CAIRO: Sureclean, a UK-based industrial cleaning and waste management company, recently injected $2 million into its Egypt operations by forging a strategic alliance with a local company, Tipico, a subsidiary of Integrated Petroleum Services (IPS).
Another $1 million is already on the way in the form of equipment to provide another boost to the alliance — which will focus on the Middle East and North Africa region — whose core client base consists of offshore oil drilling companies, such as Transocean and Prime.
Waleed Geassa, chairman and CEO of IPS, underscored the value his company would bring to the table: “We have the contacts and infrastructure to guarantee to Sureclean,” he said.
Richard McDonald, general manager of Sureclean, explained why they chose to expand in Egypt, saying, “It offers a great strategic, geographical location, situated between the Mediterranean Sea and Gulf countries, which allows us to mobilize equipment more cheaply and faster.”
Affordability and efficiency “have been the secret to our success for the last two to three months,” he continued.
On average, an offshore oil rig, McDonald explained, earns up to $180,000 per day. Thus, the oil rig operator loses that amount per day, while the service company cleans and prepares the rig for continued operations.
The advantage in contracting the Sureclean and Tipico alliance, he said, is that it can prepare an oil rig to be up and running in five days for $100,000 versus a local competitor, which will charge a meager $40,000, but will require eight days to complete the same job.
In saving three days, he explained, an oil rig will be back online sooner, meaning its parent company will save money by getting back to earning profits. In this scenario, the hypothetical savings of $480,000 are non-negligible.
Boasting such an offering, after just two and a half months, the alliance has made $400,000 in turnover, “which is a great achievement,” Geassa stated.
Although the company currently represents 10 percent of the national market, it is aiming to raise that figure to 40 percent by the end of the year, and within two years it is betting that it can snatch 20 percent of the regional market, McDonald indicated.
At present, there are 23 oil rigs in Egypt and a total of 180 in the region, Geassa and McDonald noted.
With a worldwide market that McDonald estimates to be valued at between $2 billion to $3 billion, the alliance’s target is expected to net $1.5-2 million in profits by the end the year — if its pipeline deals are realized, and $5 million in turnover by the end of 2011.
Sureclean and Tipico have already signed Master Service Agreements with all of the major offshore oil drilling companies in Egypt — a sign that augurs well for the duo.
Although the reasons for entering the regional market are palpable, Sureclean felt that for it to succeed, the company would need local talent and knowledge.
To this end, Sureclean sought a local partner it could trust, and one that could ensure that its books were transparent. Geassa’s company fit the bill.
Sharing resources between partners is critical as well since austerity and budget tightening due to the economic malaise have become the order of the day, McDonald said.
As such it makes more economical sense to hire a local versus an expatriate: “An expatriate employee costs 100 percent more than a local engineer,” McDonald underscored.
Not only do local personnel cost less, they also have insider knowledge of the terrain due to being part of the local culture and speaking the language of the country, which gives any firm a competitive advantage, he continued.
“There have been many failures,” because previous companies entered the Egyptian market with the wrong team, consisting primarily of expatriates, McDonald pointed out.
Egyptians hired by the alliance will also win big, he noted, as they end up earning a salary that is two to three times the level what they would with a local firm.
Also, employees that enter the alliance at the lower end of the company’s structure and who show serious promise to climb the internal ladder could count on the alliance forking out the necessary funds to pay for training and further studies.
Already, the company has brought on board 20 employees, with another 12 due next week.
In addition to having access to an affordable pool of talent as well as the critically strategic location of the country, the Egyptian government, McDonald told, has implemented a series of business-friendly foreign direct investment laws, which have been instrumental toward enticing his business to the country.
All of which, in his view, have made Egypt the “economic tiger” of Africa.