Tech­nica: Au­tomat­ing the fu­ture

Tech­nica, a ro­bot­ics man­u­fac­turer, ex­pands its fac­tory and be­gins suc­ces­sion plan­ning

Executive Magazine - - Contents - By Jeremy Ar­bid

It is in Le­banon, of all places, that the tale of Tech­nica un­folds. The com­pany man­u­fac­tures and cus­tom­izes au­to­mated end of line so­lu­tions — those ma­chines that pre­pare prod­ucts af­ter they’ve been in­di­vid­u­ally as­sem­bled, or wrapped, for ship­ping. So, if you were to say, eat a Twix candy bar in Cairo, it would have been Tech­nica’s ma­chines that prepped the boxes of candy bars for ship­ping, sep­a­rat­ing prod­ucts by the bar­code num­ber and send­ing them to the ware­house by au­to­mated con­veyor belts. Or, for ex­am­ple, if you were to pour your­self a glass of milk bot­tled by Al­marai — one of Saudi Ara­bia’s largest dairies — it would have been Tech­nica’s ma­chines that col­lected the milk bot­tles, san­i­tiz­ing and sorting them be­fore car­ry­ing them off to a re­frig­er­a­tor ware­house for ship­ping — all com­pleted au­to­mat­i­cally with lit­tle hu­man in­ter­face. And th­ese ma­chines are all de­signed and built in Le­banon, who would have thought?

Tony Had­dad, Tech­nica’s founder and gen­eral manager, is on a mission to trans­form the way other fac­to­ries pack­age and pre­pare their prod­ucts. The fam­ily owned busi­ness and man­u­fac­turer of ro­bot­ics and au­to­mated as­sem­bly so­lu­tions has com­pleted ex­pan­sion of its Bik­faya fac­tory with an eye on fur­ther en­trench­ment in the GCC mar­kets and new op­por­tu­ni­ties in Africa.

RO­BOTIC DREAMS

If ad­ver­sity pro­duces cham­pi­ons, then Tech­nica is Le­banon’s poster child. Es­pe­cially as in the world of industrial man­u­fac­tur­ing big usu­ally con­quers small. But for firms op­er­at­ing in niche fields, such as ro­bot­ics, small yet ag­gres­sive com­pa­nies can thrive in even the tough­est of en­vi­ron­ment. Tech­nica is aim­ing to be the pre­ferred part­ner for au­to­mated so­lu­tions in the Mid­dle East and African mar­kets by 2020. Ac­cord­ing to Tech­nica’s sur­vey of the Mid­dle East mar­ket, the sales of au­to­mated so­lu­tions have reached $10 mil­lion an­nu­ally.

To­day, Tech­nica is go­ing head to head with large Euro­pean play­ers al­ready en­trenched in the busi­ness, such as Krones (a large Ger­man con­glom­er­ate) and OCME (an Ital­ian au­to­ma­tion firm), as well as a few re­gional com­pa­nies of­fer­ing more niche so­lu­tions. Yet Tech­nica has rooted it­self in the Mid­dle East mar­ket — its client list stands presently at 276 — serv­ing lo­cal di­vi­sions of global cor­po­ra­tions like Mars, Nestle, Proc­ter & Gam­ble and Coca Cola, to name a few. And by 2020 Tech­nica hopes its client base will reach 325, partly driven by fur­ther ex­pan­sion in the GCC mar­kets but also pro­pelled by the push into African mar­kets.

All of this started in a tiny garage dur­ing Le­banon’s Civil War. When the war be­came too in­tense to con­tinue op­er­a­tions, Had­dad packed ev­ery­thing on a boat and moved the busi­ness to Cyprus. When ten­sions eased in 1991 and the Syr­ian oc­cu­pa­tion lent some sta­bil­ity to the coun­try, Had­dad moved the com­pany back and be­gan con­struc­tion of a new fac­tory in Bik­faya — the site of their present op­er­a­tions. By this point one starts pick­ing up on a re­cur­ring theme, and maybe Had­dad took note from War­ren Buf­fet — the Amer­i­can bil­lion­aire in­vestor — who is fa­mously quoted as say­ing “Be fear­ful when oth­ers are greedy and greedy when oth­ers are fear­ful.” That is to say that where oth­ers in Le­banon have found war and con­flict to be in­sur­mount­able, Had­dad has per­ceived them as mere “bumps in the road.”

BUMPS IN THE ROAD

In its first two decades Tech­nica’s sales pro­gressed steadily, the com­pany

was grow­ing and rev­enues were roughly dou­bling ev­ery five years. By 2006, with the July War un­set­tling the coun­try, Had­dad set out to again ex­pand op­er­a­tions, adding fac­tory floor space to the ex­ist­ing fa­cil­ity with growth driven by en­try into new mar­kets in North Africa. By 2009 the com­pany’s rev­enues had reached nearly $8 mil­lion.

There have been hic­cups, Had­dad points out, along the way. A broader look at gross rev­enues shows con­tin­u­ous growth apart from two years, 2009 and 2010, where Had­dad ad­mits that the com­pany’s sales were stag­nant. He links the is­sue more to the slow­down of the global econ­omy and a slump in GCC mar­kets — like the slow­down of Dubai’s econ­omy in 2008 — as projects were put on hold or sim­ply can­celed. Like­wise in 2013, the wors­en­ing of the Syr­ian con­flict halted Tech­nica’s trans­porta­tion of goods across the ter­ri­tory for de­liv­ery to fac­to­ries in the GCC. Now the com­pany, like other firms in Le­banon, has to ex­port by sea on routes that are just as ex­pen­sive. But what at first was a neg­a­tive for the busi­ness, Had­dad de­scribes, has turned into an ad­van­tage — Le­banon’s ports have ex­panded and the ship­ping com­pa­nies have de­vel­oped their mar­itime routes. For Tech­nica, the costs of ship­ping by sea to the GCC are not sub­stan­tially dif­fer­ent — re­li­a­bil­ity has be­come the most im­por­tant fac­tor. And ac­cord­ing to the com­pany, ship­ping by sea to Jed­dah, for in­stance, now takes only five days when tran­sit times by land were 11 days — “We’re us­ing faster ship­ping routes now and we’re sav­ing on that in terms of the cost of time. It be­came an op­por­tu­nity stem­ming from a prob­lem,” Had­dad ex­plains.

By 2011 the com­pany was again flush with cash and Had­dad an­nounced plans for an­other ex­pan­sion of the fac­tory — de­spite civil un­rest bud­ding to the east. With the war rag­ing in Syria, Tech­nica un­der­took cap­i­tal ex­pen­di­tures to­tal­ing $1.5 mil­lion — the ex­pan­sion was to dou­ble the size of the fac­tory while cre­at­ing an ad­di­tional 18 tech­ni­cian and en­gi­neer­ing jobs. This lat­est ex­pan­sion phase was com­pleted in 2014 and by the end of the fis­cal year the com­pany’s rev­enues had risen to nearly $16 mil­lion with ex­ports amount­ing to 90 per­cent of the com­pany’s sales.

Now Had­dad is eye­ing new mar­kets in Africa — places like Ghana and Nige­ria, which are them­selves look­ing to de­velop value chains in the pro­duc­tion of food prod­ucts, pro­vid­ing big op­por­tu­ni­ties for com­pa­nies like Tech­nica to sup­ply so­lu­tions to new and ex­pand­ing fac­to­ries. Ul­ti­mately, Had­dad says Tech­nica’s strate­gic vi­sion is to dou­ble the size of the com­pany by 2020, with a goal of in­creas­ing rev­enues by 15 per­cent each year. This, Had­dad says, would give Tech­nica greater ca­pac­ity to build big­ger, more com­plex au­to­mated sys­tems and mul­ti­ple projects si­mul­ta­ne­ously.

INTO THE FU­TURE

And here’s where Tech­nica’s story gets re­ally in­ter­est­ing. The com­pany has been built by the fam­ily from the ground up — yet Had­dad has been the in­te­gral fig­ure driv­ing Tech­nica’s evo­lu­tion since its in­cep­tion in a garage in the early 80’s. So af­ter a 30plus year ca­reer he is start­ing to think about eas­ing his work­load, and with this come ques­tions about ex­ec­u­tive lead­er­ship. For all busi­nesses, let alone a fam­ily owned one, this is an im­por­tant is­sue — lead­er­ship drives the cul­ture and de­fines the com­pany’s strate­gic vi­sion. Yet, if this idea of ex­ec­u­tive lead­er­ship were sug­gested to Had­dad, he’d clar­ify that his style is to lead from be­hind. Tech­nica sub­scribes to what is called ser­vant lead­er­ship — a phi­los­o­phy with its roots in the an­nals of his­tory but adapted for mod­ern ap­pli­ca­tion. In or­ga­ni­za­tions em­ploy­ing the ser­vant lead­er­ship phi­los­o­phy,

TO­DAY, TECH­NICA IS GO­ING HEAD TO HEAD WITH LARGE EURO­PEAN PLAY­ERS AL­READY EN­TRENCHED IN THE BUSI­NESS

dif­fus­ing power through the or­ga­ni­za­tion and the devel­op­ment of em­ploy­ees into top per­form­ers are the pri­or­i­ties. The gen­eral no­tion is that top man­age­ment serves the mid­dle man­agers who serve the fac­tory work­ers so that the en­tire or­ga­ni­za­tion can bet­ter serve its cus­tomers — sim­i­lar to an up­side down, pyra­mid struc­ture. In­deed, it was from the fac­tory floor and then the em­ployee cafe­te­ria that Had­dad ini­tially spoke with Ex­ec­u­tive.

By 2018, Had­dad reaf­firms he’ll no longer be Tech­nica’s gen­eral manager — and sim­i­lar to most fam­ily busi­nesses, the as­sump­tion is that one of his chil­dren will take over when Had­dad steps back. Yet it is not only the GM po­si­tion that will need to be filled — Had­dad is also Tech­nica’s sales manager. There are four chil­dren in the Had­dad fam­ily, each own­ing a 24 per­cent stake in Tech­nica (Had­dad re­tains a 4 per­cent mi­nor­ity stake in the com­pany), three of whom work in the fam­ily busi­ness — Cyn­thia Had­dad Abou Khater as stat­egy man­age­ment of­fi­cer, Cyril Had­dad work­ing in cus­tomer ser­vice, and Michel Had­dad in multi­na­tional ac­count sales. While be­ing a fam­ily mem­ber has been a pre­req­ui­site to own shares of the fac­tory and re­ceive a div­i­dend, hav­ing the same blood has never guar­an­teed a job in the fac­tory. “If you have some­thing to bring to the ta­ble we want you to work in the com­pany — be­ing a fam­ily mem­ber is not a guar­an­tee,” Had­dad says, some­what sidestep­ping the ques­tion of who will run the com­pany when he gives up the reins.

Tech­nica has no for­mal board of di­rec­tors. Its top man­age­ment team sets the strate­gic vi­sion of the com­pany — its man­agers of op­er­a­tions, fi­nance, hu­man re­sources, sales and strat­egy. So while Had­dad fills both the role of gen­eral manager and sales manager, his daugh­ter, Abou Khater, is the com­pany’s strat­egy manager. Cur­rently the team is work­ing in­ter­nally — Had­dad says they might bring in a con­sul­tant at a later stage — to de­velop its cor­po­rate gov­er­nance to for­mal­ize suc­ces­sion plans by re­fin­ing the de­scrip­tions for each man­age­rial po­si­tion while cul­ti­vat­ing the lead­er­ship at­tributes de­sired for the top po­si­tion. Had­dad says his plan is to con­tinue groom­ing his re­place­ment so that in three to four years he might be able to step out of daily op­er­a­tions and as­sume a more strate­gic ad­vi­sory role. “I’ve al­ready put the right peo­ple in place,” he adds. When reached by tele­phone Abou Khater tells Ex­ec­u­tive that the process of suc­ces­sion plan­ning be­gan last year to for­mal­ize Tech­nica’s cor­po­rate struc­ture — job de­scrip­tions were drafted and key at­tributes to be honed were iden­ti­fied. But Abou Khater was also vague when dis­cussing who might lead Tech­nica in the years to come, “We would pre­fer an in­ter­nal can­di­date and have short­listed maybe two or three in­di­vid­u­als.” But Abou Khater also ra­tio­nal­ized that the com­pany just isn’t yet in a po­si­tion to say who will take over when the el­der Had­dad steps down — some three to four years from now. “We also don’t want the rest of the fac­tory find­ing out who our next GM might be from a mag­a­zine — the can­di­dates names will be an­nounced on our terms.”

Suc­ces­sion plan­ning aside, the im­por­tant ques­tion is whether Tech­nica, and man­u­fac­tur­ers in a sim­i­lar po­si­tion, can con­tinue in such a hos­tile lo­cal en­vi­ron­ment. There is sup­port from the gov­ern­ment but it re­mains limited to plans ex­e­cutable over the long term. The re­hash­ing of poli­cies to­ward mit­i­gat­ing pro­duc­tion costs, the in­tro­duc­tion of new industrial zones, and the pro­mo­tion of links to ed­u­ca­tion have helped man­u­fac­tur­ers lit­tle in the short term. Ac­cord­ing to data pub­lished by the World Bank, man­u­fac­tur­ing has been con­tribut­ing less than 10

THE IM­POR­TANT QUES­TION IS WHETHER TECH­NICA, AND MAN­U­FAC­TUR­ERS IN A SIM­I­LAR PO­SI­TION, CAN CON­TINUE IN SUCH A HOS­TILE LO­CAL EN­VI­RON­MENT

Tech­nica’s prod­ucts are used in a range of in­dus­tries, from soft drinks to tex­tiles

Tech­nica ships its au­to­mated fac­tory sys­tems across the world

All of Tech­nica’s au­to­mated sys­tems are pro­duced in Bik­faya, Mount Le­banon

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