FosRich diversifies into transformer repair
Electrical lighting company FosRich has signed a four-year renewable contract with Jamaica Public Service Company, JPS, to repair over a thousand transformers yearly of the 40,000 deployed throughout the power utility’s network.
Under the agreement signed Tuesday, the transformers are to be repaired and certified to ISO-9001 standard for good quality, according to CEO of FosRich Company Limited Cecil Forster.
It will obviate the need for JPS to send the massive transformers abroad for repairs and maintenance.
“This will save the company close to a billion dollars and reduce the need for purchasing these products overseas, resulting in savings in the use of foreign exchange,” Foster said.
FosRich is in the business of distributing lighting products and manufacturing PVC pipes from its base in Kingston. This new repair business will operated from a 120,000- square-foot plant located in Hayes, Clarendon.
The company is investing about $100 million in the project, says Foster, who notes that Hayes has not seen this type of plant commissioned in the community since the 1960s, when the Jamalco bauxite refinery was built there.
The new transformer repair business, to operate under subsidiary company Blue Emerald Limited, is housed in two buildings that sit on 25-acre property. FosRich holds a 25-year lease on the property from owner Factories Corporation of Jamaica.
The equipment was acquired from Federal Transformer Manufacturing & Consulting Limited, a company that had been in the same line of business, transformer repair, but folded after its founder passed away.
“The buildout of the operation will be done in two phases initially. We’re not using all of it [the complex] right now, but in another six months we will go to phase two, which I will not say more about at this time,” Foster said.
He was alluding to a deal in the making that will see FosRich actually manufacturing transformers, in addition to maintenance and repairs.
The $100-million investment has a two-year payback period, according to Foster. JPS is FosRich’s first and, currently, only client, but Foster is looking to do similar work for large Jamaican facilities, such as hotels and manufacturing companies. He is also looking for markets outside Jamaica, specifically the English-speaking Caribbean.
“We will definitely be drawing business from the Caribbean, and as soon as we are fully established we are going to do a satellite operation, possibly in Grenada. The expertise is already in place, but certainly, we will be leveraging relationships down the line,” Foster said.
Foster says the move into transformers is a natural progression from selling electrical components and the involvement in major projects. It was just April 15 of last year that FosRich entered the manufacturing arena with the pipe-making plant at Maverley in Kingston. The move into yet another new line of business appears rapid, but Foster says his expansion programme is being rolled out according to plan.
Additionally, FosRich has chosen arenas in which no other player exists. It is the only company making PVC pipes in Jamaica, and now it is the only one to do transformer repairs.
And as for the latter, under the repair deal with JPS, the four-year renewable contract has the added protection of six-month periodic reviews, Foster said.
“Overexpansion hurts when your margins get depressed through competition,” said the FosRich CEO, who co-founded the company with wife and Chairman Marion Foster. “We’re not in that position since we are the only one doing this business at this time, and the alternative is to deal with North America, which has proven expensive and time-consuming,” he said.
Blue Emerald will be staffed by 30 persons in the first instance, headed by Stephen Spencer, formerly of the now defunct Federal Transformer Manufacturing & Consulting Limited, which operated out of St Ann.
Cecil Smith and Troy Crossley will head the production and engineering functions, respectively, and technicians are being drawn from among persons trained at UWI Mona, UTech, HEART Trust/NTA and National Tools & Engineering Institute.
FosRich will be replacing and upgrading Federal Transformer equipment over time. By October, the company plans to install two 50-tonne cranes to move the heavy-duty transformers in operation at the various JPS sub-stations around Jamaica.
There is potential hazard in repairing and maintaining transformers, since some are known to use chemicals like benzene, a cancer-causing agent. To that, Foster says the necessary hazardous chemical protocols are in place, but he also noted that his company would not be conducting repairs on transformers that have hazardous chemicals.