Gorica: Moving Markets

It’s been less than half a decade since Dubai’s economy crashed in the wake of the global financial crisis, but the once high-flying emirate is now taking off again.

Helped by strengthening trade and tourism and a sharp pick up in international investment – triggered by the emirate’s reputation as a safe haven in the region – Dubai’s traumatised stock market climbed the 5,000 peak in late April, its highest level since the GFC crippled the emirate’s economy.

The resulting real estate recovery and improved banking sector liquidity are making for a constructive mood in trailer manufacturing too, and those who were able to navigate the downturn are now emerging fighting-fit. 

One such company is Gorica. Albeit not a new name in the Middle East, the company has recently gained global attention when it purchased a suite of plant equipment and know-how from German company Krone that had formerly been used in Krone’s Danish facility. The acquisition is part of Gorica’s strategic expansion into the refrigerated transport market and widely considered proof that the economic recovery in Dubai and the Gulf Cooperation Council (GCC) is becoming more broad-based and gaining pace.

While the emirate itself had to learn the hard way that a broad economic base is more likely to absorb market fluctuation, Gorica had gone down the diversification path long before the Lehman bust and was thus able to use the downturn for strategic regrouping rather than hitting the panic button.

As a result, the regional powerhouse – historically deeply ingrained in the construction industry – was able to jump at the opportunity to expand into the line haul equipment market in 2013 and benefit from increasing consumer confidence in the region.

Due to a lack of local legislation in the field – Dubai is known as a blank spot on the regulation map – the company decided to in-source European know-how to make the expansion worthwhile. “If there is no standard, you have to become the standard,” says Ivan Fornazaric, Managing Director of the €100 million turnover business.  “And, when you consider yourself a true leader, that standard must be exceptional.”

Born in Slovenia, part of former Yugoslavia, Fornazaric came to Kuwait in 1987 and then moved to Dubai in 1990, where he founded Gorica Trading in the same year the Republic of Slovenia became independent, leaving the expat stranded in the Middle East and hungry for a new beginning.

From the outset, the young Gorica brand benefitted from the United Arab Emirates’ booming construction market and gained renown for supplying rugged transport equipment that would withstand the harsh desert environment. “It was during those early days that the brand became synonymous with solid tipper design in the Middle East,” says Fornazaric – pointing out that Gorica still is the leading tipper brand between Amman and Muscat.

“Back then, manufacturing close to 100 units per annum was a great achievement,” he recalls. “It was a restless time and the spirit of optimism was almost palpable; and the margins were illusory compared to today. Since then, times have changed and we had to become more productive to remain profitable, so we did.”

Since the company’s inception and Fornazaric’s settlement in the Persian Gulf, much has changed at Gorica. Founded as Gorica Trading in the Al-Aweer Industrial Area, the company moved to the Jebel Ali Industrial Zone in 1998 and began trading as Gorica Industries.

Today, the company is not only focusing on construction and tipping equipment, but can also build curtain-sided semi-trailers, dry vans, low loaders, liquid and dry bulk tankers, oil field equipment, concrete mixers and municipal utility equipment on demand.

“Our goal was to create a broad and stable foundation for the business, and I think our ability to ride out the GFC has proved we are on the right track,” says Fornazaric – acknowledging that quantity alone would not have saved Gorica when a giant sand dune of debt looked set to suffocate the shiny city-state at the end of 2008.

Of course Gorica took a hit too during the GFC, but it wasn’t knocked out entirely. One reason for that resilience, according to Fornazaric, was the brand’s commitment to quality. “Growth is not a quantitative process alone, we had to grow our quality proposition too.”

The strategy Gorica chose to do so was two-fold – boost the company’s own expertise and in-source special knowledge where needed. The result is a tightly knit supply network comprising market-leading suppliers like BPW, SAF-Holland, Wabco, Hyva, SSAB (Hardox) and Jost; as well as Slovenian OEM ITAS, a specialist for concrete mixer technology, and Italy’s FARID-MORO, a well regarded manufacturer of municipality equipment.

Given the company’s collaborative track record, the relocation of Krone’s GRP plant from Denmark to UAE was an almost logical step. “We had planned the move into refrigerated transport equipment in 2007, but the GFC put a spoke in our wheel,” says Fornazaric – revealing that the Krone deal was a question of being at the right place, at the right time, and in the right mind-set.

“Sometimes you come across an opportunity have to make a decision quickly, so we did. Also, buying an existing factory is always helpful to get direct access to technical expertise,” says Fornazaric – revealing that GORICA and Krone plan to co-operate throughout the transition phase to ensure the new range will hit the ground running. “In fact, we plan to market the new line as Built by Gorica, Designed by Krone,” he says. “German-made equipment does have an aura of quality to it and we intend to leverage that, of course.”

First of all, however, the new plant – Gorica’s fourth – has to become operational. Construction has begun in April and is scheduled to be completed by the first quarter of 2015, leaving ample time for Fornazaric to refine the marketing ploy and get the news out to the transport industry. “Relocating an entire plant is a huge undertaking both logistically and financially, so we have to be very aggressive in regard to advertising to ensure the market is ready when we are.”

According to Fornazaric, the target market for the new ‘frigo’ line-up is not only restricted to UAE. Saudi Arabia, Qatar, Bahrain, Kuwait and Oman are on the to-do list too, mainly because Gorica has already established a strong service network in that region.

“Having such a strong support network is quite unique out here. It may be common in Europe or the US, but not in the Middle East. In fact, I believe our support network will be the key selling point once we are ready to start production.”

With such a far-reaching target market in mind, adhering to a single regulatory standard is not easy, though. “Under-legislation has been quite a frustrating issue during the planning phase,” he says. “While Saudi Arabia, Qatar and Bahrain are moving forward to implement a more modern vehicle design standard to go by, the UAE and Oman are still lacking any regulation. That’s why we decided to take control of our destiny and base our development on European standards for now.”

According to Fornazaric, the focus on Europe as a role model was an easy decision. “Europe is at the forefront of engineering and many of our main suppliers are European-based too. It’s been a logical choice,” he explains, noting that modern braking and LED technology – most of it standard in Europe – are now making inroads in the Middle East too. 

Plus, GORICA  has already gained experience with EU legislation through dealing with a multinational petroleum company. “We are currently expanding into the aluminium tanker market and are focusing all of our efforts for phase two,” says Fornazaric, who is seeing a spike in aluminium sales ever since global petroleum giants began specifying the use of the lightweight, spark-free material as standard.

“That’s applied globalisation. Oil companies use standardised contracts around the world to ensure maximum safety wherever they operate, so you have to adapt to survive,” he explains. “Sometimes they are ahead of local legislation and help the industry renew itself from within, even though it may seem tough at the time.”

Despite that ‘natural’ drift to the EU, Fornazaric and the Gorica management would like official legislation to follow suit at some stage. “It’s always good to have a common standard, and we recently see some movement in the political arena,” he says.

“Until then, we will continue to define our own standards and help local industry move into the right direction. After all, if a market is not moving fast enough, you need to move the market.”

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