Mr. Alec Davis is the Chairman and Chief Executive of Davis & Shirtliff, one of the best known companies in the water industry not only in Kenya but also increasingly around the greater East Africa region. The company has several product divisions – water pumps, borehole equipment, water treatment, swimming pools, solar products and generators. From its headquarters in Nairobi’s Industrial Area, Mr Davis oversees a fast growing business enterprise across nine countries in the region.
Mr. Davis, 63, was born and brought up in Kenya. He went to St. Mary’s School in Nairobi before proceeding to the United Kingdom at the age of 15 to continue with his education.
While in the UK, he earned an engineering degree and subsequently enrolled for a master’s degree in business administration (MBA). He came back to Kenya in 1976 and joined Davis & Shirtliff, a company started by his late father Eddie Davis and a partner Dick Shirtliff way back in 1946. When his father passed away in 1982, he took over his shares and in 1990, the partner exited the company after selling his shares to Mr Davis.
Under the leadership of Mr Davis, the company has been on a solid growth trajectory continuing to diversify its product portfolio and venturing into new markets and is now the largest company of its type in East and Central Africa. Mr Davis spoke to Construction Review’s Francis Makari about the company’s beginnings, sustained growth and future.
CR: Davis & Shirtliff has grown tremendously over the years and is now one of the big names in the industry. Give us a background to the company.
Mr Alec Davis: Davis & Shirtliff was started by my father with his partner Dick Shirtliff after the Second World War. They were both engineers and basically concentrated on water schemes for development projects, farms and the tourist sector, some notable early ones being Karen Estates, Kitisuru and Gigiri. As the company grew, they went into swimming pools in the 1950s and also carried out some construction. In the 1960s, they began importing equipment. Their first major supplier was a Danish company called Grundfos, with whom we still have a close relationship. The importation business then grew to the extent that it eclipsed project activities and the emphasis changed to importation and distribution of products. We widened our product range and in the early 1990s took on Pedrollo, a water pumps company. In the mid and late 1990s, we accomplished two things: we moved into new product segments, that is solar energy and generators, and also began expanding our branch network. Our first branch, called The Poolshop, was established in 1994 in Westlands. We progressively opened in Eldoret and Kisumu before establishing in Uganda and Tanzania. The branch network has continued to grow since then and we now have 31 branches.
Take us through your product range
We are in five product segments, the most significant being water pumps where we mainly supply Grundfos and Pedrollo products. In the last five years, we have also introduced our own range of pumps known as Dayliff which are Far East sourced. These are value products of excellent quality. That is the core focus of our pumping business. We sell pumps for every type of use with boreholes constituting the biggest segment. We sell a whole range of borehole pumps from very small to large pumps for industrial use.
Swimming pools are also a very strong market for us. We manufacture many of our own products here and import others from around the world. Water treatment is another long established and important segment and again we manufacture a number of specialized products here including Reverse Osmosis plants, water softeners and media filters. In order to satisfy the water treatment market, one has to offer a very wide range of products because each water condition requires a different treatment process. These processes might be softening, filtration, desalination, chemical dosage and so on. We offer small equipment for use in domestic situations and large plants for small villages as well as for industrial and commercial applications.
We have recently invested in a new factory here where we are focusing on two technologies: one is reverse osmosis and the other is ultra-filtration. This is basically a filtration process with the same result as sand filtration but filters out much smaller particle sizes. We are able to go down to 0.2 micron whereas conventional filtration achieves 5-10 micron, meaning very pure water is produced. These are very specialized treatment units which we bring in from the United States and then assemble here.
In terms of new business areas, we are also one of the biggest players on the solar energy market. We import solar PV modules, we manufacture solar water heaters and we also supply power back up systems. As mentioned a big part of our business is water pumping and solar water pumping has really grown recently, the main reason being the drastic reduction in cost of solar PV modules which has dropped by as much as 80% in the last five years. This has transformed the economics of solar energy and particularly for pumping. There’s a whole new range of pumping solutions available making solar power more cost-effective compared to the traditional solution of a generator. This is an important new business segment for us and as well as supplying Grundfos products we have recently entered into an agreement with leading solar pumping specialist Lorenz to supply their extensive range so now have a solution for all requirements.
The final product segment is generators for standby applications. We have our own brand, all foreign sourced ranging from small high speed generators up to 10 KVA for domestic applications and larger slow speed generators up to 500 KVA. These are also supplied from the Far East and are of very high quality using international standard engines including Cummins, Lister and Kohler.
What informs your decision to go into new business areas or product segments?
Much of it is circumstantial, some of it is opportunity and some of it is strategic intent. Our strategy is that all our products must somehow be complementary and should be related to water. For example we entered into the generator business because we were supplying pumps and pumps needed power. We have used the water opportunities to springboard into other related products areas and generally there’s a strategic intent and also market opportunity. With the solar industry for instance, the market has been growing very fast and we saw that opportunity a long time ago and seized it.
Davis & Shirtliff has been expanding in the region and now has a presence in nine African countries. How is the performance of your subsidiaries in these regional economies?
They are doing very well. Our basic business model is that we import, assemble or manufacture a very wide range of products which we then distribute from Nairobi. We have a fleet of trucks and all our branches are within reach of the head office by road. We operate in Kenya, Tanzania, Uganda, Rwanda, Zambia, Southern Sudan, Ethiopia and we are now also doing business in Somalia. We also have activities in DR Congo and Burundi although we do not have branches there.
In 2004, your company was ISO 2001 certified. Why did you feel it was important to go through this process?
We felt it was important for two reasons. The lesser reason was that many of our customers were increasingly requiring it and obviously from a marketing point of view it was an advantage. However the main reason was that the whole process focused on quality and quality management which have always been key issues at Davis & Shirtliff. We saw the process as a way of structuring the quality focus in the business but most importantly raising the involvement of all our staff. The ISO process is broken down into departments and functions with each department required to describe its own quality processes. We felt it was important to get everyone on board and make it a team building effort to push the commitment to quality in the organization. We have been very successful in that regard.
What do you consider to be the main achievements for both you and the company since you assumed your position?
I think that there are two achievements that have driven our success: one is that we have put in place a sophisticated Information Technology and Management Accounting System. You cannot run a business like this without good controls – and we have good controls. But even more important is our culture. We are an entirely indigenous African business; we have no expatriates and most of our senior managers in our branches are Kenyan. We are now a world class organization committed to quality, integrity and service to the customers. There’s a huge commitment and motivation in the workforce to make sure that the company succeeds. That really is the driving force behind our success. Everyone is involved in the business and that is how we have created the organization that we have today.
What are your major challenges both here in Kenya and the other countries where you operate and how are you countering them?
One of the challenges in the whole region has to do with complications in rules and regulations but of course this is a challenge for everybody else. It just makes life a bit more difficult. However, we have been very fortunate in that we have not had too many problems or issues in the business. Today, probably more than ever, the issue is competition. Competition is in itself a good thing in many ways: it shows the market is vibrant and there are many opportunities. But there are many new competitors entering the market and this is obviously a challenge for us. We are countering this challenge by investing in the business, developing our product range and being more aggressive in our selling. We feel we can rise to the challenge.
You’ve talked about competition but how do you deal with counterfeit products that continue to appear on the market especially in the pump segment?
It’s very difficult. Trying to find out where these pumps are coming from is very difficult. We have tried to take legal action and it’s very complicated and obviously there are vested interests so it’s hard to get to the bottom of it. But our products offer extremely good value and most customers are not fooled. I’m a great believer in the free market. The fact of the matter is that these fake products are nowhere near the high quality as our products and they are bought on the understanding that they are not warranted. But I believe most people are rational and they understand that in order to get something that is reliable and suitable for their requirements, they have to spend a little more money. There is always going to be people trying to take short-cuts and one has to rise to the challenge by being competitive and supporting the product. But even more important is to have a good product. If you have a good product that is fairly priced, you will succeed.
Davis & Shirtliff is a successful business enterprise. Do you have corporate social responsibility programmes?
We have a very active community service programme. We focus on water installations for deprived sections of the society, mainly children. We don’t publicize these activities much but we install pumps and so on; we give a lot of our products away. And we will continue doing this on a regular basis.
You have built a strong, vibrant company that clearly looks set to outlive individuals. Where do you see Davis & Shirtliff 20 years from today?
Well, I’m very fortunate to have two sons in the business; one is already here and doing well while the other is joining soon. But we’re not really like a traditional small business; we are much more corporate in our structure with a well defined organizational structure and management. This will help us to grow and transition through the next generation in the business.