Interplast: Plastic Pipe Solutions in Ghana and West Africa

Interview with Arthur Huberts, CEO of Interplast

Interplast is a leading manufacturer in Ghana and 40% of your production is for export. How do you assess the sector in West Africa?

Well I hope that my competition is not listening in Europe or elsewhere!! West Africa is still the only underdeveloped continent on an infrastructure basis left in the world. If we look at how areas like the Far East, Eastern Europe and Latin America have all developed over the years and at how much governments and institutions have invested in the development of infrastructure in these areas, you notice that Africa is still lacking. So as far as my products are concerned, which are purely infrastructural based products like water, sewer and gas pipes, I am in a very comfortable place because there is a lot to do.

There is a lot to do and there is room to grow. What kind of share of the market do you have in West Africa?

The exact share is a little bit difficult to say, but I can tell you how we position ourselves because that will make it a little bit clearer. The owners of this company have always operated this business on a very simple principle: there is no reason why we cannot produce quality products equal to Europe, the United States or anywhere else in the world, right here in Ghana. So with three very simple, basic ideas: having good quality raw material, having good quality machinery and equipment and having a well provided for and motivated staff, I can do exactly the same right here. The quality of the products that we produce here is exactly the same as that produced anywhere else in the world. There is no difference. What makes us different is that we produce in West Africa.

A lot of the products that are coming into this part of the world right now are products of a lesser quality, only because it’s cheaper. In the end they will all find out that it is more expensive. Most of the water companies in West Africa know that once they get funding for a certain project, that’s it. If that project breaks after three to five years, they will never ever get funding for the same project again, which means that it boils down to maintenance costs. If you have a good product it will last you 100 years, if you chose a bad product it will last you three to five years and then you will have to do maintenance for the rest of the time. They know and they understand the value of getting the proper product in place. Once that value becomes more widely known and creates stronger roots in the West African countries, the development of the infrastructure will move forward at a much faster pace. Instead of continuously trying to revamp and trying to update the existing system it is better to put in place a new system and have it done for the next generation. We always like to say that we are not making these products for ourselves but for our grandchildren to enjoy. If that is the foundation of how you produce something, then you get a reputation and if you are able to sustain that reputation over 43 years then people know you. Whether you are in Niger, Nigeria, Angola, Mali or wherever you may be in West Africa, they know us because they know the type of products and the quality that they are getting. They never have to worry about not getting a first rate product for a very reasonable price.

So your challenge is that some people still prefer, for lobbying, political reasons or whatever the reason may be, to go for a cheaper product because it is funded? If not you wouldn’t have any problems, you would be selling to everyone!!

There are always issues! Never problems but there are always issues. There are always people who choose a different level of quality for whatever reason. That is ok; they have the right to choose. If I didn’t have other producers around that I could match my products against I would never have risen to the position we are in right now. What is hurting is that governments and institutions get funding for certain projects and begin to import products that are actually already being produced here in West Africa and yet they import the same products into this country when we know that they are no better than what is produced here. On top of this they are bringing them in tax free because it is ‘development’. That is painful; in my opinion it is not the wisest decision because in order for West Africa to develop the emphasis should be on the economic development of the companies that are right here, on the training and education of staff right here and on the enhancement of the manufacturing facilities that we have right here.

The easiest approach for all the governments in West Africa is what they can find in the ground: gold, diamonds and oil. But there are companies that are actually importing raw materials, transforming them right here with Ghanaian labour and know how into finished products that are as good as any other in the world and those companies are doing something different. They are actually importing the materials, paying duties through customs, transforming the materials into a finished product, paying VAT and then selling the product. That is a whole different process than utilising the raw materials that are in the ground. Companies like ours are one of the drivers of local economies. Therefore companies that transform raw materials into finished goods are very important, whether they are producing food, bicycle tyres or making plastic pipes, it doesn’t matter. Any product that can be developed in a country should have preference over everything else on the condition that the quality is good enough.

How do you tackle this issue? Do you do lobbying?

There is a lot of lobbying to be done. I don’t do it, I believe that after 43 years of producing quality products with guarantees from my clients and from governmental institutions I earned the right not to have to lobby. Of course we talk to government institutions and to the Ministry of the Economy about things like this but the decision is always made somewhere else, by somebody else. I would rather spend my time making sure that I develop and grow this company further, that I export more and that I try to assist in the sustainable development of an infrastructure, than spend my time on chasing the ministers and law makers on policy. I believe this is something that they should recognise, that they should believe in and that they should do by themselves.

Can you tell me about your exports? How do you promote your exports outside of Ghana?

Our company utilises approximately 40% of its production capacity for export right now. That means that there are pipes in the ground in 23 African countries as of today. There is a wide variety. A lot of the main infrastructure in Togo, Benin, Burkina Faso and Ghana runs on my pipelines, I have doors and windows that we produce as far away as in Freetown in Sierra Leone, we also export to Niger, etc. you name it. People recognise a quality product and that spreads, people know and realise this. In the business that we are in, whether you need these products for the mining industry or water institutions, the people always get together, there are exhibitions everywhere and what happens at these places is that people talk to each other. We found that a lot of people actually believe people who are enthusiastic about a certain supplier. If I talked to you and you told me that you had found a fantastic BMW dealer and I am interested in getting a BMW, I prefer to go to where you recommended than trying to sort through a whole lot of dealers myself.

By delivering consistency in your product and in your services to your customers, your customers are actually branding and marketing your products everywhere themselves. Take mining in West Africa for example, a mine starts with my products in Ghana and then the same mine opens in Burkina Faso and says ‘buy the products from Interplast because…’ and then it opens in Mali, Niger, etc. and so the ball gets rolling and in time people notice that your products are behaving differently than the less expensive ones. At that time you are at an advantage.

How do you stay at the same level or at the highest level in Africa in terms of technology? How do you stay at the top of the market?

By being true to the values that you as a company have set for yourself. We are true to the quality of products that we produce and we do not compromise on that. I can make a cheaper product by using cheaper raw material but I can’t guarantee the quality. I can build with the same raw material price on a cheaper machine, but it will be a lesser quality pipe. I can use cheaper labour and squeeze my people but I will not get the same production that I should get. By staying true to what it is you as a company believe in, both in good times and bad, only then will you retain your position.

What about the new technology?

Well the good thing is that all my machinery and equipment comes from Europe. This basically means that all my extrusion machines come for Germany and Italy. We have a lot of contacts in this industry in Europe. There is the K exhibition every two years in Germany which is the largest plastic extrusion and manufacturing exhibition worldwide, where we all meet each other and keep updated. The added benefit is that by having the knowledge and know how of what level we are in Europe right know means that we know here where we need to be in ten years, because the development here is catching up and doesn’t go that fast. The main difference right now is that the cost of labour in Europe is extremely expensive which means that they rather pay more for the product in order to do it faster whilst here the labour is still not that expensive so they can take longer, but they want to pay less for the product. With development catching up, Africa is still trying to play catch up, I know what is going to be coming in the next few years so it makes it extremely easy for our business.

How are you going to grow the company?

I like organic growth. We have a certain capacity and quality that we can deliver and we are not compromising that. We are able to do what we are doing today quite comfortably. We can add on to that. Do I want to become a multinational? I don’t know yet. I will only do that at such a point in time when not only the products of this company are of the right quality and all my staff has been well trained to deliver the same service quality but when the company can run autonomously over a longer period of time and show its sustainability. Countries in West Africa are always a little bit, how should I say, shaky once in a while. Ghana, I think is the great exception. We have had a new President, a President dying and another new President after an election all within a period of 4 to 6 months, with no problems whatsoever. Ghana understands that economic and political stability are the primary factors in development of West African countries, even more so than some other countries. You now see Togo behaving well and starting to develop, you see changes in Burkina Faso, and you see changes in the mentality in West Africa.

As far as growth is concerned there is so much to do. I can’t invest in what is needed; there is not enough money to pay at once for the infrastructural development that is needed. That will take time, it will develop over time and we will grow with it. As a company you should not be restrained from investing in your own development. This company over the 40 years that it has been in existence has always chosen to invest the company’s profits into expansion, new machinery and equipment, enhanced production procedures and so on. Over the past year and a half I believe we have invested over 10 million euros in new equipment, which means that the development is going to stay there autonomously.

As I understand it there is still room for further investment in certain areas, because your growth is huge and the potential is great. Would you be interested in attracting some partnerships to be able to grow?

The answer is no. At that point in time you have voices within your company that have decision making powers. We don’t want to compromise on our core values, our policy is very simple: we do it the best way we know how, making sure our customers are satisfied with our products by not compromising by choosing cheaper solutions. At the point in time when you run with venture capital or other partnerships you have other voices in your company that you have to listen to and that will make a difference on your policies. That is something we do not compromise on. This company has been true to its core values over the past 40 years and it will stay true to them over the next 40.

The growth of the company can also come for other sectors, could you talk about the other sectors?

The owners of this company have a lot to be thankful for, both for their clients and their development. Ghana has allowed one of their entities, Interplast to become quite a substantial player in the market not only in Ghana but in West Africa; however they feel that they can do more. At the end of 2011 and the beginning of 2012 the owner of this company was informed about a Spanish chemist who has developed a product that could actually make quite a difference in health development in African countries. That creation is a special paint with a patented product built within to help eradicate diseases like malaria and dengue fever and to make sure that transmittable insects no longer nest and stay in people’s residences. This product was developed over 15 years ago and has always been in a test phase because we wanted to make absolutely 100% sure that the functionality of the product does indeed exist. This produce actually takes an insecticide, wraps it up in a mantle, which we call micro-encapsulation, and changes the essence of normal wall paint into an active working element for a period of up to four years. This means that by influences such as temperature, friction, time etc. this paint will continually give off micro doses of insect repellent to the surroundings. This product is 100% safe for humans and pets. For insects on the other hand it does two things: it stuns them and eradicates them, but it also makes sure that they can’t reproduce. This product, contrary to other products that maybe on the market, doesn’t require the insect to actually touch the product. If the mosquito flies within a meter’s distance from the wall, the mosquito will be infected. The other benefit is that we do this for both inside and outside the house and with that we can start to curb the infestation which we call malaria. There are still thousands of people that die because of malaria and for people like me who run a company there are hours and hours of lost man power due to malaria. That makes this a product that can benefit countries’ economies and people.

The owners of this company have decided to manufacture this product here in Ghana. Right now we are starting to build the production facility and we will be operational in October or November of this year. We have invested huge amounts into the newest production equipment. We have bought the quality raw materials just as we do for this company and in October we are going to launch this new company. From Ghana it will spread across Africa. We believe that just as we do with our own products: a company that develops something like this should be close to where it is needed. There is no reason why we can’t produce this kind of paint and health benefit right ; we can do the exact same job in West Africa as they do in Europe. This is quite a development. It is going to be probably one of the fastest growing companies in 30 years and it is going to make a huge difference in the health system and economy of West African countries.

To conclude the interview, you have an expat’s point of view…

I’m Ghanaian!!

You are Dutch Ghanaian?

I believe that once you are here, you should be here. You can’t live in a country in West Africa and try to be a European. You have to adjust. I am Ghanaian.

I would like to know what you think Ghana can bring to the world?

A country like Ghana basically has an infinite potential, they just have to recognise it. Ghana by itself is of course a unique country. It has everything, it has fresh water, coal, diamonds, oil, natural gas, iron, just about anything any country can wish for. It has land, fertile land for agriculture, where we produce cocoa for example. Ghana has everything already in its nature. The trick is to balance that, to balance the profits and the proceeds of all of that with the other development in the country, the people, the social security, the health and safety, education, etc. If Ghana can do that well, it will grow to be a key player in a world economy market because the potential is there. The people need to have the wisdom to understand how to properly use it and how to properly benefit from it. As is common in Ghana if the people out on the street don’t realise that all this wealth is helping them, then it is going to be difficult. If they see the continuous development of the infrastructure, if the power doesn’t go off anymore, if the water keeps flowing out of their taps, if the roads become wider and safer, if the telephones start working 24 hours a day, they will see that this is helping them and that will make them more enthusiastic to help to develop the country. Products made in Ghana are probably the best in the world!!