Saudi Cool

Abdullah M. Abdul-Kareem says the Arab Spring helped grow domestic business.

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MEP Middle East talks to Abdullah M. Abdul-Kareem, MD of Alessa, the Saudi Arabian HVAC manufacturer and contractor.

What has Alessa’s growth path been like over the last year?

Well, Alessa has been growing significantly for the last three or four years. We enjoyed double digit growth throughout this period. Alessa started as a distributor but then moved on to manufacturing and now to commercial contracting. We have three arms, manufacturing, retail and contracting.

Our plan for 2011 was to stabilise some of our logistics in terms of expanding our warehouses. Our capacity jumped from 86,000m² to 135,000m². This allowed us to store more goods and products to serve our customers.

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Retail is the oldest arm of the company and it is growing at 15% per annum. The newer arm, contracting, is only two years old.

We’ve just scratched the surface of the market, so we’re enjoying 30% to 40% growth and the reason for that is because when you start from a small number as a base, the range of growth that you have is quite huge.

Plus the contracting arm is involved in quite large contracts. This is how we were able to achieve that rate of growth.

How much of Alessa’s growth is due to the Saudi Arabian economy?

Saudi Arabia is enjoying and will continue to enjoy, over the next three or four years, big growth due to government expenditure on new infrastructure and new housings for citizens. This renders itself so that local manufacturers, such as us and our competitors will enjoy a sizeable growth inside Saudi.

Due to the turmoil that happened in the Arab World, we were able to rectify some of the sales that were lost in the export market through the local market.

What are your expectations for the coming year?

We hope to continue enjoying our current 20% overall annual growth, and the reason for that is because we’re optimistic about new projects, the government expenditure over the next year and we’re expecting it to be another record year in terms of turnover. This year, we had a turnover of approximately $400m.

Air-handling units are our focus for 2011–2012, it’s a new technology, it’s an American technology and we have started producing it in our factory. We built a new factory for it and it is in the commissioning stage. The factory will produce its first unit in December and deliver it in January. The capacity will be about 900 units per year. These are of course, large size air handling units for commercial buildings.

How do you deal with the complications of different standards in the GCC?

We align ourselves to the requirements of each country. Saudi Arabia has introduced tighter regulations, which were enforced last year. The UAE also has their own standards, but our only request is that the Gulf somehow unifies their separate standards into one.

Because you have different designs when you come to each country, you would have to have an amount of spare parts and an amount of support, which the market, in terms of size, is not huge enough to justify the different types of standards.

If we could unify our energy standards, this will provide much needed support from the governments of the GCC towards local manufacturers in the region. If the European Union can unify their standards, I don’t see any obstacles that prevent the GCC from unifying their standards.

What are you plans for the coming year?

We are expanding our product range in terms of appliances and electronics, we are expanding our global coverage by focusing more on our export clients and visiting them and trying to resolve any issues they may find in our products.

We are in an industry where efficiency is the key to success, so we are focusing, in the factory, on building our efficiencies throughout the operation, right from the raw materials to building our design, until manufacturing, warehousing and registering.

The full range of the cycle next year will be completely focused on achieving efficiency.