James Morgan reports from the opening of ACO Group’s new factory in Jafza South, and asks why the family-run business chose Dubai as its manufacturing base for the Middle East
ACO Systems FZE has celebrated the opening of its new factory in the United Arab Emirates. The facility, which forms part of Germany’s family-run ACO Group, will supply and support drainage systems in the GCC region and beyond.
Growth for a company such as ACO – a world leader in surface-water solutions – spells good news for the PMV market. If demand for drainage solutions in the Middle East is on the rise, it follows that construction is taking place.
The 3,000m2 factory is situated in Dubai’s Jebel Ali Free Zone (Jafza) – home to over 6,400 companies. Those speaking at the event explained that the new manufacturing base will enable ACO to improve service across the Middle East and North Africa.
Chairman and CEO of ACO Group Hans-Julius Ahlmann said: “The development of Dubai has fascinated us from the very beginning … The ongoing demand for our products in the Arabic world requires a larger production facility.
“The most significant demand, for the time being, is being driven by development in Mecca,” he continued. “The interesting thing is that it is now the time of the Hajj. We are opening this plant, to a great extent, because of the magnitude of the order that we have for bathrooms in Mecca: 15,000 bathrooms around the Kaaba. Isn’t that impressive? All is joined together, in a way.”
Dubai’s favorable commercial environment also appealed to Ahlmann and his colleagues. As the ACO owner explained, the city’s resilience in the face of the global economic downturn was a major contributing factor in the decision to create the Jafza factory.
“Why build a plant in Dubai, and in Jebel Ali in particular?” he asked. “2008 was a sort of acid test. The stability has remained: the political stability and the economic stability. If one is driving around Dubai these days, one is stuck in traffic, which means there’s life in it. There always has been life here, and we are very confident that this is going to continue to be the case.
“Jafza itself has been very accommodating to us,” explained Ahlmann. “From the very beginning, we had the impression that we were welcome here. This is something you feel with your stomach, not necessarily with your brain, and it has worked out very well.”
Also speaking at the opening was Klaus Ranner, consul general of the Federal Republic of Germany in Dubai. As he explained, whilst ACO is by no means the largest company in the region, it is no slouch in terms of productivity and ambition.
“The ACO Group is not really an SME; it’s certainly not ‘S’ and maybe not even ‘E’,” he commented. “There are close to 4,000 people employed by ACO…The company is well known because it is active all over the world.
“I’m glad that ACO has come to Dubai, firstly, because Dubai needs investment,” Ranner continued. “Dubai needs activities from outside, and it can be happy that a company like ACO Group is here.”
Ranner also praised ACO’s decision to create a manufacturing base in the UAE because of the country’s strategic importance in terms of logistics.
“If you draw a circle around Dubai representing four hours by flight, you will have nearly one third of the world’s population inside it,” he explained. “Dubai is the place to be. I’m glad that Jafza is offering appropriate conditions, and I can see nothing to stop ACO from achieving success in this region.”
Firm roots
Once the speeches had come to an end, PMV was able to question Ahlmann, Ranner and ACO North Western Europe’s Richard Hill MBE about conducting business in the Middle East. As they explained, historic ties and a keen sensitivity to local cultures can make all the difference.
“It is the same with any international trade,” said Hill. “You have to respect the culture, and you have to dial into that culture. In turn, finding a good agent is vital. Of course, this has been the case for many years.
The father of one of our old agents in Kuwait, for example, sold cast-iron bathtubs here back in the early 1960s. I think if you respect the market and the way that market works, and if you have the right products to offer, the rest is about relationships.”
Indeed, relationships form a key part of business in the Middle East. As Ranner explained to PMV, forging bonds with the right people is more important in this region than in many other marketplaces.
“I would say that in this part of the world, personal relationships are far more important than they are in Europe,” he said. “Here, you have to build your business success on the back of personal relationships – and this goes for both business partners and the authorities. In many ways, Dubai is a business; Dubai Inc, one might say.”
Ranner also highlighted the importance of ACO’s decision to manufacture in Jebel Ali. As he explained, whilst production might not be the Emirate’s bread and butter, one should not overlook the strategic importance of the location.
“Dubai might not be the largest market when it comes to manufacturing, but it is most certainly a hub,” he said. “From Dubai, you can cover the whole region with ease. Close to one third of the world’s population lives within a four-hour flight of Dubai. For that reason, this city is very attractive.”
Of course, success is not simply a product of market knowledge. ACO Group is the biggest producer of polymer concrete drainage channels in the world, and operates more than 30 factories globally. As Ahlmann explained, the fact that ACO is family run has allowed the company to chart its own course.
“One thing is for certain,” said the chairman. “ACO employees across the world know that the company is in a stable situation. They know that they can count on us for many years to come; that the people to whom they are relating will remain consistent. Other companies are sold from one financial investor to another, but not ACO.
“The other advantage is that a family business does not have to abide by quarterly results,” concluded Ahlmann.
“We have the luxury of looking at the long term. If we believe in a particular market, so long as we are proven right in five years’ time, we don’t care so much about what happens during the next three months. I think that this is unique amongst family businesses.”
ACO at a glance
ACO was founded in Germany by Josef-Severin Ahlmann in 1946. Initially, the company produced concrete construction components and windows.
Today, with Hans-Julius Ahlmann at the helm, ACO Group provides solutions for the protection, design and drainage of roads, open spaces and buildings. The company employs more than 3,800 people in 40 countries around the world. At present, over 30 production sites generate a turnover of approximately €610m.
In addition to its channel drainage solutions, ACO provides applications in the fields of civil engineering, construction, building services and environmental protection. ACO designs products to catch, control, treat and sustainably use water in the private, public and industrial sectors.
The company provides solutions in areas where water is posing an increasing risk. As global weather becomes more extreme, demand for surface-water solutions is rising. Extremely high volumes of rain after long periods of drought, for example, can necessitate special drainage and backflow systems.
ACO’s range of channels, flood-proof separators and pumps, backflow systems, and cellar and window-well systems are specifically designed to deal with such challenges.
The MD’s perspective
Karsten Due is the managing director of ACO Systems FZE. As such, he has been responsible for overseeing the commencement of operations at the new factory.
“ACO Systems has been in Jafza since 2006,” explained Due. “In 2008, we decided to begin local production from a prebuilt warehouse. In 2010, we expanded and took on a second prebuilt warehouse.”
Due says that ACO’s growth in the UAE has only been possible because of support from Jafza. Although the option existed to set up the new factory in a different free zone, company chiefs were keen to continue this mutually beneficial relationship.
“ACO leases the plot of land from Jafza, and the company owns the property on that land,” Due told PMV. “Jafza is the sponsor for our lease, and this offers a lot of advantages. Essentially, this is a very straightforward relationship without any surprises, which is what you want as a foreign company trying to do business here.”
ACO’s largest GCC undertaking at present concerns the ‘King Abdullah Bin Abdul-Aziz Project – Third Saudi Expansion of Holy Haram Makkah and Surrounding Areas’.
“This project started in 2011,” explained Due. “ACO is responsible for design and hydraulic calculations for the indoor and outdoor areas around the Haram. This is obviously a very prestigious project with which ACO is extremely proud to be associated. All areas in this expansion will be fitted with ACO channels and gratings made from high-quality stainless steel.
“This project, however, is not the only one that ACO has conducted in Mecca,” concluded Due. “We were also involved in the Clock Tower project, which was a demanding task in respect to both design and supply.”