A significant tie-up with a top European manufacturer brings promise to UAE-based Cosmoplast's hopes of accomplishing a significant surge in exports in the near term

Cosmoplast, the Middle East's largest manufacturer of thermoplastic pipes as well as several other products including leisure items, has sealed an exclusive production and sales partnership agreement with Technip-Coflexip, the world's largest maker of flexible pipe systems for the manufacture of a specialised reinforced thermosplastic pipe called Coflexlite for use within the oil and gas sector.

Coflexlite could emerge as a powerful force in Cosmoplast's export book in coming years, considering the large-scale exploration and production activities already in progress or set to begin (See accompanying story).

As well as thermosplastic pipes, fittings and accessories, Cosmoplast produces suitcases; outdoor furniture; leisure products; printed plastic bag products and shrink films as well as wide films for use in agricultural and industrial environments. Its production facilities are primarily located in Sharjah although a new factory is now operational in Abu Dhabi.

Its overseas sales include plastic pipes and fittings, household and leisure products, outdoor furniture and plastic bags. Products doing particularly well abroad are well casings and screen pipes, household appliances and leisure goods.

Particularly important among what it produces are pre-insulated pipes used in district cooling systems; the ISO 4437 range of pipes used for gas distribution and ISO 4427 range of pipes used in water distribution; large-diameter UPVC and HDPE pipe systems; RTP products; leisure products (ice boxes and water coolers) and hard suitcases of both thermoformed and injection-moulded designs.

Exports amounted to Dh35 million in 2002 against Dh40 million in the previous year, but general manager Jim Dymock is optimistic the company will make greater inroads abroad.

"The export of Cosmoplast pipes and fittings should see an improvement due to the company's various product development programmes for new and specialised pipe systems coming to fruition. We would also expect to see an acceptable growth trend in our product range covering iceboxes and water coolers," said Dymock. "Cosmoplast expects to see ongoing and significant export growth as many of our new products and market developments come on stream."

Exports now go to the Middle East region and Africa with governments and NGOs listed as the biggest buyers for products used in water extraction and distribution.

Cosmoplast succeeded in penetrating foreign markets by first remedying a lack of market knowledge of individual countries. "This was overcome by the simple task of increasing the number of visits covering both our target markets and countries," Dymock recalled.

"Over the past years our proactive overseas customer focus has helped us to understand and match their requirements and needs better. To achieve this our marketing practice has been to initiate direct customer contact through ongoing overseas business trips and exhibitions. "Different strategies and approaches have to be developed within Cosmoplast to provide the geographical coverage thought necessary on both markets sectors and countries targeted. Techniques used in one country may not apply to another due to differing legislative restrictions, logistical difficulties, market structures and market sophistication."

Cosmoplast runs subsidiary distribution companies in both Oman and Saudi Arabia. These are semi-autonomous operations that are successful stand-alone units in their own environment. Other joint venture operations include close distributor partnership ties covering specific territories.

In addition to the recently established partnership with Technip-Coflexip, Cosmoplast has significant technical collaboration with other companies from within Group Harwal, these being Interplast, Intermetal, TSSC and Technomec in the UAE, US Polymers in the US, and Kohar and Korzikabah in the CIS.

Cosmoplast is committed to achieving the highest quality standards applicable through stringent quality checks covering raw materials and its operational processes through to all its finished products. All processes are run in relation to ISO 9000: 2000 standards. Apart from testing to specific international specification standards, there are also many generic and internal procedures for the testing of the products produced.

While Cosmoplast has succeeded in establishing a presence in a number of countries, there are specific problems it has to deal with, ones not linked to the manufacturing process or internal quality control.

"Probably one of the biggest headaches is establishing proper payment processes and ensuring that the delivery process matches the expectations and schedules of both sides," says Dymock. "It is easily said, 'sales through Letters of Credit, shipping by scheduled lines' - but not all L/C's go through smoothly or in the time expected, and all manner of unforeseen and out-of-your-hands hurdles can delay shipment deliveries. We recently had a container headed for Kenya disappear and turn up in Eritrea a month later."

The thermoplastic pipe industry has experienced variability of raw material supplies and rapidly fluctuating prices.

"Plastic pipe is effectively a commodity product; due to this and its highly competitive market nature, pipe manufacturers are often unable to match such cost fluctuations through into sales prices, thus leading to final products sometimes being sold at below effective production cost," explains Dymock.

"Another major factor of concern is the speed of payments, especially in government-related projects. Many of the contractors that we supply to have payments delayed for considerable periods of time, this then ripples down the chain; the major contractors' payments get delayed, this delay is then passed through to the sub-contractors who then pass the delay in payment through to their suppliers. These sorts of delays and conditions do not lead to a stable short and medium-term business environment and have ripple on effects throughout the industry."

Overall, says the official, the plastics industry in both the UAE and GCC regions is intrinsically strong with sales volumes on the upward trend, much of which is exported.

In the long term the market structure and environment will dictate what forms of business environment will prevail, and within this companies will have to build their own individual strategies for success.