Toufic Dalal, owner of Dalal Steel Industries, is at his desk at 06:00 everyday. Today, his desk is a four-room office in a building he owns on Makhoul Street off Hamra, but he will eventually relocate to a multi-level, modern facility outside of Beirut he has just finished building. A sign of moving forward, one might think, especially as Dalal Steel was a multi-million, family business, exporting prefabricated homes and other steel structures.
That was on July 22. The next day, three Israeli missiles levelled his 25,000m2 factory, destroying $20 million worth of industrial machinery and products and incurring losses of $4 million to $7 million in anticipated revenues. Four hundred of Dalal Steel’s 600 employees found themselves out of work. He recalls the day he heard of the strike, some 65 km east of Beirut. “I drove there immediately and I saw the 25,000m2 factory on the ground, but I did not panic.”
The next day, he flew to the US and then to Italy where he bought new machinery, arranging for it to be shipped to Lebanon once the blockade was lifted. “We have to restart production as soon as possible, because we have contracts to deliver orders,” he says.
Two weeks later, Dalal joined the long queue of industrialists who met with Prime Minister Fuad Seniora to seek compensation. The Premiere was blunt. He told the 56-year-old civil engineer that unless there were goodwill donations allocated to the industrial sector, the government could not compensate his or the other factories that were completely or partially destroyed in the war. In fact the only government reaction was to send representatives from the Ministry of Industry – “wearing nice suits,” Dalal, wryly observed – to the site of his wrecked factory to mumble words of regret.
Dalal recalls that prior to the war, Bekaa ministers and MPs would constantly pester him to hire this or that person. “And I did, not because they asked me, but because we like to hire people. But when we were hit, no one picked up the phone – not even to say they were sorry.”
Looking to the US
Dalal has since dropped the expansion plans for his Beirut office. He is currently making contingency arrangements to move his business to the US. “In four or five months, if the government does not pay us compensation, we will move to the United States and Lebanon will be nothing more than a small operation. My son is over there now making preparations,” he confirmed.
Dalal feels it is important to have the backing of the state, any state. “We planned to expand; we planned to add new products lines such as steel tanks and fibreglass products. These plans are cancelled.” He pauses. “The government is my insurance company. If they fail to pay us compensation so that we can stay, I will have to look for another insurance company. Why should I put another $25 million in a country that does not insure and protect its people? Why should we have to pay the price for the fact that they can’t work out [political] issues?”
It was not always thus. In 1986, Dalal, then a young ambitious civil engineer, returned to Lebanon from the United States, and established a 10,000m2 factory in Shoueifat to manufacture steel structures. Business grew, thanks to what Dalal claims was prompt delivery of a high-quality product.
“We concentrated on steel structures first, and later I introduced a new line of prefabricated houses. When that took off, I decided to expand the line and I went to Italy and bought some of the most sophisticated machinery,” he says.
Dalal explains that Lebanon was a good country from which to do business, not least because its favourable geographical location meant he could ship to almost anywhere in the world. “It is a very good country for the industrial sector in general, because production costs and taxes here are cheaper than anywhere else,” he says.
Working for Uncle Sam
In just few years, Dalal became the country’s biggest steel factory, shipping products to customers in Afghanistan, Austria, Nigeria, Slovakia, Kuwait and Iraq, while local clients included Coca-Cola, Pepsi Cola and Beirut International Exhibition and Leisure Center (BIEL).
But probably the biggest client was the US military, with its bases in Iraq, Kuwait and Afghanistan, for which Dalal built camps and provided pre-fabricated housing. “We were lucky to win those contracts. Their first orders were for a few thousand houses. We were automated and ready to produce and deliver on time. And we did,” Dalal says.
The company increased production and, according to Dalal, “made a fortune” during the first two years of working for the US army immediately after the 2003 American-led invasion of Iraq. “Money is not an issue for the US army,” he explains “They are more concerned about quality and prompt delivery and there was no one as automated as we were to deliver on time.”
So why was Dalal hit, if it was a supplier to Israel’s closest ally and Israel claimed to only be attacking Hizbullah’s infrastructure, bases and members? After the strike, the word on the street was that Dalal had been in direct competition with an Israeli manufacturer to win the contract with Uncle Sam. The factory was in the Bekaa, the Bekaa was perceived as a Hizbullah stronghold …you do the math.
Dalal disagrees. “Our main competitors are in Saudi Arabia. I never felt there was any competition from Israel. I don’t think that was the case. I think it was just a rumor to make people feel better. I am not an expert in politics but I think that my factory was hit because we are paying the heavy price of problems our politicians cannot solve with Israel. Imagine if we had a strong Lebanese army and I had a strong company and a strong competitor in Israel, could I really go to my government ask to bomb the Israeli factory? No. They were hitting our economy. They wanted revenge.”
Although there is now demand for Dalal’s prefabricated homes to shelter Lebanon’s nearly one million displaced people, he will only provide 1,000 units to the Lebanese army, recently deployed to the South. “I agreed to take this one contract because it is paid for by the United Arab Emirates. I don’t trust the government.”
