Hala Equipment Trading is a specialised vendor of material handling equipment in the UAE with an interesting origin story that saw the business change tack considerably from its humble origins to the comparatively expansive operations it maintains today.
In its present day incarnation, Hala is the exclusive distributor of forklifts, stackers, tow tractors and wheel loaders from Heli, which has ranked as the largest manufacturer of forklifts in China for the last 25 consecutive years and is considered to be eighth globally be revenue.
The partnership between Hala and Heli in the UAE has been in place for more than a decade. Prior to this, under Mathew Abraham, managing director at Hala Equipment Trading, the company dealt in used Japanese forklifts. It all began in 1998, according to Abraham, with the speculative purchase of some forklifts.
Having left his former employment, Abraham and a few business acquaintances decided to try their hand at equipment trading. As he explains: “We picked up about two container loads of used forklifts from Japan and imported it here to the UAE. It was an experiment, but as it seemed like a product people needed and sales started picking up. Hala Used Heavy Equipment was formed.”
The business tied Abraham’s experience as a mechanical engineer working with forklifts and a few associates with experience in the equipment trading business and in Japan.
He continues: “My partner had an office in Japan and dealt in used equipment. I chose forklifts because I was working in a factory that made corrugated cartons where we had a lot of forklifts. As they all gave me a lot of trouble, I felt that there could be a market for better quality. I also set up a workshop to refurbish them and to give them a kind of warranty.”
The forklift brands that Hala sold at this time were all Japanese, and largely names like Toyota, Komatsu and TCM. The reasons for this were simple, as Abraham notes: “The specification for the Japanese machines was basic, because in Japan, that’s what they like, but the Japanese also look after their machines, so the second-hand machines are good quality.”
Since many fleet operators and owners in in the GCC also prefer basic machines, the product was a good fit. As the business grew, however, Abraham began to see the limitations of the model: “The customers were getting more sophisticated and the need for forklifts and the requirements changed from what was available from Japan. There’s a handicap when you’re buying used forklifts: you can only buy what’s available and you can’t choose what you want — so the specifications that you get are the specifications that are up for sale.”
At the same time, there were no available franchises for Japanese forklift brands in the UAE, as these were all taken up by other dealers.
These constraints drove Hala in a new direction. Abraham explains: “When the requirements were a little different, as I couldn’t make orders from Japan, the only way around it was to get a few Chinese forklifts that met the local demands and requirements.”
“We started with a few, and the first year was just 13 or 14 machines, and then slowly from there it moved forward and grew to much more.”
In 2003, Hala then proposed and secured the dealership for the Chinese forklift OEM Heli.
Abraham explains: “Heli was keen to engage us as its sole UAE distributor. We managed to get it without too much experience, because of the number of forklifts that we were selling a year. Eventually, two years ago, we stopped selling used machines altogether and concentrated solely on new machines.”
He adds: “I could sell the Chinese product, because of the very good brand image that I had with forklift users in the industry at that time.
“We used to sell forklifts as far away as Jordan and Egypt, so people trusted me, and when I said just take this over the Japanese product, it worked. People said: ‘I’m going to, because you’re saying so.’ And they took it.”
“It still took a while to transition, and even today some people come enquire about used Japanese machines, because even though it’s 10 years later, their machines are still running.”
Working in Abraham’s favour was the fact that Heli was established on the basis of a technology transfer from Japan’s TCM, in accordance with the rules at the time for foreign firms wanting to work in China.
Abraham notes: “So the technology was from TCM, and the manufacturing process was also set up by TCM, which is a big Japanese brand, and at that time it was an even bigger brand.
“So Heli is based on good engineering. At the time of the transfer the technology was a little old; it wasn’t TCM’s latest technology, but probably a series below that. But since then, Heli has taken off and its now got a huge R&D department. So they’ve started developing the products themselves, and they’re very quick to change and adapt product for the market.”
In a region where Chinese equipment is often synonymous with competitive prices but not necessarily the highest quality product or service, Heli in many ways bucks the trend.
Abraham continues: “Suppose I do import a machine here and I have an engineering issue with it — they will fly over the correct parts and components and make the change there and then, and not only address that problem there, but address the whole manufacturing process.
“So over the years we’ve really come down to a product that works well in this area. For example, when they started with wheel loaders, they had their engineers staying in Saudi Arabia for a year — at their expense — so that they could set the wheel loader up for sale in harsh environments. A lot of changes were made after that and now we have a good product.”
Important adaptations included measures to prevent the ingress of dust into the system. Abraham adds: “The whole year was just that. The radiator was changed completely so that the engine ran cooler and cleaner. The oils and a number of other things had to be changed.”
Heli’s attentiveness is such that the only real problem Hala has with the brand is the residual negative perceptions that many professionals have about Chinese equipment brands.
But Abraham counters: “We’re way above the other Chinese brands, because most of the Chinese brands follow what we do. They see what’s happening at Heli, and the R&D from Heli trickles down to the rest of them. Internationally we fall just underneath the Japanese brands, but we are competing quite well with them — we might be a series away.”
Even then, the machines are still Japanese in one important respect; they run on Isuzu engines from Japan, with the exception of a few Cummins engines that are also made in Japan.
Abraham notes: “We have a 20% to 25% lower price, and as the price point is quite important in this environment, and because the differences are not critical, we’re doing quite well.
“If you’re not using the forklift for 20 hours a day and instead you’re using it for 10 to 12 hours a day, than our machines become as efficient as anybody else’s, and then we’re also cheaper. However, if you have to use it for three shifts continuously, then we fall behind on productivity, though not on reliability. If you want something to work for eight hours and work hard for those eight hours, then ours won’t be able to do this, because other machines are faster and the ergonomics may be a little better.
“In such an environment, it’s always about how much work you can do and how efficient you can be. But if you do not have that high paced environment, then the working hours of a forklift will likely lie between four to six hours.”
Neither does Heli fall down on service: “We have a huge special spare parts department and Heli works hard to get us stuff within seven days if we want it. They don’t have Kaizen, but they almost follow the Toyota form of management.
“Their system runs on SAP, so that I can tailor almost any order I make infinitely, with about 200-300 combinations for each forklift. In all, they make about 100,000 forklifts.”
EXPLOSIVE POTENTIAL
Heli also manufacturers some highly specialist product, including explosion-proof forklifts, which despite the rather dramatic terminology, are designed to prevent, not survive, explosions.
In essence the units are engineered to reduce their heat emissions and to prevent any sparks that could ignite airborne dusts and gases.
An example is oil and gas manufacturing units, although ironically, oil and gas is not in fact one of the highest risk environments — key examples of which are instead flour mills, because of the fine dust, and paints factories, on account of the airborne solvents. In the region, dangerous situations are often created in such environments when the businesses try to make their own modifications to normal forklifts.
Abraham explains: “A lot of guys here take a shortcut. They put a spark arrestor at the exhaust so that any soot particles that are glowing are caught, and they attach what’s called a shelving valve to limit the speed of the machine. They think that is more than enough.
“It isn’t. It’s absolutely not, and there’s a false sense of security created by that. That works in a certain environment. That’s a very low class of requirement, and it’s used in some oil and gas environments, and it works successfully for those environments — but they’re using that same logic for something that can be far more explosive, like flour, paint or solvents.
“With solvents all you need is one small spark to cause ignition and people are using electric machines there — and electric machines produce a huge spark, because that battery is massive. But I think people are slowly becoming more aware about what can be done.”
The explosive-proof forklift is a tried and tested product Heli, which is one of a handful of manufacturers to carry out the modifications in-house. However, it is a recent introduction in the UAE for Hala, which has just trained its personnel in this area and set them the target of selling one or two of the forklifts this year.
Abraham adds: “It’s an expensive machine: almost three times more — because a lot of things need to be added onto the base forklift — so we need to do a lot of ground work. I want a local customer to build up a presence.”
Again, brand perception is a significant proportion of the battle. Abraham notes: “The minute you say Chinese, whatever you say about the brand, they still want a good price.”
Branding is becoming more important, says Abraham, and Chinese brands need to differentiate. Heli itself works hard on their product and service, but he would like to see them doing more with the brand.
Heli is, however, branching out in its product range. It developed its wheel loaders only eight years ago, and these were introduced into the UAE market two years ago, after two years of testing and trials in Saudi Arabia.
Abraham adds: “It’s a different segment, but they’re slowing entering the construction industry, and now they’re looking at aerial work platforms and skidsteer loaders.”
Skidsteers are also a line that interests Abraham, who used to sell a few when he was still selling large volumes of used equipment. He recalls that the skidsteer loaders were quite popular, and that some of the units he sold were used to build the very first buildings in Dubai Media City — at a time when the area held little more than the Hard Rock Café. As he reminisces, Abraham wonders whether he should have continued selling the machines.
It is of little matter now, however, because his chance will be coming back around with Heli, and this time Abraham will be ready.
