17-05-16

INTERVIEW: CHALLENGES AND HOPES IN MIDDLE EAST

As part of the ten year anniversary Ulrich Meyer, Klaus Hofmann and Marcel Paulitsch gave an interview

The United Arab Emirates – For many a byword for the superlative, economic boom and progress. But many companies underestimated the market. So Ha-Be Middle East is proud to celebrate its ten year anniversary. In an interview Ulrich Meyer, Klaus Hofmann and Marcel Paulitsch talk about the challenges, the difference in concrete technology compared with the German market, as well as the most impressive projects.
 
Ha-Be Middle East FZE was founded in 2006 as a subsidiary of Ha-Be Betonchemie GmbH & Co. KG. How does such an event take place and what were the difficulties?
Meyer: Initially we performed market analysis and weighed up the opportunities and risks. On the one hand we saw a great deal of potential, but also the off-putting payment targets of the customers, which are usual in the market, and the required liquidity associated with this. This had the result that we initially wanted to stay out of the market.


Why then did you decide to become active in the region?
Meyer: Shortly after deciding to steer clear of the Emirates, I received an enquiry from two Arabs, who had found us over the internet and wanted to work with us. The two had started to build a production site and were looking for a partner to provide the technical input. We agreed to become partners after securing reduced financial risk.


How did you source the first employees?
Meyer: Björn Mordhorst was our „man of the hour“. By the way, he still works for Ha-Be and today he is a board member in Germany as a General Manager and the Head of Sales. He was initially with us in 2006 and also worked with another company as well. After perfectly securing the founding of Ha-Be Middle East, he decided, luckily, to work for us exclusively.


How many employees does Ha-Be Middle East have today?
Hofmann: Currently, 40 employees from eight different countries work for us.


What challenges do you face when so many different nationalities work together?
Hofmann: We have employees from Egypt, Bangladesh, Germany, India, Cameroon, Nepal, Pakistan and the Philippines. We communicate principally in English, which also works very well. Of course, all nations have varying business standards, different concepts of value and cultural peculiarities. Working in such a multicultural team therefore requires a high degree of tolerance and sensitivity for other points of view and religious and cultural needs.


How do these cultural differences make themselves known? What has been your most remarkable experience during your time in the UAE?
Paulitsch: That is difficult to say. These differences generally come about through special rites and practices. I was quite surprised when a goat was sacrificed during the inauguration of a new concrete plant. Its throat was cut with a machete so that it bled to death. Afterwards, the meat was prepared in a feast for the guests. By making sacrifices, Hindus express their reverence for the Gods. However, until then I did not know about the sacrificing of animals. Also, it is only practiced in some regions of East India and Nepal. In any case, animal sacrifices are not for the faint of heart. I can honestly say that I didn’t have that much of an appetite (laughs).
Another impressive event was the Indian festival of lights, known as Diwali. I saw how, in a concrete plant, all of the testing tools and equipment were decorated for the festival. This festival celebrates the god of fortune and the goddess of opulence and wealth. To prevent her from just passing by, companies put a lot of effort in to decoration.


You’ve been in the region for a while now. How would you characterise the differences between Arabic and German culture?
Hofmann: Emiratis and Arabs are very polite, warm-hearted and hospitable people. Here, it is very important to develop a personal relationship with potential business partners. In Germany, the focus is on “problems and their solutions”. This attitude, however, is looked down upon as aloof and too reserved.
For this reason, business meetings take longer than one is used to in Germany. Negotiations can become very time intensive and require a great deal of patience, flexibility and stamina. But when there is real and prolonged interest in a relationship, then this presents no problem whatsoever.

 
And from a professional point of view? What impressed you most during your time in the UAE?
Meyer: This will sound unbelievable for European ears, but quite near the beginning we closed a supply contract with the regional market leader in ready-mixed concrete, in which we were bound to deliver a monthly minimum of 2,000 t. Not only is this quantity remarkable, but in the same contract a clause gave us compensation entitlements totalling € 20,000 each month, if the accepted dropped below 500 t per month. This special situation was due to the fact that concrete admixture had become scarce because of the construction boom at that time, and every concrete producer attempted to safeguard their business in their own way. It was a pity that this outstanding phase was over just two years later (laughs).


What was the most impressive project that Ha-Be Middle East fulfilled in the last 10 years?
Meyer: Even though it was quite a long time ago now, I found the construction of the Jumeirah Palm as one of the most spectacular projects during our time in the Middle East. The Palm was a gigantic prestige project that has since become symbol for the entire region. Dubai wouldn’t be the same without it. It’s simply great to work on such a project. We flew the first IBC containers of our water-reducing admixture PANTARHIT N (FM) from Germany by air cargo directly on to the palm island which was still taking shape. Everything had to be completed quickly and the shipping must have increased the value of the goods eight or ten fold. But in the end, the investment was worth it, because afterwards we became one of the main suppliers for the project.

Hofmann: I found the two bridges, Sheik Khalifa Bridge and Saadiyat Island Bridge, to be very impressive projects. As gateways to Abu Dhabi, they are not only important transport routes, but also unique architectural icons thanks to their design.

Paulitsch: For me, it was the three skyscrapers Dubai Pearl, Marina 1-0-1 and the ADNOC Headquarters.
The Dubai Pearl is a complex consisting of four tours, which are connected horizontally, from roof to roof, by a “skywalk”. Each of these four towers required its own foundations. The speed and the quantity of concrete were just enormous: each foundation required 11,000 m³. This was produced and laid within 24 hours. This amount was produced in six different plants, transported with a total of over 100 mixing trucks and laid with 13 pumps. I was very impressed by the architecture of Marina 1-0-1 and the ADNOC Headquarters. Both buildings have attractive and unique designs, which fit perfectly into the skylines.

 
Going back to the product portfolio, currently you produce the concrete admixture locally in the UAE. Are you able to use successful recipes from Germany or do you need to develop new products for the Middle Eastern market?
Paulitsch: We develop most of the products locally ourselves. The different conditions by which the admixture needs to be produced are the main reason. The Middle East offers completely different conditions than in Germany. This includes different cements and different aggregates as well as other weather conditions. Here, the product must perform well under extreme ambient temperatures. This is different in Germany and must be considered when selecting the appropriate raw materials for the admixture recipe.


In Germany, concrete production is regulated by DIN EN 1045. In the Middle East BS EN, BS & ASTM are mostly in use. How do the different standards work in practice?
Paulitsch: In the Middle East, different assessment criteria are used than in Germany. For example the slump value is used instead of the flow value.
In addition, the procedure for developing concrete designs is different in the Middle East compared to Europe. In the Middle East, the specifications are supplied by the planner or their consultant. This party also develops the design which the concrete producer has to follow. In Germany requirements are stipulated using standards. Just how these requirements are achieved is then up to the concrete producer in collaboration with their supplier.


Are there differences during concrete production and distribution in plants as well as on the construction site?
Hofmann: One big difference is that the availability of raw materials for concrete is completely different than in Germany. Except for cement, all raw materials need to be imported or transported over long distances, quarries, which produce aggregates, are limited to a few regions. Slag sand, fly-ash, microsilica and steel fibre are not produced locally. Therefore the availability of raw materials is limited and choices are fewer. There is a much broader choice of raw materials in Germany. The variety of raw materials offers higher flexibility.
Paulitsch: Another difference to Germany is that PCE-based admixtures have only made a significant entry to the market in the past few years. Many concrete producers still use naphthalene and lignin-based admixtures. Above all, an admixture needs to be robust here. Many producers have had good experiences with the traditional water-reducing admixtures and don’t want to change. The advantages of PCE-based admixtures however are becoming increasingly apparent.


What is the plant technology situation for concrete production? Are there any noticeable differences at this point?
Paulitsch: Plant technology is absolutely equivalent to Germany. Most plant developers are internationally active companies that work both in Germany and in the Middle Eastern market. Therefore the technology is pretty much identical.


The economic crisis also arrived in Dubai a couple of years ago. Was Ha-Be Middle East affected by the crisis?
Hofmann: Definitely. The economic crisis had a significant impact on construction. Many projects were stopped, rescheduled or completely put on ice. Of course, this had an enormous influence on the amount of concrete being produced in the UAE and also on admixture sales. Our production quantities declined dramatically.


How is Ha-Be Middle East today?
Hofmann: The negative trend reversed about one-and-a-half years ago. Construction projects were restarted and begun at this point. That’s why more concrete is being produced whilst the demand for admixture is also increasing.
However, we also changed our strategic direction in the last few years. Before, our main business was admixture production for ready-made concrete. Since then, we have expanded our range with admixture for concrete goods, liquid colours, surface protection and microsilica and thereby acquired new market segments. In addition, we also offer targeted, special technologies and solutions.


What are your expectations for the future?
Hofmann: Basically, we want to achieve the three goals in the next three years. Initially, we want to keep our current customers in UAE and Oman. For this reason, the newly acquired market segments for admixture for concrete goods, liquid colours, surface protection and microsilica as well as special technological products will be developed and reinforced further.
Our third goal is to increase exports to the surrounding countries such as India and Iran as well as the North Africa. We expect to acquire new sales markets in these regions together with our local partners.


Before you achieve these goals, you’ll be celebrating your tenth anniversary. What have you got planned?
Hofmann: We will be holding an internal party for all employees at the three sites in Sharjah, Oman and Qatar. Some employees have actually been with the company from the beginning. We are very grateful for this and want to honour them as part of the celebration.


Have a great celebration and all the best for the future.
Thank you for the interview.