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Dwight Mahabir chief executive officer, Damus Ltd

Published: 
Thursday, January 18, 2018
Five questions with…

1. The company has been around since 1973 providing mechanical and construction services (among others) across many industrial sectors. How have the demands of these sectors evolved over time?

As a provider of mechanical, construction and maintenance services across T&T and the wider Caribbean, we are most heavily invested in the energy sector, while providing services for mining, utilities and the food and beverage sector as well.

Locally, demand for Damus’ services closely correlates with the development of the energy sector.

Construction of new petrochemical, steel, LNG and power plants and expansions to the Petrotrin refinery created significant demand during the period 1990-2010.

Damus developed significant capacity over this period, providing employment at peak demand to approximately 2,000 skilled and semi-skilled workers.

Demand for construction services fell towards the end of the first decade of the millennium. The last major construction project for our firm was the TGU Power Plant on which Damus was the primary mechanical subcontractor to Ferrostaal of Germany.

At the conclusion of this project in 2013 we were forced to retrench approximately 20 per cent of our permanent work force of 350. Our casual/temporary workforce was reduced from a peak of about 1,600 to around 350.

With limited green-field construction opportunities, brown-field projects and maintenance now constitute a much higher percentage of our revenue streams.

Baseline operations now employ approximately 650 workers which increases to about 1,000 during plant turnarounds. We anticipate demand for our services will increase in the upstream energy sector over the next three to five years as significant investment is anticipated.

Regionally, demand for Damus’ services continues to be reasonable. The discovery of oil and gas in Guyana is expected to increase demand in respect of which our team continues to deliberate on the best market entry strategy.

2. The local energy sector in particular is presently in a bit of a trough. What impact has this had on the Group?

According to a friend, when given lemons make lemonade. Another has said that the industry should not waste a good downturn.

Reduced demand has resulted in increased competition among service companies and created downward pressure on profit margins. We have responded by consolidating synergistic group companies, right-sizing overheads, converting idle assets to cash to reduce debt, increasing operating efficiency, sharpening our bid estimates and adding to our services. We have made lemonade so to speak!

These are really improvements to the way we have operated in the past and will work in our favour as we pursue future opportunities. I have no doubt that others have made similar adjustments which will ultimately redound to the benefit of the entire industry.

In the commercial and residential building construction and retail space we have managed to maintain reasonable growth through 2017.

We are expecting some curtailment in 2018 and have plans to expand into new markets to enable growth.

Unfortunately, two of the group’s companies which derive most of their business from the energy sector have not weathered the storm as well. We have had to cut staff and restructure both organisations.

3. Much has been touted about local service companies expanding across the region, particularly into Guyana as of late. What has been Damus’ experience attempting to and/or doing business in other regional territories?

Damus has significant experience working in the wider Caribbean region including Guyana and Suriname.

Entering any new territory carries with it some inherent risk which should be assessed, understood and managed. As a minimum, local laws on setting up and running a business must be understood and complied with.

The Caribbean region has always been a ready market for services and manufactured goods. Though there is still much to be done, Caricom has made significant strides which create competitive advantages for firms from one member country doing business in another.

Given the size of the Guyana oil discoveries, the infancy of the Guyanese oil industry, Trinidad’s close proximity and shared history and over 100 years of experience in oil and gas there is obviously an opportunity for firms to participate in the Guyana market. Practically, all of our service providers are planning to participate over there.

4. Local content has always been a consideration for the energy sector. Is enough being done to harness local talent across our industrial sectors?

In responding I’d ask these questions:

1. Which of the inputs into the energy sector can local firms realistically provide now or at some time in the future through focused developmental efforts?

2. What percentage of the inputs for which local firms are qualified to provide are actually being provided? If not 100 per cent why? How does this percentage vary with time?

3. What is the roadmap and timeline to develop the capabilities of local firms to provide the inputs identified as achievable through development?

To the best of my knowledge, these questions cannot be comprehensively answered and I am therefore of the view that not enough is being done as regards optimising local participation in the energy sector.

While I acknowledge the efforts being made by the government through the permanent local content committee, the Energy Chamber through its own local content committee, operator companies through their signing of a local content charter aimed at optimising local content, and other stakeholders, I believe the approach to the issue needs to be re-examined.

Broader participation by relevant industry stakeholders which include government, operators, service companies and labour is required with the effort being led by an executive office, funded by the Government and the private sector with the mandate to develop and deliver a sustainable local content model. The ultimate goal must be to produce globally competitive service companies and maximise their participation locally.

5. There is the perception (whether real or imagined) that T&T’s industrial service providers are losing competitiveness. What do you believe needs to be done to change this perception?

There are examples which suggest that our competitiveness and risk profiles are moving in the wrong direction:

Take, for example, Damus’ experience with supplying labour to the Aruba refinery prior to its closure.

Following many years of providing labour we lost the ability to compete with other labour providers from Venezuela, Colombia, Mexico and the Philippines. The client advised that better worker productivity and lower costs were available from these markets.

The decision taken by an upstream operator to construct its platform in Mexico I understand to have been cost (cheaper in Mexico) and risk (labour interruptions and timeline risk in Trinidad) related.

The decision taken by a plant owner to construct significant modules of their process plant overseas and import these into Trinidad as a more cost effective option.

These examples alone represent millions of manhours and thousands of jobs that have gone to other markets. Loss of productivity must be of concern to all stakeholders. Workers, unions, government and companies must wake up, smell the coffee and take appropriate action.

I see no other way to change this reality.

ANDRE WORRELL
Deputy Head of News-Business
 

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