Mostafa Tartoussieh – Business Development Manager, TETCO, Egypt
Mostafa Tartoussieh, Business Development Manager of Tartoussieh Engineering and Trading Company (TETCO), tells us the story behind TETCO’s pioneering story as a successful OEM distributor in Egypt, the transformation strategy TETCO embarked on in 2012 to move from a family-owned company into a world-class organization positioning itself as the full partner of choice to oil and gas companies, and his outlook on the opportunities in Egypt for international investors.
Mostafa, could you please tell us the story behind TETCO?
“This is very counterintuitive but the past three to four years have actually been the best years of the company!”
TETCO, or Tartoussieh Engineering and Trading Company, was established in 1946 by my grandfather, initially as a facility offering and manufacturing refrigeration units for vegetables and meats. My father and my uncles supported him in this business. An interesting fact I found out yesterday was that we actually supported the British Army in Egypt during the Second World War by offering refrigeration services to them.
We entered the oil and gas sector only in 1971, when we entered the pump business. It was quite an opportune moment because there were many refineries being established in Alexandria and the Suez Canal area at that time, but there was no representative office for any Original Equipment Manufacturer (OEM); companies had to travel by road to meet the respective manufacturers. We were one of the first companies to enter this space and as a result, we won a lot of business during the three decades from 1970 to the beginning of the 2000s. For instance, over 3000 pumps are used in the sector today and we have around 57 percent market share. It goes without saying that oil and gas is our main focus.
The past few years have been difficult, both politically and economically, for Egypt. How has TETCO been affected by these circumstances?
This is very counterintuitive but the past three to four years have actually been the best years of the company! Around five years ago – coincidentally around the time of the 2011 revolution – we decided to transform the company from a family-owned business into a world-class organization, hiring an external consultant to support us. The fundamental objective we identified was that we no longer wanted to just be a distributor and agent for products and services – we wanted to offer solutions and present ourselves as a true partner to our clients. This makes sense because our equipment is heavy-duty equipment that is long-lasting, so our relationships with the end user and client often last throughout generations. For the past 40 years, we have maintained the same relations with our clients, and this is critical to our business.
This meant that we had to restructure the company, starting first with changing our way of doing business. We started to introduce KPIs for everybody, we divided our sales force into regional teams so that they could make dedicated and frequent visits to our clients to support them 24/7, and we brought people together to discuss the company’s overall strategy. Ultimately, we pushed ourselves to think about how we could do things in a better way in order to reduce waste, effort and cost.
It was a very good business decision and it paved the way for us to move ahead. Our clients have been very appreciative of the new approach. As a result, contrary to many of our competitors, throughout the crisis years, we were hiring, increasing salaries, investing more into the company and providing more added value to our clients – this is what paved the way for our current success.
What we want to be is to become the model of how an OEM partner should perform in this area: by adding value to our clients.
In concrete terms, what sort of added value are you providing your clients now?
As I mentioned, our products are heavy-duty equipment that our clients expect to use for a very long period. What often happens, however, is that poor operating techniques result in damage to the equipment that must then be repaired or replaced. What we are doing now is approaching our clients not just to sell equipment or spare parts, but to engage with them in order to manage their relationship with their equipment. For instance, we can analyze the trends in their usage patterns to see when the shut-downs occur and what the mean times between failure are. We can then use this information to create a training course for their operators; we have a training center in Alexandria that we invite companies to visit. We currently offer these services along the entire petroleum value chain.
We want our clients’ operators to feel comfortable operating the equipment. At the end of the day, if clients feel like you are a true partner to them, not just someone trying to sell as many spare parts or machines as possible, they will trust you more – and this often results in more business, very organically. This is the sort of relationship-building that differentiates us from other companies working in the same field.
With this level of dedicated service, how do you ensure that your employees will meet the needs of your clients to the highest standards?
We have around 16 sales engineers, representing different expertise areas – we have pockets of excellence within our staff. This means that some people are very knowledgeable about the sector, some the equipment, and others the processes. The main thing is how to configure this to create the right team. When we do it right and achieve the right synergy balance, it is like magic!
When we visit a potential client or a new account, for instance, we bring five or six people, so that we have someone on hand to answer any question, whether it is about the process, the equipment, the repair activity or the training. This is essential when it comes to showing our support for the client. When clients see that we are not focused on just selling the equipment, it breaks the ice because they do not feel pressured. Very often, it encourages them to bring you cases and examples that they do not normally reveal to service providers.
To maintain standards, we have introduced KPIs for people in all parts of the organization, from delivery to sales to administration to warehousing to logistics. Not only do we provide training programs to our clients, we also conduct training programs internally to upskill them and increase their level of knowledge.
As a local company, what we are promoting is also the fact that we do not need to rely on foreign talent or expertise. We can do everything ourselves, from the client presentations to the repairs. We depend on ourselves.
Looking more broadly, as Egypt is embarking on a new era of modernization and transformation, especially in the oil and gas sector, what opportunities and challenges do you see for TETCO ahead?
Egypt is a very big country and it is also a consumer country. There is a lot of demand and a shortage of supply – for instance, we have over 90 million people and we have over 90 million mobile lines! There are a lot of products and services that we need in Egypt, so there is certainly huge potential. The oil and gas modernization strategy is not new per se as it has been around for many years, but it is only now being implemented seriously.
In this regard, we see opportunities everywhere! We are very close to the Egyptian General Petroleum Company (EGPC), for instance, who own nine refineries. They are now in the process of upgrading these refineries, which means new equipment, new products and new training courses for employees. It would be very good business for us, but we need to work on a clear strategy to present ourselves as a good partner to them. For instance, they are now focusing on energy savings and efficiency, and what they will do is to test pilot programs in one or two refineries. We would come in with a presentation to demonstrate the value we can bring to them in these test cases, and then these will become success stories that form our track record of partnership with EGPC. This is our strategy at the moment.
One of the biggest challenges in Egypt at the moment is financing. The flotation of the Egyptian pound has caused a big issue at the moment for companies operating in Egypt, particularly local companies. For long-lived heavy duty equipment like ours, it can take six months to a year in between the purchasing order (PO) issue to receipt of the equipment on-site. With the currency fluctuation, having that long of a time lag is very tough on a smaller company. It is therefore essential to look at the whole picture and plan ahead. Another issue is with the bureaucracy in Egypt, which affects everything from the financing of equipment to the issuing of letters of credit (LCs) and the transfer of money.
What is very fortunate for TETCO is that we are entirely self-financed, a philosophy we inherited from our fathers that has proven very beneficial to us. For companies that have taken out bank loans, the currency flotation hit them very hard, while we have been relatively insulated from the currency depreciation.
Ultimately, the world is moving, so if you do not adapt to that, you will lose out on many opportunities. This is why we are moving the company from a family business to a world-class organization, by building the next generation, and empowering them to make decisions for the future success of the company. The idea is to take what used to be a one-man show into a bigger company that will last for another seventy years – and more!
Do you have a final message for our international readers?
Egypt has huge growth potential – and the early bird gets the worm! It is the early comers that come to Egypt during the current tough times that will ultimately benefit enormously from the opening and subsequent development. I believe we are on the right track – by the end of 2017 or the beginning of 2018, we will see the first signs of success from Egypt’s new development strategy. So my message is: come early, and be the pioneers!