Bahrain Aluminium GARMCO Bahrain

Recently we have seen a sharp decline in aluminum prices as a result of an on-going economic crisis that has hit the metal industry hard. This was preceded by a wave of mergers and acquisitions back in 2008. How do you assess the global aluminum industry compared to the GCC aluminum industry?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: The aluminum industry has a long, prosperous future because this metal is recyclable. The problem that has taken place in 2007-2008 was purely speculative when we had a lot of investors outside the industry investing in the metal exchange market and adding another dimension to the whole economic cycle of the industry and that has made the price shoot up to $3400 dollars per ton. The 2007-2008 economic crisis has put a huge burden on all commodities and industries and the aluminum stockers have been affected the most. There is cyclic fluctuation but if it is only left up to the industry itself then it shouldn’t fluctuate more than $500 dollars a year and that is related to supply and demand. When there are other investors and speculators who are pushing the price up that is when there will be a bubble that will have to burst- which is what happened recently. There have been a lot of phases in the aluminum industry to counteract the financial crisis. The people with strong balance sheets remained in business whereas those with poor balance sheets were shut down. Bahrain was one of the first countries to start up in the aluminum industries and it is very advanced in that perspective and it has also developed both upstream and downstream in the industry. We have a lot of countries in the private sector to produce products for both the public and industrial consumption. GARMCO was set up by the government and it takes all of its purchase from the original company ALBA. After ALBA expanded we reduced our intake from 33% to 26% so we are the largest consumer of ALBA products and we produce 160,000 metric tons. GARMCO has developed a strategy to move forward with selling its products worldwide with different service centers and offices in other countries. Currently we are 18 companies total with 3 companies in Bahrain and 15 worldwide from Australia to America.

I read the company employees 767 people, is this total or does it include the other companies?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: No, In Bahrain we have 850 and about 300 extra worldwide so we are in the range of 1150.

In your opinion how well is the downstream aluminum industry poised to face the financial crisis, especially here in Bahrain? What kind of emergency measures and strategies have you enacted to face this crisis?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: Different companies have different strategies and different points to stress based on structure. The GCC is one region where there are no duties between countries so there is a lot of trade on the causeway and these give added value because there is less freight cost involved. Bahrain is very small with a limited infrastructure and market and GARMCO has to think globally. When GARMCO was set up initially there was no trade in the GCC so you can see how we have developed throughout the years.

Do you agree or disagree that there is more international competition than local GCC competition? What is your view on the GCC aluminum industry- do you compete with downstream individual players or is it more of a congruent effort to fight off other international players?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: Local competition is there and so is international competition, you can not avoid that. Competition is a healthy sign in industry and commerce so how do you deal with that competition? First of all, you need a strategy in place to deal with your customers to make sure they are highly satisfied and can be retained. Competition also has to be regulated from the outside and it also has to be related to quality of product and services. There are many ways to deal with competition and protect industry. GARMCOs experience allows us to know the regulations so we can play fair and don’t violate any laws during exportation and also Bahrain does not give any rebates for exports. GARMCO has introduced GARMCO products worldwide and this has worked out very well for us by monitoring different markets so we become leaders when others fail. We like to look at the market patterns and play within the rules to compete most effectively.

Is your exclusive partnership with ALBA giving you an edge compared to other downstream players?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: Certainly the only edge is that they are near by and we can receive our slabs very early. The other issue is that they produce a very high quality product whereas other mills buy it from smelters that do a lot of recycling which reduces purity. GARMCO also is owned by the government of Bahrain and the GCC so Bahrain has a 38% stake in GARMCO and 75% in ALBA; therefore, there is a mutual interest in trade for the benefit of the shareholders.

If 38% from the government, where is the rest of GARMCO from?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: It is split between the rests of the GCC.

The company accounts for 13 subsidiaries and it selling to 35 countries worldwide, how would you describe the balance of power between your customers and yourself? What is the feedback you receive from the customers?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: We are an ISO company so we have a very highly documented set of procedures and regulations to deal with our customers. We carry out a yearly survey for all of our customers to gain their feedback and we counter act that feedback by setting up a plan to face these issues. Our satisfaction rate with our customers has increased yearly and that is a good indication of our work and additionally, our quality has improved too. For example, last month we were in Switzerland to receive an international quality award and the week before we received an Excellency award from BIZ so this shows you how well known GARMCO is. We actually sell to 45 countries and we have around 2200 customers worldwide. Our subsidiaries have played an important role in addressing the satisfaction of our customers because they exist within the countries that we sell too and they speak the same language and culture as the customers we are able to break all of the barriers of trade by being close to them in many different areas. We get weekly, monthly, and yearly reports from these subsidiaries and customers also visit us here on a regular basis and we go visit them as well. We send our quality engineers to the sites as well to help process the products and help with mechanical problems. Our worldwide existence makes our people able to travel to our customer’s bases and see their plants, equipment, and the processing of our products which helps our development internationally.

How has the crisis impacted your operation and the way you do business? Where do you see potential in the market?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: I think with the financial crisis everyone who is in business is affected; not only companies but government as well can go bankrupt. We have been affected because of our broad customer base and our customers finding difficulties because they stock and stopped ordering- some of them even went out of business. The maximum reduction that we have seen as a result of the crisis is about 20% of our total volume, however, now it is at about 8%. The last quarter of 2008 was the worst for us but now it has leveled out. It helped us in a way because during that period we had undertaken a huge project to modernize our equipment and it allowed us more time to reduce productivity and perform major upgrades, prior to that we were so busy and overbooked. We have taken on many expansion projects in the mean time and we see huge potential and demand for our product. Although is it slowing in certain areas, it is still increasing in others and we are also able to move many tons of our product. For example, in the mid 90’s we saw a collapse in the Far East and at that time 60% of our product was being sold in the Far East region but we didn’t feel the effects of this because we moved our product to America and Europe and were able to sell them in no time. A company like ours with a global structure makes it very easy to make up short-comings in one area by focusing on the growth in other areas. Additionally, in 2008 we have added two subsidiaries in Switzerland and South Korea.

How are your four offices in the US operating? Are they feeling the crisis there?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: The US is about 50% affected because the situation there is really bad. We have a complete restructuring approach for the US companies in advance so we are ready for growth once that takes place.

Which market would you like to see developed? Where is the potential?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: We have a plan that is basically approved by our board. We look at four potential markets for the future where we don't have a presence at the moment. The first one is South America (Mexico or Brazil), the second one is Canada where we know a lot of companies are closing down in our field of business, the next market is Morocco because of their relations with the US, and the fourth market is India due to its huge potential. We are also considering Japan due to high value added products selling very high there.

You mentioned there are a lot of international players going out of business. How does the local market accept you or view you in the market?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: After making the first contact and a trial period of them using our product and seeing the services we provide, give the customer flexibility and attract them to our product. The more you stay with the customers and see if they have difficulties and can be available to them then they become loyal to you. You have to work very hard to gain their loyalty because once they become loyal they will become your subsidiary. We have long term visions with our customers and we like to develop those relationships accordingly.

What is your policy towards sustainable development and being green?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: With GARMCO we haven’t violated any local or Bahraini law with regard to the environment in our entire history. In fact, we have gone above and beyond the regulations and bought an incinerator so any possibly harmful liquid we haven’t disposed off in the environment because we burn it with the incinerator. We are the first company to have a machine like this in use and we have been using it for three years. The good thing about GARMCO is that we have phased out every environmentally questionable product. For cleaning now we only use water, for example. Additionally, any air that is exhausted from our operations goes through a filtering system that must make our waste cleaner than required. In the rolling mill, the only issue we have is the oil it uses for coolant and this oil used to be 93% water are 7% chemicals. However, we have improved this to 98% water and 2% chemicals and after it has been used it goes through the incinerator for disposal and nothing is disposed off in the sea. For our efforts we have received many rewards and the local people around us hold for us high regard as an environmentally conscious company.

Is there any message you would like to give our readers? What is your long term vision for GARMCO?

Bahrain Aluminium GARMCO, CEO of GARMCO, Dr. Adel Hamad A. Rahman Hamad: We would like GARMCO to grow and be able to supply its products to every country in the world. We can see that the aluminum industry has grown and is very large as it covers products used in shuttles to the moon to products in women’s hair salons. There is a vast, huge application of aluminum. We have companies who use us exclusively and do not want to use any other companies’ products because GARMCO has a focus on its total quality management systems and its good service to its customers. We are highly dedicated to serve our customers, be compassionate to our employees, and add growth and profit to our shareholders.