than mining.
In South Africa, we manufacture hardhats and respirators, among other products. Our hardhats in particular have become a standard in OGP companies worldwide. Through our Logo Express department in South Africa, we have established a new in-house design team that offers branding opportunities for customers. This is much more advanced than traditional stickers which are prone to damage, and can hide any damage on the hardhat. On the technical side, we also produce an instrument here that is only used for the South African market, as well as Cap Lamps. This illustrates the technical capabilities we have here in South Africa.
What opportunities are there to further expand these facilities?
We are investing further in our factory in South Africa. We believe in South Africa and even though we have already been here for more than 70 years, we plan on being here forever. Africa, as well as South Africa, is the last economic development frontier and we expect a lot of growth in both the mining and OGP segments. We also have an office in Zambia, as well as distributors in many of the 42 sub-Saharan countries. The future here is bright! We need to stay in Africa, and within our Group worldwide it has been made very clear that we need to continue growing in emerging markets, such as this part of the world is.
Are there particular products that you do not yet offer on the continent?
When we design a product, we do so for the world as a whole. Of course in some countries – depending of the segments – we do not offer all our products. In the case of Africa, different countries have different certifications, but we do sell most of our products in this part of the world.
MSA is a recipient of the prestigious Outstanding Corporate Innovator award – the Product Development and Management Association’s highest honour. We’re extremely proud to be recognized along with previous winners which include Apple, BMW, Sprint Nextel and Hewlett-Packard.
On a personal note, you have won the President Star award in Latin America for inspiring leadership and setting the example in the industry. Considering you are a man of strong ambitions, what do you envision for MSA in Africa in the coming 5 years?
First of all, the awards we won in Latin America were a team effort and not a personal award, but besides, in Africa our team has won the Zone Growth Champion for MSA Zambia and the 2010 Phoenix Award for our Select PPE Division, in recognition for resourcefulness and dedication to excellence during adversity!
For Africa over the next 5 years, we are working significantly on improving our customer loyalty and the service to our customers, and having more support by industry segment focus. The problem of growth is that some of the attention to individual customers can get lost. We are therefore working on a better service approach to our customers. We also use our distributors to do so and ensure that they receive the necessary training. The long-term business relationships are very important for us; we are committed to protecting the health and safety of our customers. We are, quite simply, an organization built on integrity. Then business with ethics is non-negotiable. Another aspect is the fact that we have managed to build a good team that is delivering strong results in Africa.
Doesn’t the distributor model mean that you need to compromise on control and – possibly – quality?
For the first layer of top customers, we sell our products directly. For the second layer of customers, however, it is impossible for our sales representatives to visit everyone. This is where the distributors come in to help and support our sales force. Even small volumes are important, because a satisfied customer may well grow his demand in the future.
What triggered the decision to switch to a fully-fledged office in Zambia?
The reason that we established an office there is related to the contracts we have with very important mines. They asked us for this service. In other countries, we prefer the partnership model. It is also worth considering that in some countries the governments ask you to work through local partners. The same goes for South Africa when it comes to Black Economic Empowerment (BBE). Between my arrival in 2007 and today, we have effectively moved from Level 8 BEE, to Level 3. We have achieved this level not only because we have an excellent and very ethical BEE Partner (M.I.C), we have also been recruiting BEE professionals that are adding a lot of value to the company.
Do you have a final message for our international readers as well as the South African stakeholders?
Most importantly, MSA focuses on promoting safety. We know that if we promote safety, business follows automatically. From the CEO to the worker, we feel proud to provide good products and save lives.