Thirty years ago, the Al Zamil family ventured into a project that many believed would be a non-starter.

Setting up a manufacturing facility for air conditioners in the middle of a desert in Dammam, Saudi Arabia, which was only then beginning to see some initial development, was not going to be easy.  The tallest building in the area was five storeys high! But the Zamils had persuaded Robert Butler, the American manager of the Friedrich operation in Bahrain, to take up the challenge. In 1975, Arabian Refrigeration Industries – which is now known as Zamil Air Conditioners (ZAC) – began its operations under a licensing agreement with Friedrich. Thus was born the first air conditioner plant in Saudi Arabia.
“In the first few years of operation, there were doubts about the plant’s viability. After all, most households in the region were still using ceiling fans, few had desert coolers and an air conditioner was considered to be a luxury item,” recalls Abdulla Al Zamil, Chief Operating Officer, Zamil Industrial Investment Company (ZIIC).  But the Zamils had assessed correctly that as the economy grew, there would be a huge demand for products that provided cooling comfort.  The 75,000-sq m plant started with a daily production of just 15 window-type units.  Today it produces over 2,200 units per day. Current production capacity is in excess of 600,000 units per year.
Today ZAC employs 2,300 people in its facilities in three locations - Dammam in Saudi Arabia, Grunbach in Austria and Monfalcone in Italy - and caters to a market that has grown beyond the boundaries of Saudi Arabia, encompassing the whole of the Middle East and North Africa (Mena) and even in pockets of Europe, Australia and the US.  In 2004, ZAC announced eight new projects in Saudi Arabia, China, Pakistan, Bangladesh and Portugal. These projects range in scope from mini-splits to large-scale chillers and air-handling units for highly specialised applications.  Saudi Arabia and the other GCC countries are the main markets for ZAC, contributing nearly 75 per cent of its sales revenues of  $225 million. Every fifth window-type air conditioner sold in the MENA countries is a product that has been manufactured in a ZAC facility. 

Home and Beyond
Over the years, ZAC has focused on upgrading its technology and launching products and services that cater to different segments of the market.  It designs, manufactures, tests, markets and services a comprehensive range of air- conditioning products, from compact room air conditioners and mini-splits to large-scale central air conditioners, chillers and air handling units for highly specialised commercial and industrial applications. These are marketed under the brand names Classic, Cooline, Cool Care, Clima Tech, Kessler Clima Tech and Geoclima, depending on specific markets. ZAC also manufactures units for other air conditioner companies under private labeling agreements. Most of these are for window units, though the company expects to expand its OEM offering in the mini-splits and other residential and light commercial units as well under the unitary range. 
Says Osama Bunyan, vice-president, ZAC: “The OEM business enables our engineering and manufacturing departments to sharpen and keep their technical abilities updated.  By supplying to well known corporate names/brands that have a premium image, we are reinforcing our management efforts to maintain cost, quality and delivery competitiveness by benchmarking against global competitors.” Among ZAC’s current OEM customers are reputed names such as Sanyo and Supra.
Perhaps one of the most prestigious collaborations for ZAC is its joint venture partnership with GE Appliances Europe. The joint venture, Middle East Air Conditioners (MEAC), was forged in 1997 for the manufacture and marketing of the GE brand of air conditioners. The shareholding between ZIIC – which is the holding company for ZAC – and GE Appliances Europe is in the ratio of 51:49. MEAC was awarded the license to manufacture window, mini-splits and ducted split air conditioners under the brand names GE, Hotpoint and RCA.  “Today, MEAC enjoys extensive coverage in Saudi Arabia, GCC and the MENA markets including Iraq. There are plans to extend operations to India as well,” says Nasser Al Dossary, executive manager, Middle East Air Conditioners.  “In an ever-changing market, MEAC continually strives to blend new technologies with stylish integrated design, optimum performance and reliability offering great value to customers.”

Flexibility and Growth
“We see a two-fold increase in our revenues over the next five years. Our immediate aim is to maintain and even enhance our leadership position in the MENA market,” says Abdulla Al Zamil. Iraq and Egypt are “high on the agenda” for ZAC’s growth plans. And internationally, ZAC expects to strengthen its position in Europe, Australia and the US. Achieving these outcomes would require putting in place management mechanisms and tools that enhance ZAC’s overall efficiency and market leadership.
In 2003 ZAC adopted the “Balanced Scorecard” tool to enable it meet its ambitious targets. The implementation of the tool has cascaded down to the Strategic Business Unit levels by setting out ‘strategic paths’ and ‘strategic thrust’ areas. Workforce motivation and communication too is a means that ZAC is employing to ensure that ZAC’s employees are in sync with the management goals.  As Abdulla Al Zamil says: “The aim is to look for our own internal strengths and weaknesses, rather than react to external forces.”
On the operations front, flexibility is the mantra that ZAC is chanting. In some markets ZAC has gained volumes and market shares through a direct presence, whereas in others it has tied up with distributors to form joint ventures with them. Product pricing is another major challenge. Given rising input prices, ZAC has decided to adopt a flexible approach so that when necessary it can outsource some of the products for select markets instead of supplying them from its factories. 
Over the past 30 years, ZAC has not just emerged as a global enterprise boasting of high-tech facilities, products and services, but by catering to different markets and consumer needs, it is today a force to be reckoned with in the world of appliances.