The sign above Jo Paffen's desk in his Dammam Industrial Estate office says it all: "Tough times never last but tough people do".

Paffen, general manager of Sigma Paints Saudi Arabia and area director for SigmaKalon Middle East is a tough operator with a 12-year tenure in the Kingdom of Saudi Arabia in one of the most competitive fields - paints and protective coatings.

He has overseen the growth of one of the region's premier paint manufacturers and today heads the growing group into ever-expanding market opportunities.

"In April, we incorporated two new companies into the group - one in Egypt and the other in Iran," says Paffen.

Sigma Paints Egypt Limited and Sigma Paints Iran Limited are the latest additions to Sigma's Middle East network which now covers production and marketing of decorative paint, protective coatings and marine coatings in Saudi Arabia, Abu Dhabi, Qatar, Egypt and Iran.

"Sigma Paints covers all the Arabian Gulf territories whilst SigmaKalon Middle East (a separate joint-venture between Sigma Paints and SigmaKalon) targets the other Middle East countries," says Paffen.

Established in 1980 with its own production, storage, research and development facilities in Dammam, Sigma Paints says it is the largest in its field in Saudi Arabia.

Today Paffen as well as Sami Algosaibi, who is the chairman of the board of directors and the largest Saudi shareholder in the venture, see a gradually improving market situation.

"We have two market segments - the general domestic market and the industrial segment. The general domestic market, covering building and construction activities, is still a little quiet in Saudi Arabia but we do see the contracts coming back which will eventually lead to further improvement for our sector. However, the industrial segment is looking better with a lot of projects being restarted," he points out.

Algosaibi agrees that the market is improving. "The planned deal between the government and the foreign oil majors relating to the development of the Kingdom's gas resources has had a positive psychological impact," says Algosaibi. "So even if the fruits of this deal have yet to be felt, there has been an acceleration of business with indications which are encouraging. There is high activity within the engineering services sector which will translate into improved business."

The last 18 months have, however, been tough with huge overcapacity in the market, according to Paffen. "Low-cost producers have flooded the market and we are still encountering a number of non-licensed manufacturers who do not comply with professional industry standards," he says.

Paffen believes that the authorities should take the matter seriously. "Saso (Saudi Arabian Standards Organisation) is there as a testing/standards organisation but the enforcement of these standards is non-existent," he stresses. "As a major manufacturer, we would like to see compliance and enforcement which would be good for the quality levels within the industry and will ultimately protect the consumer."

Sigma's other markets include Qatar where, according to Paffen, both the domestic and industrial segments are booming.

"The Qatar government's investment in downstream industries is having a real spin off," he says. "Qatar is a growing market which is why we have established our own small blending/production unit which will be developed into a fully-fledged manufacturing unit."

In the UAE, Paffen draws contrasts between Abu Dhabi where Sigma's sister company Multi-Coatings is based, and Dubai.

"Abu Dhabi is a steady market and more industrial in nature whereas Dubai continues to boom with all kinds of tourist and commercial-related development," says Paffen.

In Kuwait, Sigma's core decorative business is handled by its sole distributor Building Systems Corporation and is doing very well. The company has just signed a Letter of Intent for its anticorrosive and marine paints products with Kuwait Shipbuilding and Repairyard Company.

"In the past, Sigma was seen in Kuwait as a generic product not a company," says Algosaibi. "We are now putting a lot of effort into changing this perception."

The development of the holding company for the Middle East has helped the group leverage its management and production expertise, according to Algosaibi.

"Our new Egyptian operation will initially work on a toll basis but with our own staff providing QA/QC (quality assurance/quality control)," says Algosaibi. "This is an intermediate step to building our own production facilities over the next two to three years."

The new facility on Qeshm island in Iran will help Sigma reach the Iranian market and, once again, the operation is centralised and controlled from Saudi Arabia.

"Here in Saudi Arabia, we have split our production - with the main bulk (decoratives) coming from the second industrial city facility and the solvent-based products being manufactured at our existing facility on the first industrial estate," says Paffen.

Almost all of Sigma's decorative products are water based and the company continues to work towards the reduction of solvents and other harmful materials.

"As a group, we are trying to develop solvent-free products and are already providing solvent-free epoxy paints to Saudi Aramco and other customers in the anti-corrosive and marine segment," says Paffen.

The group's research facilities are based in Europe but Algosaibi sees valuable contributions from the Middle East where "enhancements" are made to products.

"Holland develops new formulations for our area but we do try and find specific solutions for our clients," says Algosaibi.

Sigma Paints Saudi Arabia has a total annual production capacity which now exceeds 60,000 tonnes but both Paffen and Algosaibi are keen to stress the quality and added value of Sigma's products. "It's not just about production," says Algosaibi. "It is about improving our service, delivery and response times."

Currently, Sigma is helping its distributors to refurbish their outlets providing close co-operation and financial support.

In terms of management and marketing, Sigma in January completed the implementation of its Sage ERP system and has also introduced version two of its SigmaStar software which features an interactive module to help contractors and consultants with advice and a calculation capability. Sigma Paints in Saudi Arabia and Qatar as well a Multi-Coatings in Abu Dhabi are all networked on the Sage system.

Algosaibi is particularly proud of the company's success in Saudisation. "We give great importance to the recruitment and training of Saudi nationals in our company and today Saudis make up more then 30 per cent of our staff, working in all fields," he says. "We have nationals working as accountants, technicians, inspectors, production managers and sales representatives and are planning to achieve 35 per cent Saudisation by the end of 2002."

Sigma is highly selective when it comes to recruitment and the emphasis on both qualifications and training has, according to Algosaibi, been the basis of the group's success in this area.

As Sigma looks to the future with confidence, Paffen reflects on the group's success: "The main difference between us and our competitors is that we control all our operations in the region and therefore speak the same languages and have the same philosophy."

Even in tough times it seems to be working for Sigma.