Ducab Enhances its backward integration
Late Sheikh Rashid bin Saeed Al Maktoum founded Ducab in 1979 as a joint venture between the Government of Dubai and the BICC group

In business and industry, companies look for examples of “best practices” when evaluating opportunities for growth and planning strategies for increasing market share. The organisations that go on to become industry leaders must continually seek new benchmarks to reach, and Ducab, based in the United Arab Emirates, has a well-established reputation of setting trends in the power cable manufacturing arena.

In recent years, Ducab has significantly increased output and more than doubled its revenues by adding new facilities, expanding its product line and analysing processes to determine the best areas for cost reduction while maintaining the highest quality output.

“The constant fluctuation in copper prices has become a factor in our overall operation that we took a closer look at,” said Andrew Shaw, managing director of Ducab. “We had already begun controlling the costs of our own raw materials by producing PVC compounding material so the next logical step was to supply our own copper rod, continuing our movement toward backward integration.”

Ducab celebrated the inauguration of its copper rod plant this year ensuring the ongoing supply of high quality copper rod for its own use, with the capacity to increase output to meet growing regional demands as well. In today’s volatile market, this factory will produce high-quality copper rod at a competitive prices, and will add significant benefits to its existing successful cable business.

“In the first month of operation, the copper rod factory exceeded its production goal,” said Samih Zamzam, manufacturing and maintenance manager. “By adding the copper rod plant, our goal is to double our output of cable over last year.” With equipment supplied by SMS Meer of Germany, the Ducab copper rod plant is the first Contirod facility in the UAE. Equipped with the latest generation of manufacturing and testing facilities, the 3,000 square metre plant converts copper cathode into 8mm diameter Electrolytic Touch Pitch (ETP) copper rod.

In the production of copper rod, copper cathode plates are fed into a vertical shaft furnace and melted at 1,250 degrees centigrade into liquid copper, which is conveyed through a holding furnace into a continuous bar casting machine, which transforms liquid copper into solidified rectangular bar. The Ducab copper rod plant features a casting machine manufactured by US-based company Hazelett, which uses the very latest metal casting technology. Once the bar moves into the rolling mill, it is converted into a high quality 8mm rod, which then enters a final cooling and cleaning process, and is coiled onto four tonne pallets before it is finally transported to the three Ducab cable factories. The immediate benefit to Ducab of producing its own copper rod was a significant cost saving in raw materials. Another element of backward integration is the optimisation of the supply chain. Ducab continually seeks ways of streamlining operations, and sometimes upon analysis, it is more efficient to continue using reliable, long-term suppliers rather than bringing a process in-house.

“Ducab had grown to a size that we could justify adding the copper rod plant in an effort to reduce cost of raw materials by going back up the supply chain,” said Simon Baker, Ducab’s supply chain manager. “The purpose of supply chain optimisation is to add value to products and save on costs. The main objective is always to control output quality.” In order to achieve that goal, Ducab requires all materials to meet a set of quality criteria by implementing phased testing for products provided by outside suppliers. “In the first phase, we test technical fit of their product to our products,” said Baker.

According to Baker other optimisation strategies include consignment stocking where materials are held locally in anticipation of future inventory demand, which shortens the supply chain and helps fine tune orders. In addition to this, good communication with suppliers (many of which have been partners since Ducab was established) and a focus on value (more than price) rounds out the strategy.

Expansion of facilities inevitably brings upgrading of equipment, automation of processes and hiring new employees along with training the existing workforce to operate specialised equipment. “The backward integration of our processes really proves our commitment to quality control, ensures cost control, adds value to the local community by keeping jobs here, and is an investment in a UAE company’s growth,” said Shaw. The training was provided by suppliers along with commissioning engineers prior to installation and was then followed by onsite training by specialists. “Along with the new equipment on the floor, the copper rod plant is also outfitted with Maximo, the latest in asset management systems, for tracking all maintenance activities,” said Zamzam. “In addition, we have a state-of-the-art, automated building management system which monitors the facility at all times including the lighting, A/C, compressors, chillers and fire alarm system.” With the construction industry booming in the Middle East and North Africa (MENA) new players are introduced into the market every day. In order to expand market share in an increasingly challenging climate, Ducab seeks creative ways to remain competitive and ultimately reach its goal of becoming the regional leader in cable. The addition of the copper rod plant, and previously the PVC factory, are examples of the company finding unique ways to implement a strategy of backward integration as a cost control measure. This method in itself is not unusual, however, Ducab’s visionary leadership has taken it a step further by employing an in-house financial analyst who reviews costs verses revenues, and constantly calculates the “hedging” position of a potential expansion or acquisition.

Producing the highest quality power cable possible has been Ducab’s mission for almost 30 years, setting the standard for power cable manufacturing in the region. With its systematic and scientific approach to production, quality materials management and customer loyalty, Ducab has achieved the highest industry certifications, the most prestigious management awards, and well-deserved peer recognition. Ducab was the first manufacturing company to be awarded the Emirates Quality Mark Award and was also a recipient of the Investment Corporation of Dubai Chairman’s Award and the Gulf Excellence Award. Continually establishing best practices in the industry, Ducab has obtained product type approval of a range of cables to British Standards by BASEC, and has type test approvals and product quality certifications from KEMA, Lloyds Register, WPB, ERA, BRE and CPRI. In 2001, Ducab became a 100 per cent UAE company, with ownership equally shared between the Governments of Dubai and Abu Dhabi. Ducab continues to expand its world-class facilities to meet the growing demand of customers around the region and the world, and now operates from four locations in Dubai and Abu Dhabi.

Ducab’s tailor-made advanced cable solutions have laid the power foundation for world-renowned projects such as the Burj al Arab, Burj Dubai, Palm Jumeirah, Dubai International Airport, Emirates Towers, Emirates Palace Hotel, Oman Culture Center, Kuwait Oil Company and Kuwait National Petroleum Company, Bahrain Financial Harbor, Alba Aluminium Company and numerous other prestigious developments throughout the Middle East and beyond.

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