How Gorica is keeping it cool

Ivan Fornazaric is used to putting up a brave front. Born in Slovenia when it was still part of now-extinct Yugoslavia, he had just settled in Dubai when the Republic of Slovenia declared independence on 25 June 1991 – leaving the young expat stranded in the sprawling, yet politically unstable Middle East.

Uprooted and hungry for a new beginning, Fornazaric went on to found Gorica Trading, the company that would subsequently morph into €100 million powerhouse, Gorica Group – the largest trailer manufacturing business in the region and the 26th-largest global OEM by output.

Since that fateful day a quarter of a century ago, Fornazaric has learned that to thrive amid uncertainty, “you need to embrace opportunities as they arise and evolve with the world around you,” as he has it. “It’s all about hard work, passion, believing in yourself – and being in the right place at the right time. We set up our company when Dubai was a low-key place on the global map. Look at where it is today, regardless of everything that has being going on in the region.”

With every crisis that has shaken the vast land between Amman and Muscat since the first Gulf War broke out – Operation Desert Storm began almost at the same time as the Yugoslav conflict – Fornazaric says he became more proficient in navigating change and adjusting to a new reality – a quality that ultimately helped Gorica become a manufacturing giant in what is still a fragmented and highly unregulated market.

25 years on, it is that very sense of adaptability that is setting Gorica apart in a market that is once again shaken by conflict, albeit economic in nature. According to Gulf News, a daily English language newspaper published from Dubai, the number of people expressing “recessionary sentiment” is now standing at 4.9 million of the United Arab Emirates’ (UAE) nearly 10 million population.

“The … pessimism can be attributed to a continued decline in oil prices, coupled with the slowdown in China and subdued economic outlook and widening fiscal deficits in the region,” says Senior Journalist, Cleofe Maceda. “Throughout the oil-rich Gulf, the slump in crude prices is forcing governments to slash spending and delay projects, while private companies shed staff and, in some cases, shut down.”

Although he would have every reason to be concerned, Fornazaric doesn’t let the situation faze him – Dubai’s 2009 crisis is still too fresh a memory, he says. Back then, the emirate was forced to turn to its oil-rich brother emirate Abu Dhabi, capital of the UAE, for a $20 billion bailout. Gorica used the slump to invest in additional manufacturing capacity in Oman – a move that is still paying off today.

The same is true for a weak patch in 2014 that Gorica used to acquire a suite of plant equipment and know-how from German company, Krone. The headline-making move laid the foundation for Gorica’s expansion into the refrigerated transport (locally also referred to as frigo, ed.) market. Since the factory opened in December 2015, it has doubled in capacity and is now considered a crucial income source for the venturesome OEM.

“I’d like to think we simply put our heads down and work hard,” he says. “When the market is down, it is an opportunity to go after market share. Gorica’s competitive advantage is that we manufacture such a vast variety of products and are able to change our product line-up to match market demand. As a result, we are cautious but positive – and very much focused on building market share in this situation.”

From experience, Fornazaric says economic declines can prove helpful in weeding out businesses that don’t have the professional grounding to compete long-term and relieving the market of overcapacity. Coupled with his penchant for diversification, he says the situation may thus hold something positive for Gorica, which has become the most-copied manufacturing brand in the Middle East and Africa (MEA) region, according to his own estimate.

“We operate in a variety of industries, ranging from construction through to food processing and even waste management, which is a key competitive advantage in managing the highs and lows we see across the economy. The work we do outside the UAE – especially in North Africa – is providing additional stability.”
Instead of looking at the competition, Domen Bockor, the Group’s General Manager responsible for Sales and Marketing, is equally bullish that natural market dynamics will ultimately lead to a healthy equilibrium, with build quality and re-sale value most likely to define success. “We respect our competition, but we only follow our own vision,” he says. “We actually believe that competition is good for us – it pushes us every day and reminds us to remain agile and focused.”

According to Bockor, the success Gorica has had in the tipper industry is a case in point. “Our tipper range has historically set the benchmark in the region. We’re not following anyone’s agenda or standard – we are the standard. See, many tenders now explicitly reference our equipment as an example. That’s not because there is no one else who could do it, but because we’ve put in decades of work that now pay off.”

Despite priding himself on having set the standard to follow for new businesses entering the market, Bockor says Ivan Fornazaric’s adaptability precept is always present throughout the business. “Building on the idea of manufacturing excellence, customisation is an important building block of our strategy. We are very much a made-to-order type of company and we welcome new challenges.

“That’s also why we’re now investing in a new facility for the production of aluminium super-structures. The market is becoming increasingly demanding in regard to payload – most often driven by international businesses – so we have to react.

“There is a lot more potential with aluminium as a building material. We are currently using it on road tankers that transport flammable liquids, but the inherent weight savings could also be interesting for other industries, which is why are using the downturn to up-skill our operation in that field. Less weight will ultimately equate to more payload, lower cost per kilometre and lower emissions on the truck. ‘Lighter and cleaner’ seems to be the new global mega-trend in the transport world, so we want to be ready for it.”

According to Bockor, the new facility – Gorica’s fifth – will focus on bulk tankers for the transport of cement and flour first, but soon expand its portfolio in line with market demand. One issue standing in the way of expanding production more rapidly is regulatory security, he says. “The market is lagging behind industry – there are still no coherent heavy vehicle standards across the MEA region. As a result, we are very cautious about our strategy and only ever adapt best practice.”

Agrees Ivan Fornazaric, maintaining the poker face that has helped him work through so many an issue since he first came to Dubai back when the city’s rise to global fame still seemed like a wild dream. “It’s highly likely our design will become the new industry standard, so we take our time and work through it. We take our responsibility as a leader very seriously.”

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