Few Lebanese were worried about
repairing their cars back in 1990, let
alone restoring a vintage automobile.
That’s the year that Mondial, a repair shop
that has been restoring classics since 1948,
almost went bankrupt. Now a decade later,
Mondial, which is owned by Ibrahim and
Sami Morcos, has become one of
Lebanon’s most reputable and successful
automotive restoration and body repair
centers. Its business in restoration has
dropped significantly, from about 40% of
turnover in the 1980s to 10% in 1998.

Repair work has helped compensate for
that with revenues increasing from $29,000
in 1994 to $213,000 in 1998, while net
earnings, less than $5,000 in 1994, climbed
up to more than $40,000 in 1998.

What makes this interesting is that the
business is growing in the middle of a
recession. “I used to have six or seven
clients for restoration work a month,” says
Fersan Haddad, one of the country’s top
restorers, “now I have six or seven a year.”
None of those who disclosed turnover figures
claimed more than $110,000.

Mondial’s slogan says “We can do the
impossible, but miracles take a bit
longer.” That comes at a price, however.
Mondial acknowledges that its quotes are
two to four times more than most on the
market. Out of 15 estimates that
EXECUTIVE received for a complete paint
job on a 1989 M-B 300E, none quoted
above $1,200, while the majority priced
the job at $500-$700. Mondial charges
anywhere from $1,500 to $2,000. That’s
pretty steep. So what does Mondial have
going for it that allows it to show growth
while charging such high prices?

Mondial caters to high-end clients, with
the majority of its business coming via
Mercedes-Benz, with which it has been
doing business since the mid-1950s. M-B
accounts for a large chunk of the increase in
Mondial’s revenues. This is partly
reflected by the amount of spare parts
Mondial purchases from M-B, up 65%
from DM 62,000 in 1995 to about DM
100,000 last year.

The customer support department at M-B
passes on all body and paint jobs to
Mondial, except when insurance companies
channel the work to other garages.
Mondial is also entrusted with the task of
prepping up every new car before it is
delivered to the customer.

Mondial’s clients include the presidential
palace, the former prime minister, the
speaker of the house, members of parliament
and several embassies. It also has
customers from the United States, Europe,
the Gulf and the Middle East.

But in such a competitive market, why are
car owners willing to pay more at
Mondial? It all has to do with the results.
Restoring a classic or repairing collision
damage means the car has to become as
good as new. If you own the only four-door
Rolls Royce Silver Wraith convertible
ever made, you don’t want it to just “look”
new. You’ll want showroom specifications,
and this is precisely what Mondial delivers.

The company focuses on producing the
highest level of finish. “I wouldn’t trust my
investments with anyone else,” says
Anthony Tannoury, the owner of the said
Rolls, which was custom-built in 1979 at a
cost of £1.2 million. After being restored by
Mondial, the car was the center of attraction
at last year’s Beirut motor show. “The work
done on that car was amazing,” says Ivo
Kapitzki, the after sales manager at
Mercedes-Benz.

With an investment of more than
$30,000, Mondial installed one of the first
prefabricated heated and pressurized spray
booths in Lebanon in 1991. This reduces
waste and produces a medium or high solid
enamel finish that resists scratches and
wear, while reflecting the base color better.
Most garages either use a simple closed
room or pay for the use of other garages’
spray booths, like Mondial’s, to do the job.

Mondial uses brands like Standox,
DuPont and Glasurit, the best in the market.
These are expensive compared to more
widely used brands such as GL and RM. A
kilo of Standox paint, the required lacquer
and additives costs almost $60. On average,
spraying an entire car takes 4 kilos, and
that doesn’t include the cost of primers,
plastic products and stoppers. The same job
using GL paints ($25 a kilo all included)
costs less than a third, but the results are not
of the same quality or longevity. Mondial is
so confident of the results that it backs up the
work with a seven-year written guarantee.

Another policy Mondial follows is to
only use original spare parts. If the part
isn’t locally available, they’ll have it
shipped in from abroad. “Their attention to
detail and use of original spare parts, even
if it means persuading the customer to pay
more, is what achieves such results,” says
Rolf Rosendaal, spare parts manager at M-B.
Most others opt for the less expensive
after-market copies. But these offer neither
the same safety standards nor the same
cosmetic accuracy.

Mondial also tries to keep up with new
developments, studying the intricacies
involved with each new generation of cars.
Techniques themselves also change. “It’s no
more a matter of just knowing how to repair
and paint properly,” says Kapitzki. “New
techniques develop, and without them, you
can’t achieve the desired results.”

Ibrahim Morcos didn’t just stumble on to
this business — he is a mechanical engineer
by trade and worked as manager of the
mechanical department at Mercedes-Benz in
the 1970s, and then for Volvo. This, along
with the Morcos family’s solid experience in the
business and the experienced professionals
it employs, were crucial factors in making
Mondial one of the leading automotive
repair and restoration centers in the country.

The company plans to expand its line of
services. Such services as work on
engines, suspension, electrical and electronic
systems are currently passed on to
independent outfits. Mondial plans to do all
this in-house. “I don’t expect these services
to increase revenues significantly,”
says Andre Morcos, who co-manages the
company. “But the way the market’s going,
it’ll help maintain the turnover we have.”

Mondial has also closed a deal with a
local distributor and will set up as a sub-agent
and selling point for its automotive paints and
related products. That will provide Mondial
with a new source of income and reduce
costs on the painting materials they use.

Mondial revenues may not compare to
Lebanon’s big firms, but it’s encouraging
that, despite the trend in the market, hard
work combined with top-notch service
can pay off.

Courier company or restaurant?
They’re not as different as you
might think. The owners of Casper &
Gambini’s (C&G’s) have proven that point.
In 1996, they figured there was good money
to be made in launching a local courier service
— judging by the shambolic state of the
Lebanese postal system. Two of the owners,
John Chedid and Brendan Cody, were
already running the Beirut office of OHL and
knew the business well. But the four partners,
each with a 25% share of the business to
begin with, found themselves in the food
trade by mid-year instead.

The other two partners, siblings Annette
and Anthony Maalouf, took charge of the
management of C&G’s. The four figured
there were better opportunities in the restaurant
business and, after all, if you understand
logistics, delivering sandwiches is pretty
much the same as delivering packages.

The gamble appears to be paying off. In
1997, C&G’s had a turnover of $400,000
with deliveries from its sole kitchen in
Achrafieh. By the end of this year, with the
addition of two coffeehouses, turnover is
expected to show an increase of 500%, to
reach a couple of million. And the team is
now setting its sights on expansion abroad.

But in a market seemingly saturated with
eateries, how did C&G’s manage to
increase business so rapidly? The company’s
initial strategy was to bypass individual
orders, opting instead to feed the business
community by opening up routes that
targeted companies with a large staff. The
first two were through Hamra and Achrafieh.
Later came Hazmieh and Solidere. Merrill Lynch, the Gefinor
Center and Pepsi were among the pit stops.

C&G’s fleet of two vans and 15 scooters
swung by offices with baskets of sandwiches,
salads, drinks and desserts, while
most delivery outfits prefer to wait for
orders to come in. “Their concept of delivering
cold food to big companies was
great, it helped them get known in the
Lebanese market,” says Joe Abrass, manager
of Crepaway. Individual orders began
to flow in after a few months on the market.

After two years of operation, C&G’s
counted some 20 companies with a total of
700 employees among its clients on basket
deliveries, not including Solidere — C&G’s
big catch. C&G’s was one of several restaurants
for which Solidere supplied its staff with
vouchers. This was exactly the market they
were targeting: middle-income professionals.

C&G’s has since ended its basket service,
but continues to deliver. It opened a
restaurant in Jal el Dib in March 1998 with
an expanded menu. That was followed by a
second outlet in the Beirut Central District
last October. That outlet has taken a total
investment of $500,000. “The idea for a coffee
shop came about because the demand
was so big,” says Annette Maalouf, managing
partner. But opening a restaurant was
going to take a cash injection that the four
partners simply didn’t have and they decided
to sell a 20% share to a silent partner.

At this point, business was growing
quickly. C&G’s was making 250 deliveries
a day in 1998, a figure that rose to more than
500 last year. Profit margins are about 27%
at the coffeehouses and 10% on deliveries.
Deliveries now make up about 40% of business,
while the restaurants account for 60%.

The Achrafieh outlet is scheduled to close in
March, when a special delivery kitchen will
open at the BCD coffeehouse. That move is
expected to bring cost savings for the company
and time savings on deliveries.

Maalouf considers her main competition
to be the Sandwich Factory, Crepaway and
Schtroumpf on deliveries, while restaurants
like Monot and Mie Dorée compete
with the coffeehouse business. “And competition
is getting tougher,” says Maalouf.
“There are more and more people getting
into the restaurant and café business,
because it’s doing well in Lebanon.”

Maalouf says she and her partners have
been surprised by how well they’ve done
here. “Some say it was luck, but I disagree,”
she says, adding that it was through
hard work and a willingness to go that
extra mile on customer service.

For now, profits are being channeled
back into the business, because as
Maalouf says, “the time is right for expansion.”
They are now in the latter stages of
negotiations to become partners with a
group in Egypt to establish a coffeehouse
and delivery service in Cairo. Egypt is a
booming but under-served market, says
Maalouf. C&G’s hopes to get a foothold in
the market by following the same strategy
of targeting big-ticket companies.

If things go well, another three main coffeehouses
and five smaller outlets will be opened
within five years in Cairo, with more possibly
slated for other large centers.

Egyptian operations are expected to generate
a yearly turnover of $5 million after three to four years. Other countries, such as
the UAE, are also being considered as
expansion possibilities. This could be a
welcome reversal of the foreign eatery
invasion that has swept Lebanon.

“I had a dream of making this company
the biggest industrial entity
in Lebanon, but I’ve realized that
I can’t and the government doesn’t care to
help,” says Izzat Kaddoura, chairman of
Soliver (Société Libanaise pour l’Industrie
des verres et porcelaines). A glass bottling
factory located in Choueifat, Soliver supplies
Pepsi, Coca-Cola, Almaza, Libby’s, Liban
Jus as well as other oil, wine and spirit manufacturers.
Kaddoura is a major investor in
the hotel industry with over $100 million in
investments, but is also having doubts
about the future of tourism. “I’m leaving my
investments in tourism and industry and
telling all Lebanese investors to go to
Conakry, French Guinea, where opportunities
are a dream,” says Kaddoura.

What he says makes sense. When new
management took over Soliver in 1990, it
had between $5 million and $6 million in
debt. Under the current general manager,
Ghazi Kraytem, Soliver posted good earnings
at the outset. It made close to $5 million on
revenues of $50 million from 1991 through
1995, and almost $2 million on revenues of
$13.8 million in 1996. But the following
year things changed. Soliver posted a
$600,000 loss on revenues of $10 million in
1997, shut down for renovations in 1998
and posted $1.6 million in operational losses
last year on revenues of $5.1 million.

Soliver is not alone. Maliban is the only other local
manufacturer of glass bottles and its story isn’t
any better. Its last positive earnings came in
1995 – $238,000 on revenues of $10 million.
Since 1996, Maliban has lost $5.4 million on
$50 million in revenues. A couple of months
ago, Maliban shut down one of its two furnaces,
cutting its production in half, from 150
tons a day to 75. “If we continue in this losing
fashion we will shut down the factory for
sure,” says Amine Tayara, legal advisor,
director and one of the founders of Maliban.

So what has precipitated the negative
returns for those companies? During the
early 90s, glass-bottling factories began
mushrooming in Saudi Arabia and the Gulf.
Capacity increased 600 to 700% for a market
that wasn’t there. Maliban is owned by the
Madvani Group and run by Turner Associates,
an offshore management company. The
Madvani Group actually started the
expansion in Saudi Arabia, opening a factory
there in the early 80s. That factory started
out producing 60 tons a day and ten years later
increased to 600 tons (about 700,000 1-liter
bottles). The company also has ties with
Savco, another Saudi glass factory.

The real expansion came in the early 1990s with
Zujaj, a glass factory in Riyadh. That was followed
by a string of factories in Jeddah,
Jabal Ali Free Zone, Dubai, Oman and finally
Kuwait. A study by the Madvani Group
showed that total demand in Saudi Arabia is
just 380,000 tons of glass containers a year,
while industry supplies over 650,000 tons.
The result was dumping in neighboring
countries, which has been especially felt in
Lebanon. “The quotations we are seeing in the
market to our clients are 25% below our
cost!” says Kraytem. That figure was confirmed
by Tayara.

In an attempt to protect their markets and
stave off foreign competition, the two local
manufacturers have had to sell below cost.
Their prices are still slightly above that of
imports. Some small bottlers are willing to
pay a fractionally higher price for locally produced
bottles to avoid the cost of financing
and warehousing, as they lack the facilities.
“But large bottlers, who have the required
finances and facilities, are not willing to
buy our bottles except when they match the
low prices of imports,” says Kraytem.

Both Soliver and Maliban have completely
lost export markets to Saudi Arabia
and the UAE, which are more than self-sufficient.
Soliver has seen exports to Syria and
Jordan drop from 25% of production to 12%
to 15%. Maliban, which had previously
exported about 60% of its production to
those countries, has averaged 27% in the last
five years.

Fuel is another problem. From December
1998, its cost went up from $100 a ton and
currently stands at $190. For Soliver, fuel represents
about 49% of energy costs, while
energy represents 25% of total costs. “We
have to lower our selling price and our cost
is rising, the government doesn’t see the
impact of a 10% price increase in fuel,” says
Tayara. Soliver and Maliban have been lobbying
the government to allow them to
import fuel, or to buy from the government
at market costs without the margins that
they impose on it.

Labor costs are also high,
representing 30% of manufacturing costs.
To make matters worse, the last three or
four years have seen the emergence of a
new player in the container market,
Polyethylene Terephthalate, or
PET plastic bottles. Since our
last interview with Petco’s
“21st Century Plastics” (May
1999), this PET factory has
registered impressive growth
numbers. Petco has twice
raised its capital, which today
stands at $8.5 million, and
has since doubled its capital
equipment investments to
$15 million.

Capacity has                                                  
increased from 70 million
bottles last year to 280 million
this year. Petco opened a
brand-new facility four times
bigger (8,000 m²) than the
previous one. Demand for
PET bottles in 1997 was just
40 million bottles. Petco has
also begun exporting to
Syria, Cyprus and Egypt.

PET has entirely replaced glass in the water
bottling industry and has expanded the beverage
bottling market, introducing 2-liter, 5-liter,
6-liter and soon 8-liter bottles. The only
markets where PET has yet to replace glass
are for soft drinks and juice, though boxes have
already stolen a big chunk of the latter. Juice
is filled while hot and glass doesn’t deform
during the bottling process. Though the
technology exists to produce PET bottles that
won’t melt during hot filling, it would require
a $3 million to $4 million investment, while
the market is too small to warrant that.

“However, this is coming in the near future,
and as for the soft drink market, we will totally
start replacing it next month,” says a confident
Hermez. Petco manufactures at 50% savings
on energy; it now has 12 lines of production
and plans to expand to all ranges and sizes of
the container market.

The glass industry has not yet thrown in
the towel. Fortunately for Soliver, the new
management team embarked on an investment
program and strategy, which were the
basis for another major investment when the
crisis hit. Soliver has invested more than $6
million since 1992 to update machinery,
using company profits and loans, while the
general manager was given the freedom to
run the company without interference from
shareholders.

And who better for the job than
Kraytem? The former managing director
of Trans Mediterranean Airlines was largely
responsible for transforming it into one of the
largest cargo carriers, spanning the globe,
during his 37 years there.

Kraytem began by improving the working
environment by giving medical and life
insurance and paying for transportation costs
to get the best out of the employees. He later
worked on company-client relationships,
even coordinating with some of his customers
on plans to help maximize sales and
efficiency in operations.

But when the company began registering
losses a few years ago, management had to
decide whether to shut down or meet the
challenge. They opted for the latter. To do that,
Soliver had to renovate the complete operations
of the factory, installing newer, more
efficient technologies to reduce labor and
operating costs. That investment was $14
million, which brought the total to $20 million
since 1992.

This will enable Soliver to
introduce an innovation, which speeds up production
by 15% and produces lightweight bottles.
That is important because now Soliver
can supply a lightweight bottle (below 160
grams) that can hold the same amount of
liquid as a 200-gram bottle. Because bottles
are priced according to weight, the new bottle
will cost less for the client, giving a competitive
edge. It will also allow Soliver to
compete against other container manufacturers.

Soliver has begun installing a third line to increase flexibility between light and heavy bottles to reduce stoppage time, which previously took up to ten hours, and improve overall efficiency.

The new electronic equipment
allowed the company to lay off 70
employees, but at a heavy cost. Under pressure
from the Ministry of Labor, Soliver had to pay
$1 million on top of employee indemnities.

Similarly for Maliban, a second furnace –
though now closed – and lines came into production
in early 1997 at a cost of $22 million.
Subsequent layoffs at Maliban also totaled 70.

Even still, the two firms are operating
under difficult conditions. The key is to
expand products and markets. Soliver is
striking back at PET, trying to take back a
share of the water market, which plastics
has seemingly conquered. “We believe there
is a demand for water in glass bottles in a market
niche welcomed in hotels and first-class
restaurants,” says Kraytem. He emphasizes
that the glass container is the healthiest bottle.
“Sabil has already put in their order and
others will follow,” he says.

Next for Soliver
is manufacturing glass wine bottles; the
company hopes to sell to the Egyptian market,
where wine consumption is increasing,
and supply local wine producers like
Kefraya and Ksara, who currently import.
Next are the 4- to 5-liter gallons and jars for oil
storage and other purposes. Manufacturing
water pipes (argile) is also part of Soliver’s
current plans, a promising product considering
its high use among Lebanese.

Maliban has similar ideas. “We cannot
rely on the soft drink market, we have to
diversify to get out of this problem,” says
Tayara. Maliban has six lines of production
designed to diversify into jars for the food
industry, table glassware and pharmaceuticals.
The company has installed a sand
plant just for the processing of pharmaceuticals
and cosmetics, which requires
special sand batching. There are also plans
to export to Jordan and Saudi Arabia, which
currently rely on imports.

What are the chances of them picking up the
pieces in such difficult conditions? There’s a
clear shift in the US towards PET except for
alcohol and some soft drinks, but even there
changes are happening. “Europe has not
been as affected by PET as the US market,”
notes Kraytem. The Saudi market is diversified,
using cans, glass and plastic bottles for
the beverage industry. “There’s a 60% drop
in glass containers for soft drinks due to substitution
from either cans or plastic,” says
Mohtaram Kaddoura, Soliver’s executive
director. “The large beverage container market
has been replaced by PET.”

EXECUTIVE
has already seen PET sample containers for
pharmaceuticals, cosmetics and juice, and it’s a
matter of time before they compete against
glass in those markets as well.

Hermez predicts that demand for glass
bottles from the beverage industries will
drop dramatically in the near term. But even
if he’s wrong, it’s unclear how long the
companies can survive.

“Considering all the efforts put in by both
companies, we sense the great difficulties that
the glass industry is facing,” says Kraytem,
adding that there might be good opportunities
for exports once the Iraqi market opens up.
He believes that their prospects can be
improved locally should they get an adjustment
on fuel costs and protection against
dumping from the government.

Kaddoura had obtained two licenses in
1988 to produce glass in Syria and Africa
and considered leaving to where operating
conditions are more favorable.

“The only regret I have is believing the
promises made by ministers during the previous
government, which the new government
said they’re not obliged to fulfill,” he says.

One look at 45-year-old Raji El
Mawla, regional manager of the
Maytag Group, and you would
probably think that life is pretty easy for this
businessman. He speaks with a calm voice
and rarely wears a suit and tie to work. But
first impressions can be deceiving.

It is 9am at Mawla’s office. He has a portable phone close to one ear and a cellular
in his hand. He is busy typing an
email to the corporate office in the US
while trying to resolve a misunderstanding
between an area manager and a distributor.
In the following hour, he manages to
schedule two or three field meetings,
respond to a few of his nearly 70 daily
emails and receive five urgent phone calls,
that he responds to in the same relaxed
manner. “Hello, what seems to be the problem
… I see … don’t worry … relax, I’m
on it as we speak … Your problem will be
solved by tonight … How’s the family?
Good … Keep up the good work, goodbye.”
After two minutes, the crisis is over.

“Easy and effective communication is
essential in this business,” says Mawla.
“People can reach me via email or cellular
24 hours a day.” Mawla must oversee the
work of four area managers based in
Lebanon, Saudi Arabia, Tunisia, and
Tehran. He is responsible for 65 distributorship
accounts in such countries as Saudi
Arabia, Jordan, the UAE, Kuwait,
Pakistan, Egypt, Tunisia, Morocco,
Senegal, and the Ivory Coast. Because of the
overlapping days and hours of operation in
the countries under his command, Mawla
works a seven-day week. With Maytag’s
corporate office in the US eight hours behind local time,

he usually does not get home until late at night.

Mawla is truly sleepless in Lebanon, but has
it paid off? The answer can be found in his
office. Sitting on a shelf is a red Everlast
boxing glove, awarded to him for reaching his
mid-year quota. Next to it are six certificates
given to him by the Iowa home office for
exceeding his quota each year since 1993.

Five years ago, when Mawla introduced
Maytag to the Middle East, it was a little
known brand. Today, it leads the pack among
US imports, both locally and regionally.
Since his promotion from area manager to
regional manager in 1994, Mawla has doubled
local sales of Maytag brands, which
include Maytag, Hoover, Magic Chef,
Admiral and Norge. Revenues have gone
from $3.5 million in 1995 to $7 million in
1999 and the company has carved out a
10% share of the local market for refrigerators,
which compose the bulk of
Maytag’s sales, which include washing
machines, floor cleaners and gas ranges.

His performance regionally has been equally
impressive, expanding revenues from
$18 million in 1995 up to $30 million in
1999. In relation to other US brands, local
market share of Maytag’s brands has grown
from 32% in 1997 to 61% in 1999, outpacing
GE, Frigidaire and Kelvinator. In Saudi
Arabia, Maytag has a 45% market share
against other US imports and in the UAE,
42% against US imports.

But what is most impressive is that Mawla
has managed to make these gains in a market
where imports of US refrigerators (the
bulk of the group’s sales) have been declining
rapidly. With the country in a recession,
people cannot afford to buy expensive US
manufactured refrigerators. As such, cheaper
Korean and locally produced refrigerators
have been slicing into the market share of the
US brands.

Statistics from the Ministry of Economy and
Trade indicate that imports of complete
American-made refrigerator units have
dropped from 36,000 units, $21 million, in 1998
down to 15,000 units, $15.7 million, in 1999 (see
“Chill in with the big boys,” February 2000).
This gives US refrigerators a 19% share of the
80,000-unit-per-year local market.

Meanwhile, Concord, a locally produced
brand which sells for at least half the price

of its US rivals, has boosted its output from
2,500 units in 1992 up to 30,000 units in
1999. Sales of popular Korean brands, such
as Samsung and LG, have also been strong.

“Until last year, GE was selling about 7,000
units per year. Last year, they started to
come down and we are taking their share.
Koreans as a whole have been coming in
strongly in the last five years,” says Antoine
Cherfane, president of AC Holdings, distributors
of Samsung refrigerators. The
Korean manufacturer has spent hundreds of
millions of dollars upgrading its manufacturing
facilities, building a state-of-the-art
robotics factory that is able to produce 2 million
units per year. The company sells some
7,500 units a year locally with sales volume
increasing at an annual rate of 25% over the
past three years, according to Cherfane.

Selim Antaki, chairman and CEO of LG
Lebanon, also reports a strong performance
for his company. With between
7,500 and 8,000 units being sold, Antaki
claims that LG refrigerators have carved out
a 10% market share. LG refrigerators are
equipped with patented new technology
called Door Cooling, a system that equalizes
airflow throughout the whole refrigerator.

“The Koreans are improving in their technology
while the Americans are sitting
idle, not really doing much,” says Gabriel
Traboulsi, general manager of Pharaon
Homeline, distributor of US-made brands
Magic Chef and Frigidaire, Taiwan’s
Sampo and France’s Brandt.

Antaki agrees: “American refrigerators
look like boxes with mechanical controls
and outdated technology that no longer

adapts to the consumer’s needs.”

But even as the demand for US refrigerators
declines, competitors admit that
Maytag remains a strong brand. “Among
other US imports, Maytag is the best
refrigerator,” says Antaki.

How did Maytag manage to do so well? A
quick look at the 17 years that Mawla has
been in this business and it is easy to understand
the secret of his company’s success.
From 1983 to 1989, he was an area manager
in Kuwait for Hoover. In 1989,
Maytag took over the Hoover operation
and the company’s two international divisions
were merged to form Maytag International.
After the Iraqi invasion, Mawla
was forced to transfer to London where he
became Maytag’s area manager for the
Gulf market, with the exception of Saudi
Arabia. In 1992, sensing an opportunity, he
brought the company to Lebanon.

Mawla’s direct management style has been
a key ingredient to turning Maytag products
into big sellers. Mawla visits all of the 65 distributors
under his control, checking on products,
quality of service, dealing with technical
problems and assisting his area managers
and distributors. “I do the product knowledge
training responsibly, and visit the service centers

randomly to make sure they are doing
their jobs properly,” says Mawla. The company
will soon have a locally based service
engineer stationed in Lebanon – for now, the
company relies on someone in London. The
engineer will visit the service centers of
wholesalers and Mawla, in turn, will check to
make sure the service engineer is doing his job
properly. He also conducts monthly and
quarterly meetings with his area managers
where he reviews market conditions, measures
the competition’s products and strategies,
evaluates achievements, reviews that year’s
plans and sets new goals.

The company also benefits from being able
to manufacture, under license, in a number of
regional countries, including Saudi Arabia,
Pakistan and soon Tunisia. This cuts the costs
by eliminating import tariffs. Mawla also
benefits from a strong product development
program. The Maytag Corporation, which
had sales in 1999 of $4.3 billion, has sunk
some $220 million into a new technology
called advanced product design (APD). The
system eliminates leaks and noise and makes
the Maytag refrigerator rust-proof. According
to US-based Consumer Reports magazine,
Maytag has been the number one preferred
refrigerator in the US for the last three years.
In February 1999, Consumer Reports ranked
Maytag’s 24-foot refrigerators first in terms
of energy cost, temperature performance,
noise and convenience.

Maytag also understands branding.
“Maytag spends heavily on advertising its
products,” says Traboulsi. Last year, the
company spent some $250,000 to host a creative
interactive TV show in Saudi Arabia, giving
away an equal $250,000 worth of Maytag
and Hoover products to winning contestants.
Locally, Maytag invests about $600,000 a year

in advertising, equal to the budget of
Concord and $100,000 more than the annual
budgets of AC Holdings and LG Lebanon.

But the main reason for Maytag’s success locally
has been its aggressive distribution network,
headed since 1995 by Nassif El Khechef,
chairman and general manager of Linkers
Group, distributor of the Maytag brand.
Khechef is also general manager of Herald
Trading Company, distributor of Hoover
since 1948, and chairman of Mangroup, distributor
of another Maytag brand called
Norge since 1998.

Khechef heads the distribution of three out
of the five Maytag brands. “Out of the 9,000
Maytag refrigerators that were brought into the
country in 1999, we imported 6,000, 75% of
sales,” says Khechef.

Linkers has a modern service and technical
center. It keeps a stock of spare parts for models
going back ten years. Khechef is responsible
for marketing brands locally in cooperation
with the suppliers. Linkers has a strong
relationship with Power Network, a high-impact

advertising and marketing company.

“I believe Maytag has the right partner by associating
itself with us and we made the right
choice by choosing them also. They have a
great product,” says Khechef. His company
also employs a well-trained sales force with
strong knowledge of the products they sell.
The group has an incentive policy for its distributors’
sales force. “The sales people are
greatly motivated. That was a smart move by
Maytag,” says Traboulsi.

Mawla knows. For a man who never rests,
motivation is his middle name. But he has his
priorities. “If you’re talking about choosing the
right partner, I have one at home. And as
long as I bring my children gifts from my trips,
they’re happy,” he says.