Gulf Aluminium Rolling Mills (Garmco) is optimistic of stronger sales in the New Year, after a drop in exports which the company attributed to problems related to raw material supplies.

Exports for 2010 are forecasted at 140,000 tonnes against a target of 155,000 tonnes, said Garmco CEO Dr Adel Hamad in the first week of December.

“All markets required more tonnage but we could not produce as the raw material feeding the plant was short,” he said. “Supplies from Alba were disrupted during the year for two weeks in January and October. There was a cut in January and a maintenance shutdown in October.

Garmco is increasing its melting capacity from 75,000 tonnes to 175,000 tonnes by the end of 2012 to be able to produce more of its raw material requirements.

Two other projects that Garmco announced in 2009 are making progress. Studies have been completed for a tension-leveling line, the company’s third, and an expansion to the foil mill’s capacity. The tension-leveling line, to be completed in 2012, will enable 8,000 tonnes to be added to the existing production capacity of circles, sheets and coils, while the foil mill expansion, to be completed in 2013, will boost foils capacity from 20,000 to 28,000 tonnes in the first stage and to 35,000 tonnes in the second stage.

Workers at a Garmco plant

Those two projects and the facility to increase melting capacity will cost $62 million. Another $2 million will be spent on installing a high voltage powerline for the foil mill.

Garmco’s annual capacity is currently 160,000 tonnes. Production for 2010 was forecast to reach143,000 tonnes with sheets contributing 18,000 tonnes, circles 5,000 tonnes and coils 120,000 tonnes.

Dr Hamad said the markets remained generally unchanged from previous years. “When we complete the tension-leveling line project we will be able to introduce a product for the lithographic sector,” he said.

New team
The company is also looking at other innovations to withstand competition in the aluminum rolling sector and grow its revenues. With that in mind, it is establishing a Business Processes Improvement Team whose mandate is to seek excellence in new products and processes and improve the existing process from cost and quality point of view.

With the construction field still weak, the company will explore its potential and new business opportunities in fast-growing sectors. Perhaps the most critical sector today is electrical appliances. Dr Hamad recalled that recently the Chinese sold 749,000 units of flat TV screens to India which he said gave one an idea of the demand that exists for aluminium components.

The Business Processes Improvement Team will be an important tool for advancement, a few years ahead of the opening of a major rolling mill in Saudi Arabia. Maaden is opening its facility in 2014 and some of its products will overlap those of Garmco.

“We want to be competitive and highly efficient. It will be quite a challenge,” Dr Hamad said.

The Middle East continues to be the largest market for Garmco products and accounts for 35 per cent of its sales while Europe takes in 25 per cent, the US 18 per cent, the Far East 16 per cent and other regions the remainder.

“Currently there’s limited capacity to open new markets; we need to expand,” Dr Hamad said.

No participation in Oman mill
In other developments during 2010, Garmco opted out of a project to build a rolling mill subsidiary in Oman. The plan was that Garmco would have a 45 per cent ownership of the plant but now Adwea and the Omani Government will go ahead and build the mill.

With Garmco’s decision not to participate in the Oman project, the company also cancelled plans for the present to open a new service centre in Eygpt but studies are going on for Japan, Canada, Morocco and Brazil. Dr Hamad said its existing service centres in the US, Australia, Singapore, Thailand, China, Switzerland and Korea were operating successfully.

The company’s two manufacturing subsidiaries in the US – Midamerica Extrusions, Indianapolis, and Republic Foil, Danbury, Connecticut - have gone through restructuring. “We look to the subsidiaries to be profitable. 2010 was a good year for them and we sold the tonnage that was targeted. It was less than capacity but a much greater improvement.”

In the US, extruded products are mostly used in construction and for manufacturing road signs. If there’s no investment in housing or infrastructure their sales will be reduced … The good thing about the US is that the labour law is flexible – you can hire and fire.”

Garmco is owned 37 per cent by the Bahraini Government, while the other major shareholders are Sabic (30.28) and Industrial Bank of Kuwait (16.98). Also having stakes in the company are Gulf Investment Corporation and the governments of Iraq, Oman and Qatar.

The Bahrainisation level of the workforce at Garmco now stands at 88 per cent, among the highest in the kingdom.