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The many forays of a fencer

Raphael R Khlat, President, Faisal Jassim Group, speaks of wanting to continue making bold moves, of having to keep dancing to grow a business

| | Jun 4, 2020 | 9:25 am
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The early days

I was born in Tripoli, a town in the north of Lebanon. I was brought up in a family of traders of white goods, which gave me plenty of exposure to trading, showroom display and office atmosphere. In the summer months during my schooling days, I used to spend a lot of time in the firm’s workshop repairing white goods and installing wall-mounted air conditioning units. I was 16, then, and learnt a lot – a privilege proffered to an unfettered mind.

Such was the influence of the family business on my mind that when it came time to go to university, there was nothing else I wanted to pursue but engineering.

Khater Engineering

I attended St Joseph’s University in Beirut, where I studied electrical engineering, and specialised in the different aspects of energy distribution and the design of air conditioning systems. While in university, I used to play a lot of tennis. Besides competing, I used to coach regularly. It was through coaching that I was introduced to the prominent Beirut-based engineering firm, Khater Engineering. I met Antoine Khater, who was kind enough to offer me a chance to train at the firm. It was my first proper acquaintance with engineering.

At the time, there were many charlatans in the city, and in that context Khater was an authentic engineering experience, where I gained exposure to proper design, calculation and measurement of performance. In short, I learnt the rigours of how to do things properly. As they say, you are fortunate if you meet people who are able to direct you along the right pathway.

Dubai beckons

I graduated from university in 1987, and Khater immediately offered me an employment. I learnt a lot on the job. The company was involved in major projects around Beirut that covered large chilled water systems, heating and solar systems. The assignment also gave me a chance to learn a lot about building management systems.

Working at Khater also instilled in me the thought that air conditioning engineering was a strong professional field. I could have gone the white goods way through working at my father’s business, but my working in Beirut opened up a different dimension for me.

The situation in Lebanon was not promising in the late 1980s, though. While I was about 10 months into the job, my cousin, Fady Khlat, who was employed in Dubai, invited me over to the UAE. I packed my bags and landed in Dubai in March 1988. I attended many interviews and eventually landed a job with Thermo, in April 1988, to develop sales for small projects. It was a great starting point, with Rafe Abul Husn at the helm and Mario Seneviratne as my immediate boss.

Getting my trading boots on

My responsibility at Thermo started with selling the company’s small projects services. It changed later on to Project Engineer in Dubai, Project Manager in Abu Dhabi for one year and, then, Area Manager for Thermo Dubai. Each assignment was a huge learning experience – I learnt a lot at the workplace, mostly about project management, the different equipment of the MEP industry and their installation.

While contracting was an exciting field to be in, the situation was similar to how it is today – it involved spending a lot of time on the job but not getting rewarded properly for the hard work executed. So, I told Rafe that I wished to quit contracting and move into trading. I felt I could sell.

In 1993, an opportunity opened up with Faisal Jassim Trading Company. Joseph Fernandes, who started the company with Rafe in 1988, wanted to migrate to Canada, and the company was looking for a new partner – I happened to fit the bill. Though the salary was low, compared to what I was drawing at Thermo, I felt it was the right decision to move to FJ. At the time, the company was involved in the assembly of electrical control panels for BMS systems and had an agency for dimming systems, pumps and electrical accessories.

I found the work tough in the beginning, but fascinating. We pushed hard to develop the business in HVAC. Now, HVAC is not something you love or don’t love – it’s like a path, and you go through it. You start with something small, with a simple pump and graduate to much more complex systems, such as AHUs, boilers, cooling towers and heat exchangers. That’s been my story at Faisal Jassim – constant development and progress; there has never been a dull moment.

It was not just about technicalities but also about how to partner with principals, how to sell, how to manage staff, how to plan, how to negotiate and commit to get things done, all within the electrical and the air conditioning environment. The journey has not been only about becoming an expert in air conditioning – it has been more about creating a business, constantly seeking growth opportunities and about taking people along the ride through motivating and persuading them to build a successful business case and a career at FJ.

In terms of the portfolio of products, today, we are doing a lot more than we first started. We have expanded our line of products, created our own brands and built factories. We have embraced the digital transformation in the way we conduct our business, we serve customers or in the way we execute processes within the company.

Speaking of the overall business, the thrill lies in taking up a commercial opportunity from scratch, identifying the components of its success, making a plan, selecting a team and seeing it all the way through its development cycle and commercial success – it gives a great sense of achievement. We have gone through this process and succeeded in our efforts many times, but we have also failed many times. Failures taught me to be humble, to listen, to get the facts right, to deal with people who know, to get away from those who thinks they know, to learn and move on.

Risk as a positive word

When I jump into something, it’s not about taking a risk, but my strong belief in the project being the right path. Most of the time, we are facing two scenarios – either we die or do something about it. When you get to understand the product, the market and the environment, you evaluate the options available in front of you. We decide and we act. We take a risk, mostly a calculated one, when we push ourselves out of our comfort zone. If you do it well, it is a way out of problems and into a new opportunity. And if you do not succeed, you would have to re-adjust, pursue a new approach and learn quickly. But you need also to know when to stop and accept defeat and move on.

I never shy away from learning. I am passionate about learning new things and how they work. Our progress has come from good partnerships and close interaction with our principals and our staff. You challenge them, they challenge you, and we understand things together. We push our efforts to the next level. We want to be the best in what we do – to the point we command market respect. We do not believe in copying but in doing things the FJ way.

We take the same approach in challenging times. There will always be competition, and there will always be situations where margins are squeezed, but we have to fight to differentiate ourselves.

Among the challenges we face today in our market, lack of trust in local manufacturing is a formidable one. Developers and authorities, in general, are a bit sceptical about local manufacturing, and they do, in general, prefer imported products. So, as local manufacturers, we feel constrained. We want to develop new products, but we know they will end up facing huge resistance and a lot of scepticism. With this in mind, FJ is pursuing an approach where we partner with technology providers to add value locally. Through FJ, our technology partners, and our factories, we are succeeding in bringing those capabilities locally under a trusted proposition.

While local production is gaining appreciation in some quarters, I would like the authorities to do more to encourage local producers. From fee breaks to land rentals, and from bank facilities to prequalification in government projects – these can help us build a competitive edge.

We see that products are sent for testing all over the world for better assurances. It would be great to develop local testing facilities, trusted by authorities. Such a set up would help us go to the market quicker.

I want to continue making bold moves, I want to continue growing our business. We acquired two factories last year, and will keep looking for good opportunities. Survival of business does not happen because you are happy with what you have been doing for the last 10 years. You have to keep on dancing.

Macro challenges buffeting the industry
On the positive side, I see a world that is more open, where markets are increasingly reachable to everybody. Principals are giving much more importance to the Middle East than ever before. They now see our area as a growth area – that way, the bias has dropped. There is more understanding on how to do business across the world. The principals are coming to the region. They have improved their understanding of the needs of the market and its potential. They demand more of you. They sometimes forget what you have done over the years for the product and its equity in the market. Some are more interested in the short-term future. So, they sometimes undertake steps that are not so conducive to long-term interests. That way, the conventional traders are put into inconvenience. But, whoever had managed to add value to the products along the years, has been able to develop those relationships better.

Cash flow, though, remains a formidable challenge. In my view, cash flow is the responsibility of everyone. It is not just the responsibility of the accounts or the salesperson. The main contractor and the developer should realise that they have an interest in ensuring their suppliers receive proper payment, on time. Actually, they have to be accountable for this. Recently, we have seen some very good developers demanding that their contractors settle their suppliers, prior to releasing additional funds to them. That way, they ensure that everyone is protected. Sadly, not all developers think that way. That is where the government should intervene and ensure that all invoices are paid within two weeks’ time. If the government introduces this approach, it will put pressure on all stakeholders to pay on time. In the absence of regulation, only the owner of the project can be the regulator. Developers, generally speaking, will be much rewarded with a timely payment, as they can demand earlier completion, better quality sub-contractors and even better pricing.

This situation needs to be looked into urgently. As suppliers, we are becoming like bankers. We have collections pending in excess of 180 days. I believe the money is available in the market, but the mentality and the approach need to change. There are maybe other reasons pushing the developer to delay, like a change in the profile of the project. A residential project changing into a commercial one, for instance. But suppliers and subcontractors cannot and should not bear the toll for this.

What COVID-19 and its aftermath mean to the HVACR industry

The recovery from COVID is something we are going to be talking in a year’s time from now – it’s not going to happen tomorrow.

We are part of the construction and the real estate investment sector, and it will be affected. There will be a retraction, and we have to accommodate to a new kind of market, a smaller market. At the same time, we have to see what we can do outside our core business and look for different opportunities and at new products.

We also have to accommodate our costs to the eventual demand. Whatever the booking we do now will give us an indication of the situation in September and October. The reality is that bookings are down, and we don’t expect them to suddenly become better. In fact, we expect them to come down further, and so we have to restructure and seek other avenues.

As I said earlier, we have to look at different products. We gave importance to the drive into energy efficiency and did not tap 100% into indoor air quality and hygienic installations. Today, I see more drive into hygiene and IEQ and, possibly, into services and optimisation of installation.

Equally important, we need to build our brands, expand out territories and establish our distributor network in new markets. Also, we need to bring in more local production instead of relying on importation of goods.

The strategy for survival

COVID has presented a heavy problem in our hands, and we need to move towards the end of the problem, hopefully without letting go of people. It is important to keep our team intact, because once the recovery comes, you need your team to grow. For survival, the aim is to break even for now, maintain cashflow and also ensure payments are on time and receivables are on time. We are not into masks and ventilators but into electrical and HVAC equipment, and till such time the demand picks up, we have to maintain the financial health of the organisation to be able to restart.

How I wish to contribute to the growth and wellbeing of the region

It is easy to look at everything from a COVID perspective, but we have to be fair and look at things from a broader viewpoint, including the good times we have had. All said – I mean the general business challenges and the ones brought about by COVID – I do believe that FJ is blessed to have a base in Dubai. We have learnt a lot from the leadership of the UAE. Dubai encourages a project mindset with big ambition, with a can-do attitude. It is a place where things happens. The quest is constantly about improvement and efficiency, on differentiation, on leadership and on being first. It is quite a challenging environment; however, it is deeply transformational in so many ways.

In terms of business, it has been quite rewarding to be based out of Dubai. And from that point of view, I don’t see myself going out of this region. I believe in the leadership in the UAE, and I believe they will adapt to change. In the long term, I feel this is a secure place. With that in mind, I wish to contribute through doing my bit for the industrial development of the country. I would like to be part of the push towards a strong local production structure, which comes from the belief that local is really important. I would like to support the introduction of more local standards and build trust around locally manufactured products. Developing local standards and local testing facilities is the way forward and is a prelude for a strong local production infrastructure.

Mentors in life

I have learnt a lot from my father, Raphael Khlat by just observing him at work. I saw how he worked hard, how he honoured his commitment and how he reached out to the community around him. It was a tough period to do business. Throughout the war, he was always optimistic that tomorrow is going to be better than today. He saw his business demolished three times, and he always emerged with a positive, ever-smiling attitude. The way he conducted himself influenced me to always look at the bright side of things. He was a simple man but a Roc.

And obviously, in the course of your life, you meet a lot of people who have impressed you. I have learnt a lot from all of them, and I shall remain eternally grateful to them. In life, we are very lucky if we meet people who inspire us to be better. I especially respect those who engage in continuous learning and who go into the deepest detail in search of the truth.

Equally, I view books as mentors. In 1988, I picked up the book, Awakening the Giant Within. It was the first book I read about motivation, about how to think and be positive. I still have a copy of the book, and have shared it with my two daughters.

My family

I have known my wife, Patricia almost all my life. She was in the same tennis club in Tripoli that I played in, and we share a lot of hobbies that we enjoy jointly. She spoils us with her attention. She does not tolerate the craziness of the world and is more grounded. She brings me closer to reality. My elder daughter, Tatiana is studying in Beirut to be a pharmacist. She is passionate about medicine, about biology and the working of the human body. My younger daughter, Laetitia is in the first year of Industrial Engineering, in Beirut, and is making her own way in the engineering world.

My family keeps me balanced, and their wellbeing is my top priority. As for my interests, I play golf and tennis and work out in the gym. I love to travel. My family and I are especially fond of opera, and we regularly go to theatres while touring in Europe. We also love visiting galleries and appreciate abstract art and constantly gaining more knowledge about many contemporary artists. We are blessed to have good friends and try our best to be involved in some community work related to Lebanon.

 

(As told to Surendar Balakrishnan)


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