Rhodes’ regional approach to servicing Papua New Guinea

Rhodes is a pre-fabricated buildings company focused on the Papua New Guinea market that has support operations in Australia, the Philippines and China. Managing Director Emanuel Papas outlines its strategy for growth to Business Advantage PNG.

Papas says the best way to describe the company is as ‘a vertically integrated design, supply and provider of prefabricated buildings.’

‘The vertical integration allows us to deliver buildings at very competitive pricing, whether it is tenders or just the supply of materials and kits on their own.

‘The barriers to entry in PNG are high, which means that once a company is established it is in a position of advantage.’

‘In addition to our office and manufacturing plant in Port Moresby, we have a procurement and manufacturing operation in China, a back end design office in the Philippines, a head office in Australia and local operations for each project. There wouldn’t be too many companies that have that.’

Papas says PNG is the company’s main market, but it is also registered in Fiji. The company is currently diversifying into other countries in the Pacific region.

Challenges

Rhodes’ Emanuel Papas Source: Rhodes

Papas believes the barriers to entry in PNG are high, which means that once a company is established it is in a position of advantage.

‘It takes a while to set up, it takes a while to get your feet on the ground and the right local people in place. It is quite difficult to do business sometimes. Logistically, there are some very remote areas in PNG, which makes it tough to deliver on your contracts. You certainly have to keep working at that.’

Papas says another challenge is the lack of availability of foreign currency, which he claims the company is managing effectively.

‘Yes, it has affected our delivery, when we receive payment for contracts in kina and then have to purchase required materials offshore in US dollars or Australian dollars. We have managed it to comfortable levels through our detailed finance processes and selecting our clients carefully.

Clients

Papas says the company has operations across PNG. ‘The main facility for our manufacturing and logistics plant is in Port Moresby, and there are also regional lay down yards in Wabag, Alotau and Arawa to support various provinces. Then there are the individual project offices for all the projects.’

‘The company’s biggest growth area is prefabricated building components.’

The company’s modular systems are predominately used by mining clients. ‘That has its advantages if it is a highly specified or technical module like an ablution. Those kinds of modules and cost levels are suited more to the mining industry.’

The company’s biggest growth area is prefabricated building components, which can be used with any design.

‘Our major focus is on Overseas Development Assistance projects,’ says Papas.

‘School buildings we provide are funded mostly by DFAT [the Australian Department of Foreign Affairs and Trade]. And then we do health centres, which are funded by the ADB [Asian Development Bank].

‘I would estimate that about 95 per cent of our labour force in PNG is national.’

‘We do have some housing projects with the likes of Nambawan Super. We are also in discussions with various housing authorities in the Pacific in order to provide affordable housing for the demand that exists.’

Growth

Rhodes may have a regional back office structure, but Papas says the operations are very localised. ‘I would estimate that about 95 per cent of our labour force in PNG is national. And I don’t just mean our own local staff out of our head office in PNG. I mean local as in the local villages where our projects are.

‘They aspire to get quality housing and a better quality lifestyle and that is where our investment is.’

‘Our typical project structure will be a supervisor and a leading hand and they will act as supervisors and instructors for the local village’s mostly unskilled labour force. Which, based on our system, means it doesn’t take long for people to become familiar with how it all gets installed.

Rhodes fabrication facility. Source: Rhodes

‘We are having some good success in training local people who can then utilise these newly acquired building skills for other projects, or for themselves in their own capacity. It is quite a satisfying outcome at the end of each project.’

Papas believes that PNG is transforming into a country with a burgeoning middle class. ‘There are skills, there are growth opportunities, there are job opportunities.

‘They [Papua New Guineans] aspire to get quality housing and a better quality lifestyle and that is where our investment is, in terms of providing housing and social infrastructure—to support growing and improving communities.’

Copyright © 2017 Business Advantage International.

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