Qualitec Industries: Raising the bar in Nigerian aluminium industry

Qualitec Industries Limited is one of the three leading aluminium makers in Nigeria, whose basic business is to manufacture aluminium coils and roofing sheets.

It began in the early 1980s with the manufacture of pots, pans and other household utensils at Ojokoro area of Lagos State. Later on, the factory was sited in Lagos but was recently moved to Ota, Ogun State.

A fully incorporated company, Qualitec primarily manufactures aluminium coils for various industrial applications, while also supplying and installing stone chip roofing sheets and flashings of various sizes and designs.

Generally, the company’s product line comprises cast coils, mill finish aluminium coils, coloured coated coils, roofing sheets, step tiles and flashings.

While the company’s corporate office is located in Lagos, its factory is situated at Ota, Ogun State.

A tour round its Ota factory last Thursday, revealed that Qualitec is in the business of aluminium manufacturing to set the pace and raise the bar for peers, in spite of the harsh operating business environment in the country.

At the Ota factory, about $100 million investments have so far been made in new plants, machinery, captive power plants and resuscitation of existing plants. There have also been investments in ingots, which are raw materials used in making aluminium. A second production line is being installed, while machines that will be required, alongside technicians that will operate them, are expected to arrive in Nigeria soon from Turkey, Real Sector Watch has found.

“We have made these investments because we believe that what is worth doing at all is worth doing well, “said Oluyinka Kufile, chairman and managing director, Qualitec Industries Limited, during the exclusive tour at Ota.

“We are in the forefront of production of aluminium in Nigeria and we are very proud of this,” he said.

“It is a huge investment that has been on for a very long time. And we are still doing more. When we started, it got to a point that we had to approach American Nexim Bank. They obliged us and gave us the facility. Today, it is a different story,” Kufile said.

Apart from the large expanse of land where the factory is located at Ota, there is departmentalisation of each production process as well as division of labour. Each section has several equipment and machines imported recently and those brought into the country before the global economic meltdown, which started in 2007, and ended in 2009.

At the first section, there are ingots neatly packed, waiting to be melted in the furnace to produce aluminium coils. But few of the ingots were produced by the factory, while the rest were imported from Cameroon. Ingots were initially being produced en masse by Aluminium Smelter Company, which was privatised by the Federal Government and then sold to United Company Rusal, who held 85 percent equity in the business. But legal tussles have stripped Rusal of the ownership of the plant, thereby throwing up a tussle between the firm and the Nigeria-American consortium – BFIG.

Currently, Aluminium Smelter Company, located in Ikot Abasi in Akwa Ibom State, is under lock and key. As of now, aluminium makers buy ingots at London Metal Exchange rate, with a 5 percent duty.

“Ingots are what we should be producing here,” Kufile said. “But the situation in Aluminium Smelter now makes us import ingots from Cameroon. Even the smelter plant in Ghana is running but ours is not,” Kufile, who is also the vice-chairman of Basic Metal Group of the Manufacturers Association of Nigeria (MAN), said.

Apart from this department, there is also a section for rolling mill operations. Rolling mill is about reducing the aluminium into thickness and gauges. Beside the rolling mill is a huge construction of the tension levelling line. The huge investment going on in this sub-section is geared towards ensuring that the products from the factory meet the global standards and can be used in any part of the world.

Moreover, there is a waste recycling and collection section, where wastes from the factory are collected and then used for further production. In Nigeria, players in aluminium and extrusion industry collect wastes and then package them for exports, while demanding bragging rights from the government in the form of export grants.

“But we do not do this because we believe in the industrialisation of the country,” said Qualitec’s managing director.

To prove that Qualitec is actually derived from the word ‘quality,’ there is a clearing system at the factory that purifies wastes after production and place them on par with what can be seen anywhere in the country. Within the clearing system section is an ongoing installation of a machine, which is meant to clean the coil and subsequently package it efficiently, as it is done in any part of the world. That equipment is also what is required to meet international standards.

Furthermore, there is equally equipment which adds colour to aluminium and is capable of doing multiple width. The coating equipment, like all others at the factory, is operated by thoroughbred professionals.

At the other end are stone chip roofing sheets, already produced from the factory, used as roofing tiles by the majority of the middle-class and high-class Nigerians.

Like many manufacturing companies, Qualitec Industries has 2000KVA and many 500KVA generators that power the factory. There are also captive power plants as well as over four gas generators, which serve as alternatives during power failure or once generators disappoint them. The consequence of this is the high cost of energy for Qualitec and consequently production costs.

“We spend N15 million monthly on diesel,” the managing director said.

Despite that, these investments are made by one man, even without necessary assistance from the government, Qualitec’s products’ quality is not compromised. A lot of aluminium dealers in the country depend on Qualitec for raw materials.

Moreover, the company’s caster line capacity is about 15,000 tons, while the rolling mills could go more than 20,000 tons.

But it must be stressed that aluminium products by Qualitec and others still struggle with imports which are cheaper and poorly regulated. At the moment, imports from Asia usually do not have HS Code, thereby opening door for unscrupulous businessmen to import lightweight products ranging from 0.020mm to 0.025mm, rather than 0.04mm or 0.03mm, which are international standard measures.

Indeed, Qualitec is a story for budding entrepreneurs and Nigerians who do not wish to toe the path of success. While aluminium companies are closing down their rolling mill operations and laying off workers, this medium-sized firm is employing people and ramping up investments and operations.

While at the factory, all workers were diligent and attended to their duties. Operations were on even when there had not been any public power supply. In fact, there has not been any public power source to the factory from both the moribund Power Holding Company of Nigeria (PHCN) and the current electricity managers.

Yet, Qualitec remains undaunted and carries on with huge cost burden. Working under these conditions, coupled with high cost of finance amid other issue, one can easily understand that products from this factory may be costlier and more expensive than those imported.

Yet, Kufile is undaunted. He is buoyed by government ‘s interest in the sector in recent times.

“We are gradually seeing the light. We believe it is right to start now because government has said they will support us,” he said.

He was quick to add that if only the government can protect the sector by controlling imports through HS Code, then more investments will come.

According to him, there has to be measures to regulate imports because many players are not finding it easy. For instance, Qualitec borrowed loans to ramp us these investments, which will ultimately impact of manufacturing’s contribution to the Gross Domestic Product (GDP), diversify Nigerian economy away from oil and increase wealth for Nigerians.

Another interesting feature of Qualitec is its ability to manage one line of operations for a long time. This is one secret of Qualitec, which has enabled it to survive the harsh business environment in the country.

“Of course, we do other things, but basically because we started with aluminium, we said our focus should remain with aluminium. We have related operations in steel and chemical related products, but we want to show we are leaders in the industry,” he said.

Qualitec is also creating employment for a number of Nigerians. Though the firm had over 300 workers before the economic meltdown, the workforce declined considerably when operations were suspended.

However, many Nigerians, including citizens of Ogun State, get their daily bread from the company. During the meeting held in the first quarter of the year, Ngozi Okonjo-Iweala, Nigeria’s coordinating minister for the economy, had asked manufacturers to create jobs for teeming Nigerians. Qualitec seems to have responded to this call by creating employment for a number of people, despite all the industry challenges that could have made them replace labour with machines.

One limiting factor at the Ota factory is the poor state of the access road. For a company that provides jobs and wealth for the community, it should easily be believed that roads to it need to be accessible. This is because inputs will be moved into the factory, while output will be shipped out for sale.

On enquiry, it was discovered that Qualitec has contributed hugely in rehabilitating the road on a few occasions. But the dilapidation is now back, thus beckoning on Ogun State government, which is now largely industrial, to come to its aid.

One clause that keeps coming out of the Qualitec’s chief is, ‘we want to do more. We want to invest more.” But this is if there is an intervention with a sector-specific policy that will drive the sector.

The cement industry today was able to reach over 40 million capacity because of the Federal Government’s Backward Integration Policy (BIP). Hence a sector-specific policy should be unveiled for the aluminium industry to crown the efforts of the likes of Qualitec.