There is never a boring day in the life of walling materials specialist Lee Chee Kok who build CAO Industries Sdn Bhd step by step
After being at the brink of bankcruptcy, CAO Industries Sdn Bhd executive chairman Lee Chee Kok, 55, has the first taste of knowing that nothing is certain when it comes to business.
In the 90s, he not only found himself in trouble financially but also put his entire family business in jeopardy.
As cliché as it may sound, Lee learns that entrepreneurship is a journey, not a destination. Every time when he thought that things were pretty much settled, changes happen.
Back then when he was managing director of the family business, he wanted to modernise the company beginning with how quicklime is manufactured.
Quicklime was manufactured in a primitive way where limestone was burnt in pot kiln made of bricks. The process is labour intensive. That was how it was done since 1980 when his father first started the business.
But Lee, who had the opportunity to further his studies in business administration was called back by his father as the business was not doing well. Lee did not hesitate and answered the call of duty of a filial son.
Since coming back from Canada in 1981, he got involved with the operations and realise that the manufacturing process need to be improved.
With 8 years experience, he thinks it is time to use a modern vertical shaft kiln and he expects to double the production capacity with consistent quality, apart from reducing labour cost.
“We were having 200 staff to produce 1,000 tonnes of quicklime per month. The cost of production is high and the quality of the product is also not stable,” Lee says.
Apart from that, Lee also realised that a primitive method of manufacturing will not produce a consistent product. Hence, Lee also setup a quality control department to check the quality of the products before releasing it to the market.
The quality of the quicklime is measured in terms of the calcium oxide content and also the burnt rate. Supplying to construction industry, the quicklime is in rock form and contractors would mix it with water to turn it into putty which then will be used to mix with cement and sand for wall plastering activities.
“We realise hardware shops require higher quality quicklime, with burnt rate above 98% because they deal with end users where quantity is smaller but quality is vital. It also commands a higher price, whereas for large scale contractors, they only require a burnt rate of at least 85%,” Lee says.
But with the modern vertical shaft kiln, Lee expects to create a homogenous quality for all. That is where the challenge begins.
Lee’s father was supportive at first and was prepared to invest RM6mil for this technology. After a year, 1990, the plant was ready in their factory in Serendah, Rawang.
“After commissioning, we were told that it needed to run a month before it would achieve stable output to warm up the linings and other components. But it did not happen,” Lee says.
Not up to the mark
Lee was disappointed with the result produced by the modern vertical shaft kiln where the burnt rate was only about 70%, worse than the previous pot kiln.
Testing continued and all materials produced from the modern vertical shaft kiln were wasted daily. Nothing produced from it was available for sale. This went on for about a month and Lee lost about another RM300,000.
Lee was fortunate that the primitive kilns were still operating while rectification issues with the modern kiln continues.
“My working capital are being used to pay monthly instalments. We continued for another six months and our cash flow is in the red. Banks were calling as we were not able to serve the instalments, and lawyer letters started coming,” Lee says.
Blame was everywhere.
Lee was blamed for not doing a proper study of the kiln and even the Italian kiln manufacturer was blaming that his staff is not capable of operating the kiln properly, and also blaming that the raw materials are not up to the standards.
“I almost gave up. The damage is too big. But every time I meet a technician from the kiln manufacturer, I put my hopes up again,” Lee says.
And in the beginning of the seventh month, one of the technician got the plant running as intended where the burnt rate was between 98 to 100%.
Lee was relieved.
Taking a break
In mid 1991, after operating for about a year, his company got the attention of a Singapore public listed quicklime manufacturer.
Perhaps he got tired and needed a break and as the offer was reasonable, they decided to sell the company with the modern vertical shaft kiln in 1992.
One thing Lee learnt for sure is take a break if you have to, but never give up. And keep on moving, as the saying goes: life is like riding a bicycle, to keep your balance you have to keep moving.
Coincidentally, the quicklime manufacturer did not want the primitive kilns hence Lee formed CAO Industries to continue operating these kilns in 1993.
“While operating these primitive kilns, I had some time to reflect: Why did I went through all the heartache to modernise the company with the modern vertical shaft kiln?” Lee asks.
His answer lies in his understanding of market needs, which is putty lime. His clients, who are the contractors, need not worry about the quality of the quicklime which is mix with water to create putty lime.
“Why not we produce putty lime then?” he asks.
Lee searched for the machine that could do this and invested about RM4mil in the machine to be built on their Serendah factory. Operational in 1994, Lee faced the next challenge.
As the product is about 30% more expensive, his clients preferred the earlier way of mixing quicklime with water. Lee had a lot of convincing to do, visiting the contractors and doing demonstrations as to how reliable their product is.
Eventually, his product became popular as contractors start to face shortage of quicklime due to high demand in the construction sector prior to the 1997 Asian Financial Crisis.
The contractors realise that it is more productive to use Lee’s product.
Opportunity in a crisis
When the dark clouds of the financial crisis came, Lee quickly refocus on seeking clients involve with home renovations. Simply put, as developers stop to develop new projects, Lee got new clients involve with home renovations as many people then are considering renovating their existing home instead of buying a new house.
His revenue dipped less than 10% and by year 2000 the company’s revenue hit RM15mil, compared to RM1mil in 1994. With such high demand, Lee is back to square one where he require more quicklime to manufacture his putty lime.
Lee was already facing labour shortage then, as well as material shortage. One of the major material in using a primitive pot kiln is that it require rubber wood as fuel. Rubber wood was gaining popularity as a material use for furniture and they were being diverted for the furniture sector.
His bad experience in the first round building the modern vertical shaft kiln did not hamper his objective of growing the company and looking into that option again. Not only, that, realising that he needed a sustainable source of fuel, he looked for one that uses biomass as fuel.
In 2001, he made the decision to purchase the unit and was commissioned in 2002 in Ipoh, followed by a second unit in 2005.
One would have though that things would be stable for awhile but no. In 2013, a Belgium based global quicklime manufacturer is seeking to establish its footprint in Malaysia and Lee’s factory is a target for acquisition.
Lee knows that eventually they would be competitors and this is not productive for his business and sold it to them, not before he got a 10 years contract to procure quicklime from them which is vital for Lee’s business.
True enough, the Belgium based global quicklime manufacturer more than tripled their sales in less than a year.
“My focus is to produce ready to use materials for the construction sector. I only need quicklime as a raw material,” he says.
In 2014, he was on the move again, this time acquiring a company manufacturing plastering materials for the construction sector, such as to do skim coating on walls and ceilings as well as to create special texture effects.
After over 30 years of being an entrepreneur, Lee found a niche of being a walling materials specialist in plastering and finishing.
“The company continues to innovate and look for products that consumers want,” Lee concludes.