The growth of local manufacturing in the UAE
Richard Edwin, CEO of Erith Group, talks to The Energy Year about how the group’s activities support the UAE’s vision for local manufacturing, as well as the company’s latest developments, clients and expansion plans. Erith Group is a provider of advanced engineering solutions
How is Erith Group aligning with the UAE’s scheme of localisation and local manufacturing?
Erith is the master distributor for the Middle Eastern and African region for both Garlock Sealing Technologies and Garlock Pipeline Technologies. One could say that we come from the “Garlock school” due to our intrinsic link with this company, but we decided that, as a strategy, we needed to be closer to the customer.
Since inception, we have aligned with the vision and needs of the Emirates and its energy industry by trying to fill in the gaps found here. Over the years, we have become one of the region’s most advanced engineering solutions providers, catering sealing products to clients in the oil, gas, chemicals, nuclear and mining sectors.
Moreover, we have aligned with the nation’s goals and we are transitioning from being only a trader to being also a manufacturer and service provider. This is part of a major localisation scheme witnessed across the region.
From here, we will not only manufacture in-country but also provide key services guaranteeing national self-sufficiency and thus, no longer having to depend on imports and international players. At the same time, this will help grow the GDP of the country, which makes us a direct contributor to the nation. The country is becoming a central hub of exports to which 60-70% of our products are being exported to other countries such as Saudi Arabia, Egypt, Nigeria and Iraq.
How successful was the inauguration of your new sealing plant and what expansion plans do you have in the pipeline?
In mid-2022, we inaugurated our new industrial sealing factory in Al Hamra Industrial Area in Ras Al Khaimah. Our current capacity is about 850,000 gaskets a month and we reached 95% capacity within the first month of operations.
The new plant will eliminate the import of foreign sealing products and solutions to the UAE and will export to other countries after meeting the domestic demand. Accordingly, we have started looking at an expansion scheme to double our current production and also start producing metal expansion joints to cater them to the whole region.
In addition to this, we are now considering setting up a new gasket manufacturing plant in Abu Dhabi, to be closer to our customers. The gasket market is on the rise but we have realised that gasket manufacturers are relatively far away from the areas of demand in Abu Dhabi – five or six hours away. So, we want to be the direct point of reference for customers, being closer to their needs.
Lastly, in Q4 2022 we signed a MoU with ADNOC to set up another facility in-country. We are now doing the feasibility study with them. The overarching strategy is that we want to service the UAE to cover its domestic needs. Yet, our approach goes beyond that, as we want to be an export hub for the whole region – Middle East and Africa.
How does your manufacturing quest contribute to the UAE’s “Make it in the Emirates” initiative?
Our manufacturing ventures are expected to reduce imports of the related products by about 30%. Secondly, we are an important part of the UAE’s industrialisation scheme, where we are not only manufacturing for the country, but also exporting to other countries and thus, proudly promoting Make it in the Emirates products.
ADNOC is strongly supporting this quest for local manufacturing and signed an agreement with us to set up another facility. Not only are they committed to our mission, but they are also helping us by speeding up the pre-qualification process. There are also some financial instruments that are being supported through ADNOC or government-backed banks. These bodies are willing to support us in terms of investment and capex.
Our vision is aligned with ADNOC: to shift our identity and scope from being a simple trader to a manufacturer and service provider. Thus, we are actively contributing to the “Make it in the Emirates” scheme, and solidifying our ties with ADNOC.
What new technology are you using in your plants to be more efficient and sustainable?
We collaborate with a company called ZUND in Switzerland that came up with an efficient combined AI and mechanical method for cutting the gaskets. Gasket cutting can be carried out in a number of ways. This new technology increases efficiency and reduces waste. As an example, we have a large order from Jordan where we estimated about 60 sheets. With this technology we could do it with 51 sheets, which makes us much more efficient.
The method it uses is called nesting – once you insert the sizes of the gaskets, the computer uses an algorithm to calculate the best method for using your sheets. By combining top manual skills and this technology, we’re able to achieve huge efficiencies and hardly any waste is left. This is not only economically efficient, but also more environmentally sustainable.
How important is Erith’s push for R&D and what inroads are you making in the area of tank and heat exchange cleaning technologies?
We invest around 5% of our revenue in R&D, but we want to further increase our commitments in the area of innovation. We have an engineering excellence centre in Chennai, India, but we want to focus our R&D capacities in Abu Dhabi. Primarily, we want this because we aim to put in work closer to the end users. Secondly, as markets become more competitive, the only way of staying ahead of the game is through innovation.
When it comes to specific technologies, we are looking at special sealing products. We are also seeking technologies in the areas of water and waste cleaning. On this note, we will be involved in a contract for ADNOC involving tank and heat exchanger cleaning where we will apply the latest technologies.
What contracts and clients have you worked with across the energy value chain?
We are looking at about USD 8 million-10 million in orders for 2023. We secured long-term price agreements with companies such as EGA, Aramco, Shell and Swiss (SUEZ) Steel in the MEA region, among many others. We are also working with THERMa-Pur, which requires specialised high-temperature metallic gaskets for ADNOC PDH facilities. These gaskets can go up to 1,200 degrees Celsius and we also manufacture them. During Covid, we also managed to provide oxygen service gaskets for oxygen suppliers in the MEA region. We also manufacture and supply very niche-type gaskets.
Interestingly, we have a long-term agreement with a nuclear energy company and in December 2022 we catered a huge requirement of gaskets. Historically, the gasket business has had a high demand from the hydrocarbons upstream and midstream sectors in the UAE, but now we are seeing plenty of demand coming from the downstream as well. In this sense, the Ruwais complex is a great opportunity we aim to capitalise on. We can supply any area in the energy industry, be it nuclear or hydrocarbons, as we hold the highest standards.
What key growth milestones do you project in the short-to-medium term?
During the pandemic, we grew 35% and in subsequent years we have grown about 20-25%. We want to continue this growth path. Firstly, we aim to focus more on the service side of the business. We intend to grow our service unit by 30% in 2023.
Secondly, we aim to get closer to our customers, and this will be done thanks to our UAE manufacturing plant. Thirdly, we aim to set up two more manufacturing locations: one in Egypt and one in Saudi Arabia. Oman and Nigeria are also interesting markets for us to penetrate where we would start by opening offices. We are therefore looking to have around 10 entities, four manufacturing plants and one R&D excellence centre.
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