Rami Touma, President of CECA, talks about the chemical business and how their products play in the petrochemical industry.
Please excuse any typos in this hasty transcript.
Matt Register: Welcome back to the show Texas Business Radio. Texasbusinessradio.com is where you can go see the entire broadcast in beautiful high definition video. If you want to get your questions in, three ways to do that. We monitor #tbr on Twitter. Go to the website, get your question in that way, or our 24 hour call-in line, 844-814-8144. That means call in now, call in in the middle of the night. I don’t care. We’re gonna get the experts on here to get those questions answered.
I’m your host Matt Register. Jay Curry’s the one sitting over there in the co-host’s chair. We’re gonna talk about the export of oil field equipment. Very fascinating company in here that essentially takes oil field equipment and builds packages, and sells them overseas, and some really cool things that happen within that.
CECA is the name of the company. Rami Touma is the president of CECA out of Houston. Jay, what do you think about this, man?
Jay Curry: I think this is a great model. You hear a lot about imports and experts, their impact on the economy. This is definitely an impact on our economy, and it helps get our goods out. This is a great model.
Matt Register: Yeah, no doubt. Rami Touma, president CECA. Rami, welcome to the show.
Rami Touma: Thanks, I appreciate you guys having me. Looking forward to speaking to you.
Matt Register: So, CECA. What do you do, who do you do it to?
Rami Touma: Oh, boy. It’s a long question. It’s a big question. I’ll try to answer it as efficiently as possible. What CECA does, we’re a US-based corporation. We’re here in Houston, TX. We have offices in Algeria, and Tunisia, and Paris. We were founded in 2003 by Maher Touma, my uncle. He and I started the company together, and at the end of the day what we do is we help US oil field manufacturers get their products sold, marketed, serviced overseas.
It’s very important for these guys to have a diversified market. You don’t want all your eggs in one basket. The United States is a wonderful basket to have all your eggs in, but the United States goes up and down. What we tell our partners is our region, north Africa, is so dependent on the production and export of oil that when the price goes down, they don’t lay down their rigs the way the United States does. It’s a real luxury we have here in the United States to be able to just stop drilling when it’s not worth drilling anymore.
Matt Register: Yeah, they can’t stop drilling, right?
Rami Touma: The US can, the Algerians cannot stop drilling, or a lot of these petro-dependent states cannot stop drilling, so by having a piece of that market share over there, you’re protecting yourself from other markets going up and down. The Russian market can be volatile, the United States market can be very volatile, South America with all its political turmoil. North Africa, Algeria specifically, has been a pretty stable country for the last 20 years. It’s a big oil market, they pay, they like good quality, made-in-the-USA equipment, and that’s kind of the niche that we found.
Matt Register: Well, it’s one thing to be able to make a mud pump. Right? It’s quite another to be able to go into another country, another north African country, and outsmart the banking system, the finance system, the collection system, all the laws, and permits, and the import/export laws pertaining to it, and that’s what you guys have made a business out of, is having people on the ground there to be able to handle all of that.
Rami Touma: That’s right. I look at Algeria, you know there’s that phrase, “If you can make it New York City, you can make it anywhere.” If you can make it through the Algerian public tender system, you can make it through any country’s public tender system because it’s got a lot of red tape, it’s very regulated, it can be very complicated. You have to have a very strong financial partner, you’ve gotta have a very strong bank, but more importantly you need a bank that knows international business, a bank that knows international exports, a bank that has direct relationships with our client’s bank.
Our clients are in north Africa, they’re in Algeria. Their banks are not CitiBank, or HSBC, so our bank Amegy has set up a system for us through the XM bank to be able to guide our partners through this tender system, actually guide us through the tender system, because at the end of the day we’re the one that are signing the contracts with the end users. It’s allowed us to assist all these manufacturers here in town that would like to get their products in overseas markets, but really don’t know the first step of how to do that.
Matt Register: Well, we were talking during the break, and your family background is fascinating. You’re a family of Syrian Christians that immigrated here, what, 30, 40 years ago now, right?
Rami Touma: That’s right. In the late 1970’s we moved to The Woodlands, Texas when it was barely The Woodlands, Texas, and that’s where my family planted our roots, and that’s where we’ve been ever since.
Matt Register: Well, God bless America.
Rami Touma: Absolutely.
Matt Register: It sounds like you have built a wonderful company in the meantime, right?
Jay Curry: So, is this … Have I got this right? There’s big, big, big oil companies that are selling over there. You’re able to bring in some of the competitors that are not owned by the big, big companies. You can bring in like if you have a manufacturing product, oil field-related, if you’re not selling into the big companies then you’re an opportunity for them to get out there and become part of it.
Rami Touma: You know, our partners vary. We have partners that sell five to six million dollars of equipment a year, and we also sell all of Cameron’s BOP equipment in Algeria all through the year, so our partners-
Jay Curry: You also do tap into the large companies’ products?
Rami Touma: Absolutely. There’s no doubt a company like Cameron can work their way through the system that we work through in Algeria, but Cameron wants to do what Cameron does best. That’s manufacture equipment. They don’t want to have to worry about financing with the Algerian banks. They don’t want to have to worry about issuing bid bonds. They don’t want to have to worry about going through and issuing performance bonds, letters of credit, payment terms. They would much rather have CECA issue an order, have CECA pay them on the agreed payment terms, and then let us follow up with the work down the line.
Our smaller partners, companies like Russell Oil Field, Cam-Tech, they need us because they wouldn’t be able to get in markets like that without our assistance.
Jay Curry: You really cut the red tape, as well as everything else.
Rami Touma: Yeah. I mean, our motto’s always been, I think I’ve said it, let’s let manufacturers do what they do best: manufacture. Our niche has been assisting manufacturers by getting their products for them overseas. We will-
Jay Curry: That’s a great niche.
Rami Touma: Navigate for that system for them.
Matt Register: Well, and gaining them a market they otherwise wouldn’t have the ability to go get themselves, especially the smaller guys, right?
Rami Touma: Absolutely, and not just any market, but a good market. Algeria’s a top 12 oil market. They produce over a million barrels of oil a day. They were doing two million barrels during the good times, so it’s not just another market, it’s another successful, steady market, and more importantly, it’s a stable market.
Matt Register: Without the volatility that some of the other markets have in there.
Rami Touma: That’s right. If you look at Tunisia, Egypt, Libya, over the last five or six years those countries have all had a lot of chaos. Algeria stayed relatively stable during that time period. My theory on that is they had a civil war in the 90’s. They remember that civil war in the 90’s, so as they were seeing Libya and Egypt start to have some unrest, those memories are very strong, and I don’t think they wanted to go back there.
Algeria’s been a very stable country since the late 90’s. They’re proud about that, and I think that’s what they want to focus on going forward.
Matt Register: Yeah, no doubt, and makes for a good market to sell in too, right?
Rami Touma: It’s a great market, with great people. I really enjoy the Algerian people.
Matt Register: We also touched on during the break, and this is something that I think I have mixed feelings on it, a lot of people have mixed feelings on it, is the XM bank. You guys are big time exporters with the XM bank, right?
Rami Touma: Absolutely. We couldn’t be the company we were without the XM bank. The XM bank has been very crucial to us. Before we got with the XM bank, our sales hovered between six and ten million dollars. During our little discussion before here I confirmed to you that our average sales over the last three or four years have been between $50 and $60 million, and I really feel the XM bank was a big part of that. The support they show us, the opportunities they’ve given us have been very crucial to our growth.
Jay Curry: That’s American money going out, American products going out into the world. That’s big dollars for export.
Rami Touma: Absolutely. The XM bank is not just a bank that helps … Most people look at the XM bank as a bank that will go to Kenya. If Kenya wants to buy an airplane for their airlines, they’ve got Boeing, and they’ve got Airbus. XM bank will go into Kenya and they’ll say, “Hey, if you buy Boeing we’ll finance you at this rate over this time period.” Kind of give them a sweeter deal so that they may look at Boeing as opposed to Airbus. I don’t see any negativity in that.
They do help large companies, GE, Caterpillar, Boeing, but these are American companies. They also help companies my size, as well, and that’s very important.
Matt Register: Well, and that is 100% the reason to keep it around, right, is for the smaller companies, the ability to have smaller American manufacturers be able to open up markets overseas is exactly the reason. It was refreshing when we were talking about how they’ve actually helped you and your business. That’s a good thing.
Rami Touma: They’ve been very important to us. The opportunities they’ve given us because of their affiliations with the government is options that a standard bank would not be able to give to you. XM bank, the final thing I’d like to say about the XM bank is it actually makes money. It makes between $600 million and a billion dollars every year. That’s money that goes directly back into the US treasury, so it’s not like taxpayers are paying for that bank. Taxpayers are actually profiting off of this bank, so we’re helping US corporations and we’re actually bringing some money back in the US system.
Matt Register: No doubt. Who needs to pick up the phone right now and give you a call? If you have an oil field product in the United States that you’d like to open up to that market, is that somebody that needs to give you a call?
Rami Touma: Made in the USA matters a lot. It matters a lot in this country, but believe it or not, it matters more in some other countries. Algeria is a country that really appreciates made in the USA oil field equipment. If you’re an oil field manufacturer in this city and you would like to explore a new market, if you would like to look at a market that will be steady and consistent, if you would like to diversify your work, that is who you should … That is a typical company that we would usually partner up with.
Matt Register: Wonderful. Rami Touma is the president of CECA, CECA.com is the website. CECA.com. We’re gonna have that linked right form texasbusinessradio.com if you’re driving and can’t take notes. We’re out of time, though. We’ve gotta go pay a couple of our own bills. We’ll be back right after the break with a whole lot more Texas Business Radio.
Rami, thank you very much for joining us.
Rami Touma: Thanks for having me. I appreciate it.
Matt Register: That was fascinating.
Rami Touma: I enjoyed that.
Matt Register: All right, guys. Don’t go anywhere. You don’t even have time to go anywhere. We’ll be right back.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.