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Saudi Arabia Report
Marcopolis presents the Saudi Arabia Report focused on the investments, doing business, economy and other topics featuring interviews with key executives. The sectors under review in this issue are industry, real-estate, ICT, investments, banking sector, telecom sector and many more.
InterviewsNovember 07, 2022
Electric Wires and Cables Market in Saudi Arabia: Talal Idriss of Bahra Electric Discusses Upcoming Projects
Talal Idriss, CEO of Bahra Electric
- Written by Sandra Francisco
- Published: November 07, 2022
Interview with Talal Idriss, CEO of Bahra Electric
What is your overview of the sector in Saudi Arabia, and how does Bahra Electric fit within it?
The Middle East represents 13% of the global cable business in the world. Saudi Arabia represents about 50% of that. So, it is a big market. There are big players and recently the sector has caught up to capacity. It has been overcapacity for many years now, but people are starting to buy capacity again in the market and we are seeing the increase in numbers. I am optimistic about what is going on in the market, the number of projects, and our international scope. We sell now into 35 countries from Argentina to Australia, including the US, UK, France, Italy, etc. We are a market leader. In terms of position, we are number two. We are the youngest company at only 13 years old. Our growth has been quite interesting. In the past, we started with cables and then we built 10 other factories that do other things like transformers, busways, switchgear, cable trays, steel pipe, PVC pipe, PVC commodities, and so on. The cables business margins are very slim and they need to be updated and supported by other close electricals projects that we are involved in. We would like to vertically align our businesses so we can have a little bit more of the pie that is there. In terms of range of products, we are A to Z from wires all the way to high voltage cables. We are now experimentally doing extra high voltage, which we will be able to get certified within the next 12 months. We are even now looking at submarine and we are in the early stages of discovery at the moment.
What products and services do you offer to your customers?
Bahra Cables is one of the few companies in the cable industry that has branched out from cables. Our share of cables will still be 75%. The other 25% comes from other sectors, which are in the same electrical field, but supporting products that help you reach the same client while offering him more of what he wants under one roof, which is an advantage. Earthing is a project that we started very successfully. Busway busbars is a project that we have been leading in and we are doubling. We have a lot of new projects on the drawing boards. We will integrate vertically into a rod mill where we will start using our own rods. We also have accessories for overhead lines, accessories for cables. We have an EV charging line that we are studying. We are studying lighting. We are studying more than 10 projects that hopefully will see the light within the next 10 months. Some of them are easier to roll out than others because we have now about 2000 people. We have experts along a lot of businesses, a lot of commodities, and a lot of engineering products. That gives us the leeway to be able to manufacture associated products rather quickly and bring them to market. There are some things that will take longer. The rod mill will take two to two and a half years. Now, we have already signed with the Ministry of Industry committing to build the rod mill, together with partners.
What are your competitive advantages? What makes you stand out from the other players in the sector?
We are quick to market and our decision-making process is very quick. We have a lot of knowledge in the market where we are more confident in where we can produce. We have sister companies that distribute our products which gives us insight into the market more than a manufacturer will have. Combining all those three together, makes Bahra an aggressive company with an aggressive growth. It is the DNA of our company.
You mentioned that you are in 35 different countries. Where are you present and do you have any specific products or services in those countries?
We sell through a Singaporean company and we sell to Australian electric companies. Our first shipments we sent there arrived in bad shape because of the ships at that time. We of course fixed that immediately. From our last shipment we received an email from the authorities saying that it is the best cable they have ever seen in their life. So, that is a nice change from one reputation to another. We are quite proud of that. We have the most certifications of any company in the Middle East. I say that proudly because we deliver to many different countries who have different specifications and different certification methods, and you have to be certified in each one of those markets. We are also engaged in high end projects that push us to get that approval. We now have a huge certification field of knowledge that helps us get approved on various projects. Our factory is based on half a million square meters of land. We are lucky to be able to have all our factories under one roof which helps a lot in getting things done rather quickly and using the resources and the benefits available to each company to help the other. If we want to have a minus 60-degree temperature, air conditioned, controlled, etc., we have it in house. We can be efficient in terms of resources and in terms of investments.
What are some of the awards and certifications you have received?
In 2021, we were awarded by the Ministry of Industry the best factory in Saudi Arabia. We have had various other awards such as fastest growing 100 company in Saudi Arabia. We have signed contracts with the French nuclear power as the company they want to work with. We have signed contracts with EDF for the same reasons. We have signed contracts with major international companies that want to choose a Saudi partner. We have had discussions with Boeing and with all the major American and European companies to work with them on localizing some of their products. A recent project was to localize and to change 250,000 street lighting fittings from incandescent to LED. We did that in house which means localizing. We are trying to localize everything because Vision 2030 is localized. The government pushes us in that direction and supports us at the same time to build those factories. That support is not available in many other countries. That is really the benefit of Vision 2030, when we have very high goals that we have to reach, and everybody, for a change, is pedaling in the same direction. In Saudi Arabia, you get the stick, and you get the carrot – the push as well as the support. So, it works very well.
What is your three-year vision for Bahra Electric? What do you hope to have achieved in the medium term?
We see ourselves as a localization partner. We start with all the electrical products. For our 10 projects currently, we will localize all of them under electrical. Then we will start looking at the gray areas that are electrical and something else. Lighting for example, is not 100% part of the heavy electrical that we do, but it is something we will build. We are continuing to drive local products to enlarge the product offering and to build them within the same buildings, the same half a million square meters scope, where you can use all the advantages mentioned earlier. That is an endless quest, really. Those projects are not profitable from the first year. Some of them take five, six years to become profitable, because maybe they are new to the market. But eventually, they all hopefully turn profitable as we go along. It is a long road. But we believe electric wires and cables is the basic business, around that is 10 existing projects, and around that is another 20 projects that are being studied with some of them closer to fruition than others. That is our strategy. Our plan is to also work with the big companies such as Schneider, Legrand, Boeing, Airbus to develop not the full product, but to develop some elements in their product range that we can call local and make them more efficient to use local products. The policy and the strategy are very clear: localize everything you can can localize and become more technical – instead of localizing a simple product, localize a more difficult product – and as you build your expertise in extrusion, injection, aluminum, copper, wood, and you get more comfortable developing products that are more difficult to develop and sell them to different countries. For example, we have a project with a German company where they have become inefficient in their country because of costs, etc. They give us the technology and we sell them part of that product for them to use, and they concentrate on another product range. That kind of deal is very possible. We are very internationally motivated. We have a team that travels with all the official government trips, whether it is Uzbekistan, Johannesburg, Madrid, etc. Every two weeks, we have a trip headed by a minister. We believe those connections we gain are the start of the relationship that we build on to build more products.
What is your message to those people that are looking at working with Saudi Arabia or any of those leaders and businesses here?
Big markets and companies coming to Saudi Arabia have a huge track record of success. But it is very difficult for the small and medium ones because they do not have expertise in financial matters, they do not know how to open a letter of credit or how to receive a letter of credit, for example, which is the basics of doing international business. Doing a joint venture with an international company is not an easy path. I recommend more than joint venture, a joint royalty, where they do not have to invest which is much easier and much quicker. They can see the beginning and the end of their investment and they can see those profit margins. They can share that knowledge without putting money up or without going through a lot of due diligence, reports and studies. Usually, they do not have the patience to make it work. You see a lot of JVs that start and then somebody buys somebody else out over time. I like the route of royalties. If you have a product that is worth taking outside, join forces with somebody who will develop it for you and will share with you some of the profits. That is a much easier, much quicker way to go to the markets. We are open to do business with any company that thinks we can offer something positive.
So, overall, would you say that there is a lot of opportunity in Saudi Arabia?
There is a huge amount of opportunity. It is a market that is growing at a very interesting rate. There is 3.5 trillion dollars of windfall coming to the Middle East, and Saudi Arabia represents more than 50% of that. There are going to be very good days coming soon.
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