Patricia Henry, CEO of Arel Limited, and Earl Spence, director of medical sales and services (Photo: Garfield Robinson)
Kingston-based engineering and contracting firm Arel Limited has set its sights firmly on being selected as a preferred supplier for billions of dollars worth of imaging equipment to the nation’s hospitals.
The company, which supplies imaging equipment such as computerised tomography (CT) scan machines, magnetic resonance imaging (MRI) machines, X-ray machines and ultrasound machines, did a study assessing the needs of the country’s hospitals as a first step to securing a supplier contract. Arel is Jamaica’s representative for GE Healthcare equipment.
“In terms of equipment, we are talking about the order of over US$30 million worth of equipment that are needed now,” Earl Spence, director of medical sales and services at Arel Limited, told the Jamaica Observer in an interview. Spence said the estimate is for more than 40 pieces of imaging equipment desperately needed for the nation’s hospitals.
“We know exactly what are in those hospitals, because we would have supplied them,” Patricia Henry, CEO of Arel Limited, highlighted. Henry has been in that role since December.
While Arel did the study to determine the equipment needs for Jamaica’s hospitals, it however was not offered a sole source contract with the Government opening up the possibility of supplying the sector to other contractors as well.
“A tender is out to supply the hospitals with equipment, maybe through a public private partnership, and we are going to bid, but it is really our project that we brought to the table,” Henry emphasised.
Spence said this would be the first time since preparations were being made for the hosting of Cricket World Cup 2007 that any new equipment on the scale of what is being proposed now was bought by Government.
However, he said with general practitioners requesting more and more imaging services for their patients, the need for the equipment is growing each year.
“The problem is that some of these machines need special siting, especially the MRI or a CT scan machine. We would need a room to put them in, and those rooms don’t exist at some hospitals,” Spence continued. He said a solution has been proposed to get over that hurdle.
“You have hospitals out there, like Lionel Town and Spalding and Morant Bay, which have very minimal imaging equipment, and then you have Mandeville, May Pen, Cornwall Regional and KPH, etc, where the needs are different,” he pointed out. Getting imaging machines in more places would not only help to relieve pressure on the limited ones now available, but would also minimise the need for patients to be transferred to another facility to get the imaging done. He said a proposal was also made for the Bustamante Hospital for Children in St Andrew to be equipped with a CT machine.
Still, despite the need, getting the equipment requires money and the Government has been exploring at least two possibilities, buying them outright or renting the equipment from suppliers.
“We could buy the equipment and rent the Government, so we would get rental income flowing in. Also, being that we are associated with Eppley [an investment company], we can get funding from that company to buy the equipment to rent the Government,” Henry said, indicating that talks suggest the equipment will be acquired in phases.
“We have a contract to supply six X-ray machines to the South East Regional Health Authority (SERHA),” Spence told the Business Observer. He said three are for the Kingston Public Hospital, while the National Chest Hospital, Bustamante Hospital for Children, and the Spanish Town Hospital will receive one each.
Still, the diversified engineering company has its sights on growth outside of supplying hospitals with equipment. In October last year, the Musson Group and Productive Business Solutions (PBS), along with other equity shareholders including Henry, invested in the company. While it is not clear how much all invested, PBS’s financial statements for 2022 showed it acquired roughly 17 per cent of Arel for a consideration of US$246,000. At that investment amount, the valuation is US$1,441,378.10 for the overall company.
“My mandate is to increase revenues 20 per cent to 25 per cent this year,” Henry told the Business Observer. The company’s revenues are “generally in the vicinity of $1.2 billion per year”. As for profitability, it has been “on and off”.
So far, Arel has been working on various projects to date and has signed contracts to execute others, including supplying elevator and electrical services to two buildings that are under construction for use in the business process outsourcing (BPO) sector, and a contract with Kingston Wharves. It also has the contract to supply the Cornwall Regional Hospital (CRH), which has been undergoing a lengthy renovation, with air conditioning.
“We hope that this CRH thing comes to some closure because the AC costs over $700 million,” Spence highlighted. “The equipment is on site and needs to be installed. It was bought from 2021,” he added.
Additionally, the company recently completed lighting works for a new plaza in Mandeville, Manchester and is working on the AC unit at the Sangster International Airport in Montego Bay, St James.
“There are also smaller projects and we are getting ready to look at bids that are out there. We are registered with the public procurement commission and we are grade one in three disciplines, medical, electrical and mechanical,” Spence noted.
He said in the past, the company did 70 per cent of its business with the Government, but that has shifted now with most of the business coming from the private sector.
“Because a substantial part of Arel is in construction, when there is good activity in the construction sector, we tend to make money,” Spence said. He said, though official figures show a slowdown in construction activities – the sector declined by 5.2 per cent, 3.1 per cent and 4.8 per cent for the second, third and fourth quarters of 2022, according to official data – Arel has not seen any slowdown in demand for its engineering services.
But they stress that it is the medical business which is expanding now and will be the focus for the next two years, though no segment will be neglected.
“Right now we’re working on a project in Negril, by the way, a place called Omega on Norman Manley Boulevard, where the person is putting in an MRI machine. A CT and C-arm are already in place.”
“Another area that we are going to be expanding in is air conditioning,” Henry said. Arel’s biggest competitor in the AC market is CAC 2000 Limited.
With the acquisition led by PBS and Musson, which are companies with common owners, Arel now finds itself in a group with regional ambitions.
“We know being aligned with that group will also help us to, perhaps in the future, move into other territories with what we are doing,” Henry said. She however said the push for now is for the company to organise itself for success in digitised systems.
“The PBS brand has expanded all across Latam and has aligned itself with Arel, so we could expand where they are as well,” Henry added.
“What we are also trying to do is expand our footprint here in Jamaica. Recently, we added some 10 vehicles to the fleet because we also want to ensure that we stay on top of maintenance,” she continued as she highlighted that doing equipment maintenance will be another area of growth for the company, especially for entities which do not sign maintenance contracts when they buy equipment.
“We have a good reputation out there. We were asleep a little bit, but we have been awakened by some injection of capital, and so we are going after what is really ours,” she said, though she did not quantify how much capital was injected in the company.
Another area Henry said the company is eyeing is building management systems.
“We have not pushed that a lot, but we could explore that as well,” Henry said.
“What we want to do is look at other elevator brands that we carry.”
Now the company distributes only the Schindler elevator brand, which is top of the range. Henry said the company is looking at supplying cheaper alternatives that are priced in the midrange.
Ultrasound machine from GE Healthcare.
CT scan machine supplied by GE Healthcare.
An MRI machine supplied by GE Healthcare.
SPENCE… we are talking about the order of over US$30 million worth of equipment that are needed now (Photo: Garfield Robinson)
HENRY… we were asleep a little bit, but we have been awakened by some injection of capital (Photo: Garfield Robinson)
The Arel Limited headquarters on Picadilly Avenue in St Andrew (Photo: Garfield Robinson)
Patricia Henry, second right discusses the company’s plan with technicians.(Photo: Garfield Robinson)
Earl Spence, director of medical sales and services, examines a project with other employees.(Photo: Garfield Robinson)