Wassim Aboushaar, general manager at Cummins Middle East, talks about the company's power generation business in the region.
Wassim Aboushaar is no stranger to his line of business; he has been active in selling power generation equipment in the Middle East for the past 22 years. Having been with Cummins, who supply engines for power generation, transport and other machinery, since 1990, he moved to regional subidary Cummins Middle East in 2008.
He arrived in time to witness the boom times before the recession hit home. "I have seen both trends. 2008 when things were booming, when we were picking up those orders from the fax machine we wanted to respond to, and left the ones we didn't need to, because there was enough meat on the bone for us," he recalls. "And I've seen 2009, when the whole industry was struggling."
The downturn hit business hard, as Abou Shaar is free to admit. A big chunk of revenue is generated from the construction business, as construction sites will not have access to the grid, and are reliant on generators as self-reliant sources of power. Thus the sharp decline in building activity in the Middle East did not pass Cummins by unnoticed.
Nevertheless Aboushaar feels he is engaged in a market in which demand will remain strong for some time to come. Power is a precious commodity in the region, as utility providers are forever catching up with the demands of increasingly urbanised and industrialised societies.
"Our sales went down by 30 percent year on year in 2009. But now we are catching up quickly. Power generation is one of most important segments in the Middle East, as the supply is insufficient. With the unrealistic growth witnessed in many markets, utilities were not coping with expanding supply. This is why power generation remained a good segment, at least to maintain its level. It will start growing much quicker than other markets," he says.
Covering a variety of different markets also helped alleviate the effects of the recession, Aboushaar explains. And it was Cummins Middle East's involvement in countries that are not high on every company's To Do list, in particular, that provided impetus to business.
Servicing the green machine
Based in the harsh desert climate of Iran and Afghanistan without access to a reliable grid, US and coalition forces have a huge demand for small-scale power stations as well as machine engines.
"What made the difference for us was that we cater for almost the entire Middle East from our headquarters here in Dubai, so if market slows down a little bit in UAE, for instance, it can pick up in Afghanistan, in Iraq," says Aboushaar. "In Iraq and Afghanistan, our clients are the military. All these camps need power for their soldiers, and they won't compromise. They need the power now and they need reliable power, they need reliable products."
To service the equipment, the company even had permanent staff stationed in Iraq. "During the peak times, we had a team based with the military in the camps. We had about 20 engineers with managers and the logistics in the camps, just to support the end users and our equipment. This way, thousands of units were sold in Iraq, and now we are doing the same in Afghanistan."
In line with the new US strategic focus, business has grown in Afghanistan since 2009. As the military presence there has grown in an effort to bring stability to the country, Cummins was busy fitting out new army camps with power generating equipment.
One stop shop
Aboushaar, who has visited Iraq several times himself, clearly feels that that satisfying the needs of demanding customers like the army is a testament to the quality of Cummins equipment and service. He also believes that he his customers benefit from the fact that the company produces all the components for their engines themselves. "It gives the end user one warranty, one safe source. With us, he is getting one warranty and all the spare parts from one vendor. Then there is also the consistency of the supply, we own the channel, so the end users knows he will always get the component he needs."
During summer, peak demand for electricity puts additional strains on supply, frequently leading to power cuts. Providers of rented generators make good money in those months, as customers shield themselves against the prospect of a power outage.
While Cummins notices this trend through increased equipment orders from rental companies, Aboushaar points out that short term demand is not the main driver of his business. "The area that we compete for is the big power stations. We are not so competitive on the small range, like the lower lower kVa's and the small portables, because the market here is very saturated, and a lot of cheap quality, and the end user is not interested in the long term," he says. "Seasonal demand is for small products. Larger plants take time to build."
Letting the small fry slip through the net does not seem to have impaired business prospects, with Cummins having resumed a brisk trade this year. "In 2010 things are really picking up. We are experiencing at least 20 percent year-on-year growth for our product mix, stemming mainly from the power generation sector," says Aboushaar.
The biggest revenue earners this year have been Abu Dhabi and Oman, and supplying the military in Iraq and Afghanistan. "I don't know if that market is growing, but we really have secured big projects in Oman," he says.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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