There have been numerous discussions and webinars over the last few months which have addressed the Covid-19 related challenges the sugar industry now faces but for the most part, these have focused on the ramifications to the millers and the cane growers. The bottom line seems to be that, for these two groups, the impact is minimal in terms of the production costs and sugar price, both world and domestic.
In reality, there is another group that has not been considered: the equipment providers, consultants and service technicians who support the industry. Up until March of this year, we all went about our business visiting customers and providing our expertise. The personal touch has been standard practice for most service providers, at least since I started working in the sugar industry over 40 years ago. Personal relationships and friendships have developed over the years between our customers and ourselves which, during these difficult times, may prove to be the most valuable assets for our companies.
The services that we provide can be broken down as follows:
- Visits by sales engineers to sugar mills
- Visits by vendor engineers to survey sites for new equipment orders, construction supervision, commissioning, and training
- Visits by consultants who provide ongoing technical support
Currently, because of the difficulties with global travel, we cannot provide these services and at this point, this situation seems indefinite. How does this impact on the vendors and consultants?
The sales engineers are normally very experienced sugar engineers or technologists whose companies provide information and proposals which allow the miller to decide on investments. Normally, such visits involve factory visits and inspection of proposed project sites.
Once an order is placed for an item of equipment, it is usual that a site survey will be undertaken to collect process data and details of existing equipment into which the new plant will incorporated. This is generally the key to a successful project.
During construction of the new equipment, site visits are made to ensure local works are in accordance with the vendor design. Once installation is complete, a further visit will be made to check the installation and supervise commissioning, performance trials and training of the factory staff.
Normally, supply contracts for equipment include financial guarantees based on agreed plant performance parameters. Failure to complete this activity may result in financial retentions not being paid which impact cash flow and profitability.
One of the biggest issues any supplier faces now is the delivery of goods and services. Shipping of goods, especially by air freight is now prohibitively expensive. However, for some equipment, there is really no alternative because, for example, the shipping of control systems and instrumentation by sea freight is not ideal.
Our own company, Sugar Technology International, is not exempt from any of these challenges. Currently, STI has ongoing equipment supply contracts where a site presence is required for plant start up or for trouble shooting. Trying to remotely fine tune a sugar dryer control system via Skype or Zoom conference call with a customer from countries where a translator is required for normal communication is no easy task and is frustrating for both ourselves and for the customer.
We also have team members in Thailand working on long term project assignments who are unable to take their leave or have family members join them due to the local quarantine protocols. This particular project in conjunction with a Chinese contractor is severely delayed due in part to travel restrictions and to the subsequent delay in the issuance of work permits.
This year, I only have one sales trip made to date, which was in January to Thailand and to Indonesia. It seems likely at this point in time that the prospects for business travel before the end of the year are zero. Normally, my colleagues and I spend upwards of 200 days per year on the road drumming up business. We will definitely feel the effect of this inability to be on the road in terms of sales in 2021.
Going forward, sugar mills will continue to buy equipment and services. The question is: How do we as suppliers operate without the ability to travel internationally? We can train local staff but that takes time and money. That then brings up the issue of staff retention because historically, once they are trained, they become potential assets for the local sugar mills.
Will the mill owners be understanding and support the vendors?
Currently, we do not have answers to the above questions. The reality is that many companies still have employees furloughed. Some companies will not survive the current business climate. We are ALL searching for ways to adapt to this new world.
In the short term, it seems likely that the millers will lose the services that are provided during sales visits and that the “White Board Warrior” approach that we have all come to know and love will disappear. Zoom, Skype or other online meeting platforms can take you so far but at the end of the day, nothing beats 30 minutes in a sugar factory discussing a problem and finding possible solutions with the factory engineers.
In conclusion, I believe that the vendor and consultant groups will be the hardest hit by the Covid-19 pandemic in relation to the sugar industry. When we eventually arrive at some semblance of normality, the landscape for this sector of the industry will have changed dramatically for each stakeholder group.
Sugar Technology International, 555 Republic Dr, Suite #115, Plano, Texas 75074, USA
mobile + 63 918 8268378, Email: Tmilne@groupsti.com, tel usa: +1 214 764-2917