Ivan Fornazaric on 25 years of Gorica Industries
Ivan Fornazaric chronicles how, in just 25 years, the Gorica Group has risen from the ashes of war and independence to become the region’s pre-eminent manufacturer of truck bodies and trailers
As the Gorica Group celebrates the 25th year since its incorporation in Dubai, few people are left marvelling at the distance the group has come in that time more than its founder and managing director, Ivan Fornazaric, who arrived in the region in the early 80s as an itinerant salesman from Europe.
Hailing from Slovenia, he headed up an early foray into the Gulf region by Vozilo Gorica, a Slovenian company producing trailers for trucks and other vehicles, or vozilo, from Nova Gorica — a small town along the Slovenian border with Italy just 30km to the north of the northernmost tip of the Adriatic Sea.
From 1987, Fornazaric represented Vozilo Gorica in Kuwait — until Iraq’s invasion of the country on 2 August, 1990 (and the onset of the First Gulf War) forced the company to leave — but its woes had only just begun.
Fornazaric soon parted with the company and headed to Dubai to set out on his own, establishing Gorica Trading the same year in Dubai to continue the flow of Slovenian trailers into the UAE and the wider Gulf.
“A year later Slovenia declared independence from the former Yugoslavia, which was another challenge,” explains Fornazaric. “And the company back home went through some restructuring and didn’t quite succeed.”
Fornazaric founded Gotrade three years later (in 1993) on what is now Ras Al Khor Road in Al Aweer — to commence the in-country assembly of the previously imported trailers — and almost as quickly as the group moved from trading to assembly it then proceeded on to manufacture with Gorica Industries.
“It was 1998 when we opened our first manufacturing facility in Jebel Ali Industrial Area,” explains Fornazaric.
“That also became our headquarters and the first plot of land that we took out on a long-term lease from the Dubai government.
“So that was the beginning, and the company has since emerged in phases together with the growth of Dubai, of manufacturing in the Middle East, and of its shipping technology.
“Roll-on, roll-off (RORO) vessels used to bring almost anything from any port in Europe to any port in the Gulf. This has changed, and now you will see RORO coming only from the big ports, mainly from northern Europe, down to Dubai. The transport costs for trailers, which are huge by volume, are also much higher and there is a 5% customs duty.”
Fornazaric notes that “in some ways [Gorica] was forced” down the route towards assembly and manufacture. But the group’s proximity to the Gulf’s markets subsequently enhanced its ability to react to the changing demands of the region’s road conditions and applications.
Thus the expertise of Gorica Industries as a producer of truck bodies and trailers highly specialised to the needs of the region grew.
“In the 1980s, this market was quite small,” continues Fornazaric. “The statistics are not very good here — especially given the number of trailers that go unregistered — so you cannot really relate this to official figures, but 25 or 30 years ago, the market for trailers in the UAE involved 100 or 200 trucks; today it involves 10,000 trucks — so that was the growth.
“In 1990, I made a feasibility study in advance of starting a local joint venture — regarding trailers in Sharjah — to make 20 units a year. Now we make 12 a day, or more.”
Strength in versatility
Today, Gorica Industries has expanded to accommodate an expansive range of transport sectors. It produces everything from rigid freight bodies and truck-mounted municipal waste vehicles to vacuum tankers and free-standing tipper trailers — but it has all grown around a nuclear product core.
“Initially we had two products: one was the tipping trailer, and one was the flat-bed trailer — so these were the very basic products. It is changing a little bit today, but our products have always been largely related to the construction industry,” says Fornazaric.
“It is the market: the flat-bed trailer is used for a lot of different applications — it is multi-purpose. The first is for containers, and it has some twist locks to carry standard containers; the second is using vertical supports at the sides to load steel bars and elongated loads.
“In the older days, a lot of cement was also carried on the back; not in the dry bulk, and contractors even used to put a body on top to transport their labour force.”
Today, tipper trailers remain the most popular product manufactured by Gorica Industries — accounting for roughly five of the average of 12 units that are produced by the group each day. However, even this single product group does not want for lack for diversity.
“In the UAE and Oman, there are still no restrictions regarding loads, whereas in Qatar, Bahrain and Saudi Arabia also, there are some regulations related to that,” notes Fornazaric.
“The challenge that we are facing in the UAE is overloading, and producing tippers to cater for that. Especially from 2006 to 2008, Dubai was building a lot of islands and hauling a lot of rock — so we had to make products tough enough to accommodate that.”
Rocks in the road
“In 2016, the UAE may be our largest market — but this was not the case for the last few years,” adds Fornazaric. “From 2009 to 2012 there were no sales at all — the market collapsed completely after the economic crisis in 2008 and our turnover went down drastically.”
In these years of famine, Gorica Industries explored the African market, and notably Ethiopia, where the influence of Italy on the country continues to this day in its vehicular preferences. As a result there was demand for a very specific 14m3 three-way tipper mounted on trucks of a characteristically Italian design.
In the GCC, however, Gorica’s typical brief is for heavy-duty, 18t-class, pan-European trucks from Mercedes-Benz and MAN, then Volvo and Scania, and Renault and Iveco.
“If we talk about how the market has changed: 25 years ago that truck would come with something fixed on it; now the truck dealers will purchase the truck chassis and then come to us to mount something on it — so most of these things are now done by local body builders,” explains Fornazaric.
It is the demand for local customisation and body mounting services that in part promoted the successive registration of Gorica’s companies in first Oman and subsequently Qatar.
He adds: “We do quite a lot of things ourselves, but it is not our aim to do everything in future. We are often forced to carry out certain tasks because the market is not developed enough to allow us to rely on subcontractors.”
“We are in phase one of our development in DIC with the completion of factory four for Frigo reefers, and we have now begun the construction of factory five, which is for manufacturing aluminium tankers — and again this will be a new product here in the Middle East. I think we will be the first,” notes Fornazaric.
The main application is the distribution of petroleum products. Most of the products currently on the market are made out of steel, so Gorica expects it to take time for the market to come around, but, highlights Fornazaric: “The market is growing and specifications are changing as regulation slowly takes place across the GCC.
“The use of aluminium tankers is related to regulations prescribing lighter tanker weight due to load restrictions — so aluminium tankers allow you to carry more.”
Steel also contains sulphur, which can leach into petroleum, which is corrosive, so as the GCC continues to push for low sulphur fuel for more efficient engines, the most suitable tanker material will ultimately be aluminium. Future fabrication
Looking forward, Fornazaric has a nuanced view about upcoming business. He notes: “The improvement started in 2014 and has continued into 2015, but we are nervous about what will happen in 2016. We believe that the UAE, or at least Dubai, and Qatar and maybe Oman, will continue and we won’t see a big drop.”
For the UAE and Qatar, notes Fornazaric: “A lot of material is being brought from crushers in the UAE by ship to Qatar. So the big trailers are in the UAE, but then it has to be delivered in Qatar — so we are able to play a role at both ends of the process.”
A final potential growth area for Gorica is the truck-mounted Palfinger cranes that the group distributes through Gotrade.
Fornazaric notes: “This will definitely grow in the waste sector in the future, because with the separation of waste you have containers that need to be emptied by crane. In Europe a lot of municipal vehicles have a crane behind the cab, and this market has developed to that point that contractors are investing in sophisticated equipment.”
This year, Gorica established a dedicated manufactory for the production of rigid refrigerated ‘reefer’ truck bodies, branded ‘Frigo’ and designed by German reefer specialist Krone.
“We had this idea of making the Frigo factory here in 2007, explains Fornazaric. “We were actually starting to build a factory, but then the crisis hit, and so our plans did not take off.”
Then in 2013, Krone decided to sell a factory in Denmark, and Gorica seized on the chance to purchase the machinery.
“Now our facility is running and the capacity of the factory machines is above 2,000 big units — though it will of course take some time and effort to reach that figure.”
The market rests in part on the development of regulations regarding refrigerated transport.
At the moment, the GCC is awash with vehicles that have essentially been ruled unfit for purpose in Europe.
Fornazaric notes: “In Europe you can carry food in a refrigerated vehicle for a maximum of eight years — after that they sell it to Dubai. But a trailer that has been running for a decade on the roads elsewhere is not suitable to transport food.”
He adds: “Massar is a good client. They are ahead of the general regulation for the transport of goods. We’d like to see more companies like that and have more clients like that.”