You can tell a lot by where and how someone chooses to be interviewed. I say ‘chooses’ as it is very rare the humble journalist gets to decide where it should take place. The number one place to be taken to is the office.
Typically it is because it is the most practical place for a CEO or Chairman to talk openly, but it also means you are meeting them on their terms and you must be prepared to listen. Often that means you listen, a lot.
It is a relief then that Mr Nabil Al Zahlawi, the head of NFT has chosen instead to greet PMV in the company’s boardroom. Interviews held in boardrooms are much more open and instructive.
On the large expanse of the boardroom table are three models of cranes, the largest of which rises over a metre in the air. Although, even that is dominated by a giant TV screen that is showing CNBC’s stock market report. Zahlawi sits reviewing the trading information and market prices when we greet each other.
“I like to see what the markets and currencies are up to. I find it relaxing. Sometimes I sit here and watch the screen like some people listen to soft music,” he says
The boardroom itself sits at the centre of the company’s offices in the heart of Port Zayed in Abu Dhabi. A hub from where Zahlawi guides an empire that includes an asset base of 600 cranes and hoists that are active across the globe.
NFT, which is the sole agent for Potain cranes in the GCC, has recently been recognised as the number one crane supplier in the Middle East in a World Market Intelligence report. In its own literature it states that intends to move from being the fifth to the biggest crane owner in the world.
It’s a grand ambition and one that is softly and humbly portrayed by Zahlawi in person. He explains NFT may have started as a company that serves the Middle East but it is moving out into new territories as diverse and as spread out as Canada, Singapore and Azerbaijan.
“Our strategy is simply not following what others do. The clever move is to diversify and move to industrial centres, unlock new doors for equipment, find new buyers.”
Zahlawi nurtured NFT by not being afraid to move where the business is. He started in 1974, working on erection and servicing of cranes in Saudi Arabia for a trading company.
With a natural bent for understanding how business and more exactly the crane business worked, in 1987 he created his own company based in the Kingdom. However the market in the GCC was changing and Zahlawi sensed his young business would need to move.
“We were doing a lot of projects with the contractors in the country until we found a good opportunity to move to the United Arab Emirates in 1995 under the name of NFT. We moved the head office from Saudi, because of the facilities and better support from local authorities in UAE. Besides the cycle of construction, starting in 1996 and 1997 was moving to this area,” he explains.
In 2010, Zahlawi says that this cycle of construction has come to an end but stresses that there is a new era beckoning for the construction industry in the UAE and the wider market of the Middle East. Assuming that a period of hardship can be endured.
“We enjoyed the good times in 2006, ‘07, ‘08. 2009 was not bad…2010 has been,” he pauses and then smiles. “Less good.
“It had been a good 15 years – a cycle that is easily the longest period we’ve ever had to enjoy the ‘good times’ – and usually you move in cycles of five to seven years. We’re now back to a stage I would describe as ‘normal’.”
He continues: “It’s difficult [out there] as we are having ‘surprises’ everyday. I wouldn’t go as far as saying that it is brutal but we have to move from one surprise to another daily. But we are still doing okay. We have to be wary of the coming years. I really worry about 2011 and 2012.”
Although he remains a steadfast supporter of the UAE’s openness to trade and foreign business, he is enough of a realist to recognise that his company will face some stiff competition in the tough years ahead as other’s follow a trail that was blazed by companies like his own.
“I think the beauty of this country and the UAE is that you can do any business you want,” he says. “Access to this country and establishing a company and a base with service is easy for everybody. Which is not the case for other countries like Qatar, Saudi, Kuwait, etc.
It makes our lives more difficult and our business is paying for this free trade policy. People can come with fewer tools and get part of the cake. And that cake is getting smaller and smaller,” he says.
“The UAE is open to everybody and there is a surplus of equipment already, so having more traders and companies will create more problems. You can find American, Chinese and European suppliers, everyone is desperate to come to the UAE for business.
“You can see why. It’s a choice between a dead market like Europe or the US, or hope for improvement in a market like Abu Dhabi, Saudi or Qatar. People have a better chance here rather than their local market.”
This is the third recession that Zawhali has faced in his career and it’s also the worst the keen market watcher can remember in the Middle East. For someone who comes across as an optimist, he is markedly gloomy about the next few years.
“Previously we have been less affected; however this is the first truly global one. Everybody is affected by this recession, and this is why we are suffering. I’m not expecting that the situation will change in one day,” he says. “Based on this, it will not be a cycle of two to three years; it is going to be a little more.”
Downbeat he may be, but Zahlawi feels he is only being realistic. A virtue that has, arguably, been in short supply in recent years.
“What else needs to be built in the UAE, for example? We’ve built the tallest towers, the hotels, the Formula One track, and infrastructure – what else is left to be built?
“Cityscape was the worst exhibition in the last ten years. You can see the projects but everybody is waiting for business to pick up. We have to be realistic. The idea of this business is not to build where there is no market. Projects can launch everyday but are you able to sell this project to a customer?”
Zahlawi’s solution is an ambitious one for his company and others that have shared in building the iconic structures of the UAE.
“The business model of Dubai is good but we have to bring this idea to other countries. We have to move from one place to another with the business model we have made in the UAE,” he says.
“Open your country to create opportunities and to build everything: the hotels, tourism, industries, and housing projects for people providing services, etc.”
NFT is spreading outwards, following its leader’s perception of potential hot spots for the trade and supply of cranes, hoists and other equipment. Like many other companies that operate across boarders, Saudi Arabia has become an extremely important country for NFT.
“Oman has a lot of potential, but Saudi is a country where everybody is concentrating and developing.”
One of those projects is the Princess Nora Bint University where he says that a company under his stewardship had, “even during the good times in the area”, never had such big numbers on one site. While we discuss the massive project, he pulls out a picture of work being done of the KSA’s financial district. The sky is literally filled with cranes supplied by NFT.
You detect Zahlawi’s pride in his company’s involvement in theses projects however the last few years have left an indelible mark on his evaluation of their true worth to NFT’s future.
“The problem was we got used to the mega projects. We increased the company’s capital and assets plus the number of employees,” he says. “There was almost too much demand from the market.”
“Like any type of industry, you have times when you are overloaded and have no time for anything, but today I feel the market is healthier,” he says. “The past was abnormal. You shouldn’t be doing three times your capacity.
“People got used to living with a big turnover and profit – but you cannot do that anymore. The competition has increased and everybody is desperate for business. We are 20-25% cheaper than two years ago. It’s not only a matter of saving. Manufacturers are willing to run at cost, the shipping costs have fallen and much less than before, and we have to limit the profit. Machines must sell for much less.”
Following a period of restructuring where there was an increase in investment and reduction in risk in the company, the new version of NFT is starting to gain traction in new markets and diversifying into other lines of business. There’s been a shift in emphasis from tall cranes to machines that can operate with larger capacities and on a variety of projects.
“We invested a lot because we were moving very fast, increased the capital, and the size of the company by three times. We need to reduce the size, the structure, so we can adapt to today’s economic situation.
No more high-rise, sure. We are now talking about small low-rise projects plus industrial projects. We have types of equipment that can be used for housing. Also equipment for the oil and gas industry. We are finding new areas, projects and industries for our equipment – if you want to install a new tank you can use a tower crane.”
“Our company can reply to any of these enquiries. We have a rental fleet of 600 cranes – we start from a baby crane to a mega crane that can be mainly used for nuclear plants.
The strategy is not to just stay as a housing or construction company. We are moving into industrial and infrastructure projects, including power plants, bridges, dams, etc.”
“Each of these projects is totally different. In tower projects, you need huge money and investment to get a mast section up to 200m or more. With industrial power plants you are limited in height. Capacity is more important requiring us to get a different category of crane for this project.”
The company maintains distribution partnerships with companies based in the US and France who handle the fabrication of the machines. As the sale of machines has fallen, NFT is finding itself relying on the machine rental side of the business more and more. Zahlawi argues that machinery rental could aid machine fluidity in the market.
“I feel more and more positive about rental because this will solve the financing problem for contractors. Today banks are not giving anymore financing for contractors because they have to make a huge investment to buy equipment.
Our solution is to propose that you rent rather than buy. The investment is around our neck but we have the capability to do it. Our rental business should improve daily.”
On top of the rental business, NFT is fully active in services such as maintenance and spare parts sales.
Donning his salesman helmet for a moment Zahlawi explains NFT’s offering. “We don’t just about money we talk about turnkey solutions. We take care of the maintenance and supply the operators. The contractor does not have a big investment on maintenance or spare parts.
“They can take a crane with full items from one place, which is a big advantage,” he says. “We are into services, reconditioning for cranes. As well as selling brand new cranes, used cranes – we have all options in one place!”
The conversation moves onto some of the other markets that NFT has been looking at, often on the recommendation of NFT’s existing customers.
“We have a few customers that we deal with in the UAE that we find now in Saudi, or Qatar. I was recently on a trip in Azerbaijan and saw one of these guys over there.”
The market watcher in him interrupts the interview and enthuses: “It is a very promising market. A stable market. You can’t sell hundreds of crane, just a few.
“We need to do keep doing this. If we can move 20 cranes in one country and 20 in another, we can keep moving our 600 cranes. Azerbaijan is part of our plan to move to other markets and open new doors for our equipment. I don’t like see my machines sitting idle.”
The second-hand sale business is one that appeals to Zahlawi especially in the new markets that have opened up.
“We are limited when we talk about brand new because there are dealers (for our partners) everywhere. We don’t offer brand new cranes outside our territory, the Middle East. However the idea of second-hand business is open for us.”
In his office Zahlawi keeps a large map of the globe, and you get the impression that he spends a lot of time looking at it. I ask where he’ll look next.
“I’m always trying but if you have any other ideas then let me know.” I suggest Iraq or Iran, but Zahlawi is ahead of me: “We are already in business with them and supply on a case-by-case basis although we don’t have an office over there. The UAE is a hub for the purchasing of machines, so if you are in Lebanon, Iran or Syria you can come here and buy.”
“We are getting help from the UAE government and we benefit when the UAE finances a project. Recently is financed a mega housing project planned abroad and we hope to do some of the work on it.
“We are focused on international exports, and our business development manager, Hansraj Bhatia, will be travelling for our strategic business expansions.
“We have some contacts in Singapore and the Far East. You have to find a new market for your equipment. There are countries like Lebanon, Syria and Iraq where they need a lot of housing and this is a great opportunity to move the equipment out of this country,” he adds.
“I like to think of cranes as as a voyager. It moves from one place to another way. I bought one crane in Syria to Saudi to France and then back to UAE. It has moved four times.”
You get the impression they’ll be following each other around the world for a long time yet.
