Zamil Steel has positioned itself very well with its recent production expansion and product diversification and forecasts growth in its international operations and exports to the countries in South East Asia, KHALID ABDULLA AL ZAMIL, managing director, Zamil Industrial Investment Company (ZIIC) told Gulf Construction in an exclusive interview.

Gulf Construction: Zamil Steel has just completed a major expansion of its manufacturing facility. What exactly did this entail in terms of new machinery, expanded manufacturing areas and output?
We have completed a major expansion project of our pre-engineered buildings (PEB) production facilities in Saudi Arabia, Egypt and Vietnam and our engineering capabilities. Likewise, the structural steel business unit has expanded its manufacturing facilities by 100,000 sq m. Substantial investments have also been made in hi-tech robotic equipment, plate processing and shear machines, plate and pipe bending machinery, plasma cutting equipment, hydraulic presses and drilling machines. This has further enhanced our position and added to our production capacity to meet increased global demand and has improved our delivery capabilities, especially on fast-track projects. On the other hand, this expansion programme has facilitated our diversification into complementary products such as process equipment.

How has business been for Zamil Steel over the past year? How does this compare with 2003 and what are the prospects for the coming year?
Our performance in 2004 has been outstanding. We achieved remarkable growth in turnover and profit. We have surpassed SR1 billion ($266.7 million) in revenues in 2004 and achieved a growth of 54 per cent over 2003. Our exports increased by 60 per cent over last year. This is quite an accomplishment by all standards and we are very excited about business prospects in 2005. We are well positioned for a repeat performance of last year.

What percentage did Zamil Steel contribute to ZIIC’s total turnover last year?
The contribution is in excess of 50 per cent and we aim to improve upon this achievement this year.

A recent ZIIC venture to complement Zamil Steel’s product offering was Canam Asia which supplies open web joists and floor decks. Is ZIIC planning similar vertical or horizontal expansion to complement Zamil Steel’s portfolio?
Our joint venture with Steel Plus, a subsidiary of Canam Manac Group of Canada, to fabricate open web steel joists and floor decks, although generic, is part of our strategy to expand our core competence and building solution offering. We have a business development team responsible for assessing opportunities. These are reported to the ZIIC Executive Committee for further evaluation and action.

Taking the recent Aziz Mall project as an example, how have the specialities of the different companies within the ZICC umbrella helped the firm to secure a larger market share?
The Aziz Mall in Jeddah is the third such project with Fawaz Al Hokair and Partners Company. Over the past two years, we have supplied air-conditioning and steel building solutions to Khurais Plaza and the Mall of Dhahran to the same client. Zamil Steel has advanced steel construction into this traditionally concrete sector giving our clients numerous advantages. The ability to offer large clear-span interiors is critical to shopping malls. Completing such fast-track projects, despite their design complexity, allows early return on investment for developers of these commercial centers. We continuously upgrade our design capabilities and develop proprietary technologies to enable us to offer highly specialised applications specific to each market sector. This is a value added service to our clients.
ZIIC’s Total Building Solution proposition to clients gives exposure to the group’s capabilities. We have established a department to promote this concept and coordinate activities within sector businesses.
Has Zamil Steel introduced any upgrades/enhancements to the PEB line over the past year?
Zamil Steel Product and Research Development department is supporting product improvement and innovation. It is equally responsible for continuously developing and upgrading our proprietary technologies and engineering systems. Our success is partly due to the efficiencies achieved through our engineering software, which can now automate the design and estimating of pre-engineered buildings and accessories as well as generate approval drawings.
The software also allows a 3-D view and ‘walk-in’ module, enabling customers to visualise a building prior to ordering. We have introduced a new roof system in Zamil Steel Vietnam known as ‘MaxSEAM’, which is an efficient system for the rainy climate in South East Asia. Another product innovation included the DX and EX concealed steel and aluminum fastener panels, which improve the fit and finish of external walls and liners.
We have to continuously work on improving the performance and quality of our products if we mean to stay ahead.

A recent annual sales conference under the theme ‘Meeting Your Future Needs’ focused on the developments and changes Zamil Steel is making to ready itself for the future. Please elaborate on these developments and changes,
“Meeting Your Future Needs” is not just a slogan for us. The theme implies that we have to be proactive to anticipate and read carefully these needs; we have to be genuinely committed; and, we must deliver our solutions and services very efficiently. Sustaining our growth is very much dependent on this.
We have developed a five-year strategic plan that identifies a strategic path entitled KEIR, acronym for Knowledge, Efficiency, Innovation and Reliability. This plan is the product of intensive strategy workshops involving all senior management intended to position and strengthen Zamil Steel as a global leader. We have been readying ourselves as I explained before. We have the technology know-how and the mind-set. We have accumulated tremendous business experience over the years and we are prepared to “meet these future needs”. However, we have to bear in mind a critical development that is bound to affect us all.
The accession of the kingdom into the World Trade Organisation (WTO) will impose upon us a new reality. We need to revisit the way we’ve conducted business and accept to make behavioural changes and concessions. We need to make quick adaptations in our general business culture and business philosophy if we are to successfully compete in such climate.

Zamil Steel has also implemented business initiatives to sustain its growth and enhance efficiency through the creation of special departments. What is the precise role of these departments and how will they ensure a better service to clients?
We have implemented a number of business initiatives; most notable are the Strategic Management Project and the Balanced Scorecard. We have formulated a clear vision and mission statements for each business unit and developed unit specific strategy and designed a road map for implementation.
At the organisational level, we have created two new departments – Project Management and Special Projects – responsible for the efficient handling of large projects with specialised commercial and industrial applications. They have intertwined sales and after-sales responsibilities of internal logistics, follow-up between various departments, as well as coordination with our clients/end-users and contractors. It is one of our niche markets where we have extensive competence. Clients have one contact person in the company.

What are the company’s plans for the future? Is it looking at diversification or establishment of new offices/plants?
We are always appraising opportunities for entering into new markets through a direct presence, or through certified builders and agents. We have over 50 dedicated international area sales and representative offices and as many certified builders and agents in the Middle East, Asia, Africa and Europe. We are in the process of opening a satellite manufacturing plant in Ho Chi Minh City to manufacture main frames. We have plans to open two additional factories in 2005 and 2006.

What strategies do you have to ensure staff and customer loyalty?
I believe serving our customers well is essential to our reputation and growth. We have to excel and be truly different. It is one of our deeply-held core values. We have our CRM system in place and our Customers Satisfaction Program, which are supported by strong alliances and client partnership relations. Repeat clients are a good testimony and loyalty to Zamil Steel implies a commitment from us as well, to be loyal to the needs of our clients both in terms of quality products and quality services.
We firmly believe that our human resources are our major strength contributing to our continued growth and success. Developing core competencies and leadership skills of our teams are part of our strategy.

What are your comments on the competition? What moves are being made to ensure you have an edge on the market?
The competition in the PEB market is tough, just like any other market sector. Competition keeps you on ‘your toes’ to be different and go the extra mile to satisfy your customers. You must have quality products and services.
We have introduced new complementary products and expanded our production to meet increased demands. We also try to get closer to our customers in some markets to learn their needs and be in a position to address them efficiently. This is not a destination for us. Our team knows well it is a mission.

Do you have any recommendations to regulate the market?
The market is a continuous state of evolution. We have witnessed the changes in the past 30 years. Sometimes we were the agent of these changes. Our role is also to educate our clients about quality and offer them choices and quality products and services. Supply and demand and other market forces will always influence and regulate the market.

How do you see the Saudi construction market shaping up in the short-term future?
I foresee the construction market to continue to grow in the immediate future in Saudi Arabia. Mega projects in the oil and gas-related sectors and petrochemical industry will continue to give impetus to the construction scene in general. Although the dramatic escalation of raw material prices has caused turbulence in the construction scene in Saudi Arabia, just like anywhere in the world, I think we are well on the recovery trend. This is due to the sustained construction boom stimulated by the increase in oil prices. This will have a settling effect on the construction industry and will restore its confidence.