CMME speaks to Zain Sadik, the man tasked with ensuring IC Global continues to survive amidst the turmoil in Iraq
A lot has changed in Iraq since CMME first spoke to Zain Sadik, IC Global Corporation’s director of development and the man who signed off a huge order for 100 LiuGong machines in April. Then Sadik found himself the centre of attention at an event held to mark the opening of the GCIC training centre in Jebel Ali. Now we speak with the world watching in dismay as the north of the country thrown back into a conflict with a group of fighters calling themselves the Islamic State of Iraq and the Levant (ISIS). The global news channels are reporting that they are spreading south towards the heart of Iraq and Baghdad the evening he returns a phone call.
“I can’t tell you it isn’t affecting us, because it is,” he says over a surprisingly clear phone line.
“For example, we were in the process of recruiting a group of foreign sales people and engineers – in light of current events we’ve had to let them go back to Dubai and China. It looks like the situation is hopefully under control. Our plans have slowed down and we’re watching events but other than that everything is looking good.”
A pause on his side is deliberate before he drops a classic one-liner.
“It’s a bad time, but I was thinking you should come in – see different companies, see how the market is… but I guess that might have to wait a few months!”
IC Global or to give it its full title i Cube Global Corp describes itself as an international supplier to governments in countries as diverse as Russia, Ukraine, South Africa, Jordan, Sudan and of course Iraq.
It is part of The National Group conglomerate based in Baghdad and a 35% shareholder in the National Islamic Bank. The emergence of the country after the second Gulf War has allowed the parent group to add to a long list of other interests include contracting (its $800 million of on-going contracts makes it the largest construction company in Iraq), transportation, real estate, among many others. The backing of the National Group gives IC Global considerable financial clout in the Iraqi market and a ready-made customer for its equipment.
During his first meeting with CMME in April, Sadik says his company, which includes Zoomlion for cranes and concrete, Liebherr and Iveco trucks among its ranks, has been on a spending spree that will see it emerge as a dominant player across the country. First there’s an apology from CMME as to why the business card passed to him has seen better and less crumpled days.
“It’s no problem, it’s not about form, it’s about function right? Form is always good but it is not essential!” Pragmatism is clearly a major plus-point in Iraq.
He continues: “We have a few other businesses, such as equipment testing, but right now this is our major focus and we’re investing heavily. The team put about 500 hours into our business plan and we know there is a lot of business out there.
There’s a dealer in the south that is probably selling 500 wheel loaders per year – and he’s not even covering 10% of the market. He’s just covering the private sector and small businesses.”
He describes IC Global’s major customers in the market as governmental and large contractors.
“We’ve not only bought a 100 machines from LiuGong, but another 100 from Iveco and we’re finalising some orders with Liebherr too. I wouldn’t say there is a little bit of demand out there but a lot. This is just the beginning of what we’re doing. We want to be a full turnkey before and after construction equipment contractor solution provider. We took a $1.5 million order the other day and that was a small order – so an order of 100 is a start but compared to our projections it is nowhere near where we can be.”
The heavy equipment industry has been maintaining a watchful eye on Iraq for a number of years with many predicting it could become the most important market in the region for the next decade if it remains stable.
The general election at the end of spring was meant to be a major watershed in this direction with many hoping it would clear the path for a ramping up in government spending for much needed housing and infrastructure investment. By 2017, 6 million barrels per day are expected to be produced by its oil fields and it would be logical to assume that much of the revenue could be poured into projects.
Unfortunately little of what is happening is logical in Iraq for the time being. Sadik sees an opportunity. Competitors in the market have grown reluctant at holding large inventories of stock, creating an opportunity for a company willing and financially able to step into the gaps of demand that litter Iraqi construction. At its most fundamental IC Global wants to be able to provide stability to contractors, he says.
Sadik notes his customers are often dealing with a series of rapidly evolving situations as they attempt to get their work finished. Flexibility for contractors who are often chasing payments is understandably essential – 24 months financing is available, he iterates.
“One of the problems in Iraq is planning,” explains Sadik. “The Iraqi market only started in 2003 – literally. Other countries have been developing experience over a long time, they plan months in advance, but in Iraq the situation is very different. Right now we are taking on risk, but the situation is similar to when there is a recession. No one is spending right now – in fact they are liquidizing their assets – but we anticipate that they will want to purchase immediately (when the government releases its $140 billion budget).
When reminded of these words two months later, Sadik remains confident. The region’s affected by the ISIS onslaught represents an important if not major number of machines.
“We’ve taken a lot back into warehouses in Baghdad. The sites are not close to the action but it is better to be safe – 90% of our business in the south and Baghdad,” he says. “There won’t be sudden advances.”
Before hanging up he raises a point that rams home both the good and bad of the market.
“You know the volatility gives us an edge. If this was like Dubai or Qatar – and one day I hope it will be – you would have a lot more competition. There are some competitors from Dubai that were going to come into this market, and I’m sure they will think twice now. It gives us an edge to get even more market share. The budget is big, the GDP is huge, the only problem is that some people can’t stand each other!”