Tuesday, February 8, 2011

Fayssal Frem Interview Featured in PAPER MIDDLEAST Magazine

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An interview with Fayssal Frem, INDEVCO Paper Containers Managing Director, is featured in PAPER MIDDLEAST magazine's Autumn 2010 'Focus Lebanon' edition.

Source: Rima Dib. "Interview Report." PAPER MIDDLEAST Autumn 2010: 38 - 47

A young dynamic person, who put his heart in the family business and the business of his predecessor in his heart, having climbed the ladder accumulating through the long years, a rich experience fingerprinted with successful business performances and during which he reinforced the family philosophy and spirit in the commitment to the development of the community. We are talking about Fayssal G. Frem, the Managing Director of INDEVCO Paper Containers, with whom we had the following “food for thoughts“ conversation.

By Rima Dib

  Mr. Frem, first we would like to know how did you start your career and when was it?

I have grown up in a family where work and merits are considered virtues, but since we were kids, we always heard about the business. I officially started my career after graduation, however there is no summer that I remember, I did not take a summer job inside the family business, that when I was 14 years old and I used to spend at least 40 days in the summer.

At that early age, what tasks did you use to fulfill?

I used to work as a catcher on the machine, a segregator of products, very low level blue collar jobs… It was essential to pass through this in our business; if you want to understand how people feel, if you want to optimize on that feeling for the benefit of the people and the organization, I believe it is essential to live it first!

I graduated in Business Management in 1997 and started in UNIPAK in the corrugated industry and did my first official training in our operations in the USA, and then moved back to Lebanon managing side projects. I have some experience in Project Management and when I delivered the project, this is when I started a new job and earned new tasks in the organization. And I climbed the ladder from the bottom up and had the opportunity also to manage and run the operations separately and uniquely.

I have been the General Manager at Easternpak (Affiliate Box Plant) in Saudi Arabia for one year and a half back in 2005, before I moved back to Lebanon again as General Manager of UNIPAK; so I had to run UNIPAK as well and early in 2000, I was part of Unipak Nile management team (our affiliate Box Plant in Egypt).

Today as we speak, I am the Managing Director of INDEVCO Paper Containers, a Division of INDEVCO Group, responsible for the corrugated packaging business. IPC subsidiaries are: UNIPAK in Lebanon, UNIPAK Nile in Egypt, and Easternpak in Saudi Arabia.

Besides, what other occupations do you have?

I am responsible of the HR of the whole INDEVCO Group covering 8,500 employees worldwide and I am also member of INDEVCO Board of Directors and Vice President for LibanPack.

Is LibanPack still running?

Of course, LibanPack has a very important role to play in the packaging development in Lebanon and is expected to be helpful all across the region. It was founded in November 2008 through the joint support of the UNIDO - MACLE project, funded by Switzerland through its State Secretariat for Economic Affairs (SECO), ALI (the Association of Lebanese Industrialists) and The Syndicate of Packaging Industries in Lebanon with the mission of increasing market access of Lebanese products to export markets by improving their packaging and labeling.

The fund was supposed to end last March of 2009, right?

Yes, but we took another support and we have to be thankful to the Swiss Government as they renewed the funding for another year until we can be sufficient. LibanPack is very active on this front and there are a lot of new initiatives that will be taken and have already been taken and we expect to start seeing the fruits of these initiatives very soon.

Now LibanPack is a subsidiary of the Association of Lebanese Industrialists (ALI); and is very active on the front of packaging whereby we consult on labeling, packaging designs and designs efficiencies and effectiveness so that the Lebanese products be carried abroad with high standards, and be regarded as quality products.

In addition to that, LibanPack is organizing continuously training events and educational courses for Packaging Manufacturers and for Packaging users, also for designers as well, so we are also active on this front. LibanPack is also focusing on consulting manufacturers on the best hygiene practices as well as good manufacturing practices so they elevate the standard of production and this is very essential I believe; in Lebanon this could become an important advantage.

We have the human resource and the awareness of quality and we need to leverage on both, and LibanPack is leveraging on the very important ones and this is essential.

Now, we would like to highlight on UNIPAK; what is the kind of production at the mill, the production capacity and the market that you target?

At UNIPAK we produce the Corrugated Fiberboard packaging covering different sectors for
Dairy and Beverage, Food Industry, Appliances Industry, Agriculture, Pharmaceutical, displays… while the production capacity is around 60.000.000 m2/annum. We operate using the best brand machines worldwide, following high operational standards. In a word, UNIPAK is a well equipped Box plant comparable to any international player.

And… the market?

We can't sustain in Lebanon the whole capacity of our production, a significant share of our production is exported mainly to neighboring countries. We even go beyond these markets and this for specific product lines.

Do you have the same market coverage for each product? (if we take the Displays for instant as an example)

Sometimes it is the case and sometimes it is not. In general, we do the whole range in any market we supply; however you know the corrugated have a lot of fresh air in it, so it is not a very competitive product to ship as you loose a lot of space inside the Container because of the corrugated medium.

So, it goes natural to target the micro Flute business because the furthest you export (geographically) the more it is better to go with micro Flute rather than to go with Higher Flute so you can save on the shipping.

Is this the problem that you are encountering while practicing this kind of industry in Lebanon?

No, the challenges in Lebanon are not that at all, this has an impact on the product itself, so basically it is not a real problem, but if it was, then it is a very easy problem to overcome. The actual problem in Lebanon is related to the problems of Lebanon that are posing the challenges in our industry. Before we go in details in the challenges, let me brief you and give you some figures that would help understand more the corrugated industry in Lebanon and as a sequence, the challenges to it.

Since its development in 1871 the corrugated fiberboard industry has succeeded to provide a product with fantastic properties. It is environmentally sound, has a record recycling rate and an incomparable recycled content; in addition it is a renewable resource. The corrugated industry is developing fast and technology is advancing in printing and cutting which is making product even stronger to compare with its substitute THE PLASTIC.

Now to give you some figures; for instance, the average corrugated packaging consumption per capita in Lebanon is of 11.6Kg (versus 12.9 Kg for the MENA region.). Therefore, the market of Packaging is limited to the development of other industries. We are directly related to the manufacturing industries because these are our customers, so, if they are not growing, we are not growing as well. But the fortunate thing is that Lebanon has been growing lately.

The impact on the industry growth is not as high as the impact on the construction growth or on the banking growth per se, but still it is considered to be a good growth.

The latest series of local indicators have shown evidence of strong economic growth, leading to a GDP growth rate estimate of 6.8%. This should be considered as a base for a solid growth in the corrugated industry if the latter figure was balanced in all the industries.

In addition to that, the complexity of this market in terms of creativity requirement given the small quantities involved and its orientation towards exports making it highly demanding in terms of continuous development in quality, product development and operational standards.

The bottom line, WE NEED TO BE CREATIVE. And to overcome this low consumption and still be profitable, we need to go towards creative solutions in order to create development and put them in the hands of our customers. This is a challenge for us but we love to do it. We will be also leveraging on the human talent of Lebanon when we think ''creative''. This is a challenge to the corrugated industry and at the same time one of the solutions to it.

Second, we lack the presence of local suppliers, this is a major challenge as well, then we need to input all of our requirements, we have local suppliers but who are not able to fulfill all our requirements or even the majority of our requirements, they are able to fulfill a very minor share while the rest has to be imported; which defies the concept of ''just in time" and this also cause a great challenge to our lean approach in manufacturing.

Other challenges that need not to be missed are related to the high costs of operation; we are talking here about different kind of cost such as shipping, energy, labor...etc. Therefore, we look forward to a comprehensive plan from the government to alleviate our suffering which can be defined through:

- Export subsidies
- Investment incentives
- Tax cuts
- Drawbacks

Adding to above, the fact that we have one of the highest labor cost among neighboring countries and the real estate congestion that is leaving almost no space for industrial development are holding our growth and the growth of other sectors. We are calling thru the Association of Lebanese Industrialists represented by its president Mr. Neemat G. Frem for the development of industrial cities or compounds.

In your opinion, how to overcome these challenges?

We at Indevco, and in order to remedy and survive despite the above listed challenges, have adapted our practices in order to reflect 5 important issues:

1- The empowerment of Lebanese talents at management and workforce levels.

Applying these creative and professional attitudes has made us overcome the hurdles in our path and we have developed a great survival instinct and skills which has become our competitive advantage not only in Lebanon but elsewhere where the Group operates. And the reason behind our success in INDEVCO is because we have learned these survival skills from Lebanon!

2- Excellent planning and dynamic logistics that we have developed

3- A cultural belief in operational excellence driving its implementation

4- A continuous adjunction to the latest technologies in order to balance automation and staffing from one side and to find alternative energy solutions from the other (solar panels for lighting, fuel oil with higher calorific values and less residues…..)

5- A robust customer oriented information system

All of this would lead to our ultimate goal, which is a strong sales orientation with a reach beyond the conventional 200 KM radius of our industry.

Any other issues?

As I have told you before; we have a lot of hurdles in Lebanon to overcome of which we are aware such as; operation cost, the high cost of living in Lebanon, the high cost of labor and not to forget the lack of consistency in energy supply… so we have to overcome all of this through different alternatives. One alternative would be the Adoption of Operational Excellence and here at UNIPAK we have adopted this concept all across the business fronts.

What do you mean by Operational Excellence?

Operational Excellence is the continuous improvement not only in the HR quality, but also on the processes and standards improvement. In other words, we engineer our processes and we put a measurement scheme on every process because YOU cannot improve if YOU DO NOT measure. Metrics for any process are of pivotal importance and we need it in order to overcome the burden of the overhead and the labor, so that our operation becomes more efficient.

Organization should also be improved. OE'S main objective is to reduce operation cost and wastes, without affecting quality, time delivery and cost of products and services one has to offer.

And INDEVCO Paper Containers has a rigorous system that affects the behavior of the people, and changes the way the equipments are managed, leading to excellent performances. The end results of World Class Operations Management are measurable, and they lead to significant economic improvements and an outstanding increase of the competence of the people.

Another important issue is the Awareness on the importance of packaging on the communication level, logistics level and Hygiene and Safety of users. The continuous improvement on the printing resolution adds value to the packaging and the users.

The resulting challenges from above, are valid to most countries including Lebanon.

You have highlighted on very important issues Mr. Fayssal, now if we are to compare the corrugating industry in Lebanon to other industries such as paper and tissue, where is this industry standing?

It is a good question. I would say that corrugated packaging occupies an important place in the supply chain but still there is a big handicap which is shipping as I have told you earlier. The physical shape of the box, the constituents of the box are causing a big handicap to the shipping because of the fresh air. So, it lives within your markets. The usual radius is 200 KM, beyond that you start losing efficiency and you don't want to sell it as it is not attractive anymore.

While you don't have this at the paper and tissue industry, there, the global market is your market, while at the corrugated your market is your regional surroundings; it is kind of limited.

But I am personally happy to be in the corrugated industry because I am a very environmental aware person and I care a lot about the environment and corrugated is a lovely product that is very friendly with the environment. And here I would like to emphasize on what I have noted before by explaining that corrugated has a record recycling rate and an incomparable recycled content because of the paper constituents are all made out of recycled paper.

It is also a renewable resource and as you know, the initial way to do a paper is through the tree, so every time we cut a tree, it will grow up again; therefore it is a very friendly product. The recycling of this product is also easy to the paper mill and the way we bond the product is made out of starch (tapioca starch, potato starch…), so it is also very friendly. And that is something that I love in my industry.

And compared to past years, where does this industry stand today?

Our industry like many other industries is geared by the advancement of related technologies and the development of equipments for the corrugating industry is quiet high and the technology put in the equipments is very advanced, and this is what is impacting the corrugated industry to further improve in quality and become even more environmentally-friendly through using lighter paper, hence LESS PAPER.

Back to UNIPAK, how many employees do you have at the mill and how was it first established and why?

At UNIPAK we have about 300 employees. UNIPAK was established in 1967 by my father Georges Frem.

In 1967 when UNIPAK came here to this region (Halat- Jbeil), it was a rural region with only potato growers and lands for agricultural produce. At that time however, the apple was not properly exploited in Lebanon because there was no package to it except the wooden crates. So, my father back that time, established UNIPAK to serve the growers and the agricultural producers to export their goods safely to markets abroad while preserving the value of their products.

And this is where the philosophy: “what is good for the community is good for our company" came from. And ever since this philosophy have grown to become our guiding torch.

I am running the HR in Indevco, as I mentioned before, so I am responsible of the 8500 people who form the INDEVCO population, and one of our important HR theme is to convey our philosophy and our values to all our people inside and outside Lebanon.

And what are your future plans?

We are always looking for expansions, this is something we believe in and we are growing at a significant rate.

We can't undermine the people and as I said earlier, the main resource of Lebanon is the human capital and this is what INDEVCO continuously do, we grow and raise the human capital that gears our business developments.

If we do not have a human capital then we can't take any initiative of business developments.

What you have already said is very true. And now, out of work, how do you spend your free time Mr. Frem?

Because my business requires a lot of traveling where most of the week I am out of the country so I take the opportunity to spend the weekend with my kids and family; I am a family man. I am also very well organized, I do my workout and I spend sometimes by myself. And lately, I got myself a fishing boat to do some fishing (I developed this hobby in order to stress out…to calm myself within the sea) and I spend the rest of the time with the family and friends. I also like to go out in nature and I love reading.

And how do you wish to conclude this interview?

At the end, I would like to say that we are all serving a cause that helps our working environment develop in the right direction and providing the consumer with easy and cost effective access to various products. Corrugated packaging occupies an important place in the supply chain. Hence our contribution has a direct impact on global prosperity. Life is rewarding so is the business life and the enduring and lasting companies are those who continuously seek to bring value to this chain.

We have what is most important to run a business “PEOPLE”, add to this great asset, the advanced and professional practices and you have a flying high organization.

INDEVCO Paper Containers is a division of INDEVCO Group.

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