EuroAsia – Steve Elassaad Interview
Looking Ahead

Al Sulaimi Group Holding has recently set up 13 new companies in Oman, UAE, Qatar, Saudi Arabia and Iraq, involved in providing products and services to various heavy industries in the region. President and CEO, Mr Steven Elassaad, tells Simon Davies about the well-structured business strategy which is promising further and sustained growth in the future.

Although it has been in existence since 1970, the Al Sulaimi Group has seen its most important period of growth during the last four years, with the development of a clear business strategy based on its core competencies. The group began in Oman as a small trading company called Technical Trading Company (TTC) providing a range of fire and safety products, as well as automotive parts including tyres.

“TTC grew to become one of the major players in supplying industrial products and services to Oman,” outlines Mr Elassaad. “A few other companies also emerged in Oman and the UAE after that, but, since I joined the group about four years ago, we have added 13 newly-established companies to take the group to 20 companies covering a wide range of industrial products and services, on regional basis in the Middle East.”

A hybrid strategy

The company's business strategy is key to its recent growth, and Mr Elassaad outlines the way it works: “We have developed what we call a “hybrid business strategy”: Oman has its own strategy, and we use a different strategy for the rest of the region. The reason for this Hybrid Strategy is related to the fact that our competences and capabilities vary between the way we approach regional business opportunities and what we are able to do in Oman.

“Our regional strategy involves different layers of activity, which are all interconnected, and each operation is part of the development process to reach the next layer. We begin by setting up trading companies offering industrial welding and cutting solutions, which is our core competence, and we are the leader in this type of business in Oman, the UAE, Qatar, Saudi and Iraq. After engaging the market in this way, the next step is to set up workshops for repair and maintenance of oil and gas, water, power and other industrial applications. These workshops provide an asset base, and that enables us to move to the third step, involving the establishment of fabrication yards, which is an even bigger asset-based operation. These yards manufacture process equipment, such as pressure vessels, heat exchangers, boilers and other products of that nature. From there, we can go on and set up non-destructive testing (NDT) companies, building further on our core knowledge and customer base.

“In Oman, however, the owners of the group, being Omani, have other capabilities as well. They are able to be of service to companies coming to Oman who are looking for a local partner to help in the establishment of an operation in terms of facilitating various logistics, securing local resources and help in introducing the new services to the local market opportunities. Accordingly, in Oman, on top of our knowledge base, we follow an additional business strategy, focused on being the local partner for international or regional champions in their own businesses. For example, we are partners in Oman with an industrial catering company called SJ Abed, which is very well known in the industry. We are also partners with Kanoo Travel, which is a leading travel company in the region. Another example is IDTEC our JV with Bentec GMBH a well known international Oil Rigs manufacture to overhaul all kinds of rigs in the region. Another is our JV with Wildcat which is a very successful regional and international company offering the latest solutions for the oil and gas industry. We are also into other businesses like interior design, carpentry, infrastructure, construction and fabrication of tippers – all of these companies are joint venture companies in Oman, managed by our successful and well known partners who are experts in their industries.

 There is no limit to the area of activity we can get involved in, the only limit is the calibre of the partner – we insist on well-known, respectable and successful regional or international players in their own specific industries.”

Developing the model

This business strategy is clearly demonstrated in the companies that currently make up the group. In Oman, TTC offers a wide range of industrial and construction products; Advanced Oilfield Technology Co. LLC and Al Mansoor International Co. LLC provide maintenance and fabrication services; and Hi-Tech Inspection Services LLC offers NDT services. Six other companies in Oman are joint ventures with regional or international market-leaders. In the UAE, Tech International LLC and Linde Corrotech International LLC are trading companies, and Tech International FZC provides engineering design, manufacturing, project management, installation and commissioning services. Qatar Technical International Co. is the group company in Qatar, involved in trading, as well as maintenance and repair services. The remaining two companies in the group: Advance Welding Solutions and Advance Welding Solutions Iraq, are trading companies in Saudi Arabia and Iraq, respectively.

“The selling of our welding and cutting solutions, targets customers that include fabricators, pipeline contractors, shipyards, heavy industries and other metal fabrication industries,” continues Mr Elassaad. “We then provide these customers with another service in our workshops; repair and maintenance solutions serving industries such as power plants, oil and gas facilities, petrochemical plants, and desalination plants. Then we undertake the fabrication of process equipment, serving a wide range of such industries.

“We have three fabrication yards in Oman, and another one in the UAE. We have just applied for one in Qatar, and we intend to set up one in the near future in Saudi. We have already established workshops in Oman, the UAE, Qatar, and we will soon be setting one up in Saudi as well. Right now, we are only involved in the trading phase in Iraq, and we will probably move into the workshop and fabrication phase in Saudi before we go any further in Iraq. Hi-Tech Inspection Services LLC has just entered into NDT contracting in the UAE through a JV with Wildcat, which is the last activity in this regional expansion phase emerging from our own know-how core competences.”

Important opportunities

Mr Elassaad explains that the group's business strategy arises from an analysis of the trends in the Middle Eastern markets. “Historically, the market in the Middle East has been a lot about trading, rather than making things. Obviously, there are companies that are doing a lot more than that, but this is the general trend. It was clear for us that, in the civil construction and the trading industries will have too many players in the market, and the competition will become fierce, so the margins will drop. We decided that our differentiated know-how, catering for more of the heavier industrial sectors, was in a market which had a lot of potential.

“Previously, the only way to get a boiler or pressure vessel, for example, was to import it from Europe, the US, or, more recently, even from India and China, because such products were not conveniently available, locally. The logistics of doing this is becoming so expensive and not so convenient; for example when you are shipping a pressure vessel, you are not shipping the steel alone, you are shipping the large air space in it. These dynamics are changing the rules of the game, and now local manufacturing companies, who have a good reputation and references for supplying such products, are preferred in many cases. We are being approached by many international companies from Europe and America, who previously obtained products from the US, Europe or even India or China, to make their products for them.

“We are catering to interesting and evolving sectors of the market,” he asserts, “especially the development of the oil, gas and utilities industries. The regional trend now is not to produce oil and gas to ship out to other countries; it is more a bout a need to process a good chunk of it before it is exported it out. Accordingly, process equipment for petrochemical plants and refineries is in demand. The region wants to add more value to the oil and gas before they ship it out, so that they can make more money out of it and create high value jobs in their local markets before exporting it.

“At the same time, the local population is increasing, so power generation and desalination, is becoming even more important. The people growth in this region is one of the highest in the world – people have a good number of children, and there is a continuing influx of expatriates – and this creates tremendous demand on desalination, water and power. Accordingly, the power, water, oil & gas, and petrochemical sectors are, without a doubt, the primary developing and sustainable businesses in the long term, and this is what we are positioning ourselves to service. Mining could be the next interesting opportunity. We already have the know-how, expertise and ability to service these sectors, which puts us in a very competitive position,” he adds.

Prepared to change

The Al Sulaimi Group has clear targets, but is also flexible enough to adapt to the developing market conditions in the Middle East. “We do intend to continue our regionally expansion because our developing business model is like the concept of a fast-food chain franchise – we can set up a model and then take it everywhere,” Mr Elassaad explains. “These things take time, but we have grown into a group of 20 companies within a very short time. The next step will be to enter into Kuwait thus covering the total GCC market. This will come in the second phase of our regional expansion which may also target additional countries such as Libya, Algeria, Sudan, Syria, and, as we go forward, we will define more regional expansion targets.

“Companies that are not going to change are going to lose the game,” he continues. “Change management is becoming crucial to everybody in the world, and if you cannot change fast, you are going to be in trouble, in any business. So, we are developing skills and capabilities in the culture and processes in the company, so that we can adapt and change quickly not only to respond to the market changes but also to predict it and proactively take actions to position ourselves appropriately. We are doing that and positioning ourselves so we can be more dynamic. I believe a lot of companies in the Middle East are facing this problem right now. They are used to a certain business model, which was very comfortable for a long time, in which agencies were protected from having their contracts cancelled. Now, more countries, in this region, are becoming part of the free trade agreements, which means that agency agreements, for example, are not going to be honoured.

“With all due respect to the companies who have treated the agencies very well and developed the brands and services, adding a lot of value; they cannot count on these values and the fading protectionist commercial laws to ensure the sustainability of their business model. They need to move up a notch. I highly recommend that local companies get into partnerships, associations and alliances to bring in know-how if they don't have it, so that they are partners in the process and not just representing a brand or solution. They need to be in better control of the sustainability of their business model.

“Times have changed in the Middle East, both for companies coming from the outside, trying to do business here, and for the companies within the region, trying to better play the market. Both parties have to recognise that major changes are coming and are already starting to happen in this area.

 Partnerships and/or High value-additions are a must for local companies.

As for foreign companies, I recommend for them to be more selective and careful in looking for the right partner. It is an increasingly competitive market and you have to choose the partner that can support you throughout the largest possible part of the total value chain,” he concludes.