Proceeding Towards Industrialization

12-07-2006

Aqa Maula (TUS) has stated on various occasions that Mumineen should set up industry and diversify into manufacturing. Keeping Huzurala's Farmaan mubarak in mind, Al-Tujjar organized a forum and brought together traders and manufacturers so they could share their thoughts on the subject.

The forum began at 9:00 pm in Saasa Hall and was attended by about 30 mumineen in the audience and a panel of 4 with Shk. Mustafa Saasa as moderator.

 

The Panel consisted of:-
Shk Shabbir Fozdar (Classic Extrusions LLC, Classic Metallic Sheet Factory, Manufacturer of blind rivets, based in Sharjah)

Mansur Arsiwala, Industrial consultant with experience in setting up more than 22 manufacturing units

Mustansir Saifuddin (Chairman and CEO of Crystal Arc having an experience of 17 yrs in the Crystal business)

Kaizar Federal (RightSource LLC., Advertising & Promotional Materials)

Bhai Mustafa Saasa began with an overview of the manufacturing industry and explained how the nature of manufacturing had changed over time. He also briefed the crowd on various forms of manufacturing and introduced the panel members.

Bhai Mansur Arsiwala began by sharing his views on how advances in communication like internet allows traders to locate the source of products quite easily. Hence, manufacturing, rather than importing, provides a stronger long term future. He also expressed strongly that there is a niche and space for every product, and low price is not the only factor that makes one competitive. In manufacturing one has to change and innovate by always seeking new products and ideas.

He gave an example of how they have switched over time to manufacturing products which yield relatively high returns (from glucose biscuits which were high turnover).

Shk. Shabbir Fozdar (Classic Metallic Sheet Factory) was quick to re-inforce some of these points. He admitted that even though they are more expensive than competitors, they are doing great business.

According to Shk. Shabbir Fozdar, a general guideline for deciding whether an item should be manufactured or not involves the ratio of raw material to processing cost : if raw materials account for 50% of import price, it is safe to manufacture that item.

He also emphasized that in industry, it takes time to develop ones market. Industry gestation time can be 2 years or more.

Mustansir Bhai began by pointing out that the first concept of industry has to do with idea. He gave an example of how a Lebanese individual he knew gave up a well paying bank job to start a small operation creating sugar sachets, and is now very successful and happy.

As far as employees are concerned, Mustansir Saifuddin was frank in stating that you, as a boss are smarter when you hire someone smarter than you. He further elaborated,

"Keep your eyes open for someone who has confidence and is willing to commit and ask him what he can offer you."

From a management point of view, manufacturing can be more challenging because all employees have to work efficiently as the production cycle is a chain and each part relies on the other. Mustansir Bhai also advised that manufacturers should aim to have everything in-house. When you depend on others, problems are more likely to arise. He summed up his talk with the following words of wisdom,

"Seek partnerships, alliances, joint ventures. It helps to find somebody to work with. Move towards like-minded people and keep in mind communication and transparency is the core of a successful partnership"

Kaizar Bhai believes that the goal of manufacturers should be "quality, on time" . These two words, according to him, should be the focus of every manufacturer. He also believes greatly in product differentiation. By producing something different, each product can be sold. Differentiate by quality, packaging, branding, advertising, etc.

"By simply doing something which your competitor is not doing, you can be successful"

A general discussion then followed with a high level of audience particpation and feedback from the panel members. The following points were expressed by the audience.

• Expertise is required in order to execute an idea.
  
  
• Let go of the fear of failure. Ask youself what you can lose if you fail. Keep in mind if you are successful, it will be a giant leap.
  
  
• Fear is the biggest motivator.
  
  
• Talk to people before starting any venture. Talk to other people in the industry, talk to competitors, talk to friends, talk to peers. This helps generate ideas.
  
  
• Trading can evolve into manufacturing. One Mumin Bhai traded in PVC pipes. Over time, volume reached considerably high levels and he switched to manufacturing that particular item rather than importing.
  
  
• Each step can be a struggle-be prepared for it.
  
  
• A Strong distribution channel is required to sell your products.
  
  
• Sharjah is a good location for setting up a small industry employing 5 to 6 people. However, Ras Al Khaimah is ideal for large industry. A license can be obtained in 3 days. One can get undeveloped land of 300,000 sq feet for AED 150,000 on a lease. Visa cost for labour is only AED 2000 per person.
  
  
• Ras Al Khaimah and Bombay are examples of cheap alternatives for industrial land.
  
  
• One of the best methods of studying the manufacturing process is to go to the source and study their operandi. Buying technology is important.
  
  
• Timing is the name of the game. Companies often require things urgently and this is one of the reasons why one can set up closer to their market.
  
  
• Also where customization is required, it is not easy to source from faraway places.
  
  
• Our risk taking capacity distinguishes us from others, and this acts as a barrier to entry for other potential competitors.
  
  
• Goods which are high in volume, or hollow and occupy alot of space are potential items to manufacture. There is the natural logistical advantage in the form of lower transport costs when you are closer to your market.
  
  
• India may be a better option for manufacturing certain products because credit period is much shorter in India than in UAE. It may take upto 6 months to realize a profit of 20% in UAE wheras in Bombay, this profit can be realized in 45 days, thus allowing more investment and turnover.
  
  
• Manufacturing is not limited to mass production. Customizable products have large markets also. In the market for customized products, pricing depends a lot on who you sell to, and how you sell it.
  
  
• Smaller items have higher handling costs so it is possible to manufacture them cheaper here.