MANUFACTURER OF THE MONTH- Once a month, Inside Industry looks at a manufacturer — whether locally bred or an international player with a manufacturing base here in Egypt. The monthly feature covers manufacturers in different industries to look at their success stories, the challenges they have faced as local manufacturers, and the path forward as Egypt looks to build a more robust local industry. This month, we spoke with Yasmine Khamis (LinkedIn), chair of Oriental Weavers, one of the world’s largest producers of carpet, rugs and related raw materials producers.

Oriental Weavers is a homegrown company that went global, in terms of exposure to different markets and also in terms of trying to be a multinational company when it comes to manufacturing. We have manufacturing facilities in Egypt, as well as in the US that cater to our showrooms and retailers, including Ikea, Walmart and hotel groups like the Four Seasons, Marriott International, and Hilton.

We’re a one stop shop carpet supplier: Our strength lies in our vertical integration and that we are producing machine man products, which means that we are affordable, play on economies of scale, and maintain control of our supply chain.

Global exposure is a continuous process: Oriental Weavers exports about 70% of our products — although with the economic slowdown it’s closer to 65% this year — with 30% sold locally. In 2022 our exports came in at USD 493 mn with our strongest markets including the US, Saudi Arabia, Japan, Australia, and Brazil. Every year, we try to look for new channels, segments, markets, customers, and so on. Currently we’re trying to grow in Africa; we already have business in East Africa and North Africa, with a strong presence in Libya and South Africa.

We manufacture the majority of our local components, including our main raw material — polypropylene granules, a plastic chip made from propane gas — through an Egyptian factory that we are a partner in. As a net exporter, we face relatively few problems accessing USD to import goods. Instead, the problems we have faced are logistical issues facing raw material manufacturers, such as during covid-19.

Local manufacturing allows for speed, control, and cost: Oriental Weavers has always focused on localizing not only our raw material needs, but the materials we need for the entire operation, such as the plastic that we use to package our rugs so that we can ship them. The pandemic caused logistical issues for the goods that we do import, such as jute, a natural fiber that comes from Bangladesh and India. Looking to solve the issue, we talked to local manufacturers and plantations regarding an alternative local material, but in the end one of our engineers developed a manmade yarn that we were able to produce internally. We are always in an “adaptability mood” and try to change our skin depending on the circumstances.

One of our biggest advantages is our customer service: Any manufacturer can produce a number of products that look the same, but Oriental Weavers can also deliver and secure really good service leverage for our customers. Given our internal control of our raw materials and supply chains we have the ability to service customers or make changes to products really fast.

The other is our innovation: Oriental Weavers has always been known for its creativity in terms of coming up with new products to introduce to the market. Our collections can be ahead of the curve by two or three years before the market catches on and it becomes a popular trend.

And we continue to look forward: R&D is one of our strongest capabilities and we are working on establishing a design and innovation hub inside Oriental Weavers, where we will try to come up with ideas relating to all sides of the business — commercial, manufacturing, or operations. These new ideas will not be incremental; we’re stressing on breakthrough ideas, something that takes you forward in leaps, not step by step.

We’re trying to venture into new segments: E-commerce started to boom after covid-19, particularly in historically non-traditional markets like Saudi Arabia or the UAE, with more people buying home decoration items and furniture online. In the last three years, our e-commerce sales grew from almost 3% to 10%.

Manufacturing in Egypt should be an incentive for foreign investors: There’s no reason for anyone manufacturing in Egypt to not get started if they really want to. The government provides export subsidies for local manufacturers, the country is strategically located as a gateway to Africa, Europe and Asia, the workforce is large, young and skilled, and there are reasonable rates for labor utility — plus, Egypt provides inexpensive energy and land. As manufacturers, it gives us great comfort to see the flexibility and support of the government.

Oriental Weavers makes use of these incentives: We factor the export subsidies into our selling price, so we can provide it as a reduced price to our customer, making us more attractive from a commercial perspective. Oriental Weavers employees some 19k people, only in the carpet sector. It’s a huge responsibility that means that we can’t afford to get greedy. We can’t afford to take these subsidies and put them in our pockets, because we hold a lot of responsibility towards these people that depend on us.

The industry is a connected ecosystem: We really want the local business community around us to strengthen. Following the pandemic, Oriental Weavers has been trying to support local SME manufacturers that could be our suppliers, by providing them with more relaxed or upfront payment terms. While we pay abroad at 90 and 120 days, to local suppliers we are more flexible offering payments sometimes at 30 days. We also bring local firms that could be our suppliers into our factories to educate them on our quality standards and expectations. Empowering local businesses also helps to enable a local customer base by providing people with more spending power.

Your top industrial development stories for the week:

  • A new package of incentives for industrial projects: President Abdel Fattah El Sisi instructed cabinet to implement a fresh package of incentives to support industrial activity and accelerate localization.
  • Kronospan to set up a USD 50 mn wood panel factory: Austria-based wood panels maker Kronospan plans to invest USD 50 mn to set up a multi-purpose wood panels factory in either Sadat City or 10 Ramadan.
  • Singapore chemicals outfit to invest USD 700 mn in Egypt: Singapore-based chemical company Indorama is set to invest around USD 700 mn to establish two factories to produce phosphate fertilizers and silicon metal for solar panel production.
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