TBY talks to Khater Massaad, Partner & CEO of Al Forsan Global Industrial Complex
Updated: Mar 4, 2021
The Business Year talks to Khater Massaad, Partner & CEO of Al Forsan Global Industrial Complex, on the firm's recent achievements, major export markets, and goals for the coming year.
Could you give us an overview of Al Forsan Global Industrial Complex's latest achievements?
For the last two years, we have been concentrating on being specified and approved for projects in Saudi Arabia. Now, many projects are going on that are government and private. We have been awarded several important contracts. The main is that we are supplying 5,800 villas for the National Guard. We're also supplying projects for ministry of housing and the Ministry of Interior's south border housing projects. We are classified as a technical factory. Unlike many other factories, we have been focusing on being approved by engineering consultants, contractors, and by ministries. Now we're considered a serious partner for any of those. Even during COVID-19, we haven't stopped our business; we continued to supply our clients and worked on our projects. We are happy with our progress as of today. More specifically, we have established new products. The most important product for us today is outdoor wall cladding. We have tiles that are 60cm x 120cm with 2cm thickness. They can be fixed on outdoor facades with mechanical fixing that would normally be used to fix granite and marble. We have started getting a lot of projects using these tiles, especially the mall on King Abdulaziz Road and other projects in Mecca and Riyadh. We also have 40cm x 80cm tiles that can be used in place of marble and granite, and it's very interesting now. It's a new product on the market. We have also established an antibacterial glaze for our tiles, good for schools, hospitals, hotels, restaurants, and so on. We are the only company producing that type of tile and it prevents any bacteria from growing on tiles. This is done through a special formula that we produced independently. At present, we are developing new models for export to the UK. We saw good exports in 2016-2018, and we have renewed those contracts to develop a new series for the UK. These will be in the same sanitary segment, and we expect 20% of our production to be exported to the UK.
Do you have other export destinations and what kind of projects are you involved in through your partners?
We are now exporting to about 16 countries. Since COVID-19, we have not been able to export, but prior to this year it was about 75% local and 25% of our products were shipped abroad. The UK is our largest export market, followed by Jordan, Lebanon, Iraq, Tunisia, Yemen, and Italy. We are renewing our contracts in Italy for sanitary ware. I expect that in 2021 we will be back to around 50% of our products being exported. With Aramco, they are working on housing projects for which we supply. We also supply Emaar. We supplied material for the housing projects of the Royal Commission and the Ministry of Defense. With all of our partners, we supply housing projects, in addition to several hotels we have provided for in Mecca and Medina, mainly porcelain tiles and sanitary ware. In shopping malls, all of the flooring is porcelain. We are producing the same style as you might see in the Mall of Arabia, for example.
How were you able to maintain operations since the start of the COVID-19 pandemic?
We started by asking all of our employees to stay inside our compound; we have our own canteens and everything they might need. Anyone who does go in or out has their temperature checked. We try not to let those who have been outside mix with those inside. We have been supplying in that way.
How do you see the Saudi Arabian market changing in the wake of the coronavirus?
Personally, I believe it's not that much different from a normal influenza. Up until now, there were 200,000 deaths from COVID-19 worldwide, but in 2019, around 600,000 people died from the normal flu. It's my opinion that the exaggeration of this pandemic is benefiting some industries who want to sell products at an expensive price. I believe that the Saudi Arabian market will continue booming over the next 30-40 years. The population has also been increasing by 700,000 people per year. The population of Muslims in general is increasing by about 150 million per year. As you know, every Muslim has a dream to visit Mecca and Medina. Imagine 150 million people every year adding to that pool. If just 2%, 3%, or 10% of them come to Saudi Arabia, imagine the impact. We have to reach a capacity of 30 million to 50 million visitors per year. For this, they will need construction. That's why I am very positive about the future. The Vision 2030 to be more economic and future thinking is in line with our leader's vision. I am in contact with many ministries, banks, investors, development funds and so on, and I really meet a lot of highly-qualified Saudi Arabians. Many of them are deep thinkers with deep knowledge, which is really creating a positive momentum within the country. Today, all of my top management are Saudi Arabian citizens. For the past two years I've been Saudizing everything; by the end of 2021, it will stand at about 90%. Many young people who have been working with me for four years or so have been promoted to sales managers or operational managers, even general managers and are very hardworking and very talented. This is very positive and one of the reasons I'm more confident about the country than I was in 2016, when we last met. When I arrived here, I did not know the situation; every time I met someone, they were a foreigner. Especially people who arrived 10 or 15 years ago had a clear idea that Saudi Arabians do not want to work. The main point was to employ them just to meet a quota. In the past five years, I have come to realize that that is not the case. As long as you hold them to a high standard, they will be able to do the job the same as any other person. I created a positive attitude within them. They saw that I was not considering them as employees, but as a part of their business. I can say my Saudi Arabian employees are exceeding my expectations. I keep them busy and they are very happy. Saudi Arabians by and large have very good intentions and work ethic. At present, we are at 70% Saudization and by the end of 2020 I hope it will be 85%. I want to retain the best employees, and today, hiring a foreign employee costs about the same as hiring a Saudi Arabian. In any case, being realistic—any foreigner in the country is here temporarily. They are often coming with the only purpose of making money. It's not a matter of loyalty. I am working to create loyalty among the Saudi Arabians that live around this area. I don't want them to have to drive more than 20 minutes; I want them to see their future here and a career here.
What does Al Forsan do to be sustainable and protect the environment?
We are in the ceramics industry. We use exclusively Italian technology that complies with European norms and standards. The authorities here are very strict on refuse, wastage, and fuels. Thankfully, we are doing extremely well in that regard. We employed nearly 12 consultants when building our compound, one for environmental impact, one for safety, and one for everything. That allowed us to take everything into account from the beginning.
Are you planning to use more artificial intelligence and robotics in your operations?
We have the latest technology here, but certain things must be done by people. Mixing of raw material, milling, printing, and loading may be automatic, but in between, you have to clean and maintain the equipment. Yes, it's highly automated already for three factories like ours—one for sanitary wares, one porcelain, and one ceramics. This complex would need 2,000 people working 25 years ago, but today we only need 1,000, including all the people in sales, staffing, and security.
What are your short-term goals for the end of 2020 and the coming year?
We plan to multiply and install a faucet factory. We want to build water taps since there is no factory like this in the area. We are looking for partnerships, specifically someone who wants to come and work with us here. I hope 2021 will be a better year than 2020. No one can predict that, but I do know one thing. The world will not stop turning. In 2008-2010, everyone was so sure the banking system would collapse and there would be a new world order. If you had talked to anyone at that time, you'd be depressed. But by 2012 everything was back on again and everything was booming. Generally speaking, our market will continue to grow even if there is no oil because we expect 30 million tourists to Mecca and Medina. There is very little risk. Moreover, there is a lot of wealth available in the world. It may change hands, but it will not reduce. Another hand will invest. I don't think the future will be bad, and it won't be worse. Behind every valley there is a mountain—after all the problems in the Middle East are resolved, they will need to rebuild. War cannot last forever, and people want to live. Since there are problems everywhere around us, we see that it will only get better in the coming years.