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Fri 12 Nov 2010 12:00 AM

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Empire builder

PMV meets Nabil Al Zahlawi, the head of crane specialist NFT, a company with high ambitions.

Empire builder

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.

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