 INDUSTRY |
 Towards New Prospects |
The Algerian industry, as the other national economic sectors, has been committed in a process of reforms mainly based on the public enterprises restructuring which represent about 80% of the national industrial potential. The 20% remaining constitute the private SMME& SME ( small and medium-sized manufacturing companies & small and medium-sized enterprises). Thanks to better production costs and an ever-increasing market these companies can be in a favorable position to develop their competitiveness.
Off hydrocarbons which represent 97% of the country exports, the industrial sector covers a wide range of activities , with notably the basic industry ( Metallurgy, Iron & Steel, Mechanics), the textiles and leather industry, electronics & electricity, agribusiness, building materials, chemistry …etc. The economic advancement of these sectors is closely related to the good management, by the public authorities, of the stimulation plan implementation, essentially through a clear restructuring policy based on privatization.
| The Major Guidelines Of The Industrial Policy |
Prior to anything else, the objectives appointed to the industrial sector shall first take into consideration the perspectives of its development and of its competitiveness within the new economic environment. In this respect, the expected membership of Algeria to the WTO (world trade organization) as well as its contract of association with the European Union stand as a major stimulant to the industrial tool upgrading. However, despite of all the efforts , lots of work should still be done so that to enhance the performance and the competitiveness of the sector.
The latency of the sector is essentially due to the fragile financial balance, unimportant investment projects, a deficient financial and institutional environment, antiquated equipment and lack of modern techniques of management.
It was then undeniable to give a new a burst to the restructuring process that establishes the conditions and the needs of the industrial upgrading, whether within its internal functioning or its immediate environment. This would not be done without the decommittement of the state from the management of the enterprises. In fact the state role shall be limited to encouraging measures only through a dynamic industrial policy. According to Mr. Abdelmadjid Menasra, former minister of industry and restructuring: " It is agreed that the main objective of this process is to strengthen the self management of the enterprises. The present assistance to the said companies by the state is meant to prepare these latter to privatization which would warrant to Algeria a very competitive private sector actively contributing in the labor force creation as well as in the establishment of a durable growth. The state will progressively henceforth withdraw from the production circle".
Having given up its role of the regulator of a controlled economy, the state is now endowed with the prerogative to sensitize the companies with the new rules and laws of competition. A supporting program to the development of the industrial competitiveness has been elaborated accordingly. The retained priorities mainly concern the support to companies within their process of modernization and investment through a restructuring policy based on qualitative adjustments, partnerships and privatization. Other supporting services such as ( engineering, specific training, research and development, quality control, ..etc.) have also been implemented.
| Partnership Contribution |
The recourse to partnership is considered as highly determining in order to extend the industrial basis and bring thus the companies to reinforce their positions within the local market and mainly within the international market . Speaking of the public enterprises, Mr. Menasra asserts: " The only issue is the recourse to partnerships which in counterpart to their contribution with financial funds, technologies and expertise would acquire important market shares. These public companies shall have a particular consideration through a program of financial restructuring and the reorganization of their structures".
Considered as one of the most important sectors in the national industry, the iron & steel industry is determinedly committed in the process of partnership. This is well illustrated by the complex of Sider El hadjar (east of Algeria).
" After rough negotiations we finally found a partner and signed thus a contract agreement with Ispat International. It is a successful association which brought about lots of investments for the renewal of the production instrument. This partner is expected to increase the quantity and the capacity of the production and find other possibilities to market the production overrun" says Mr Shrider Marar, CEO of Ispat Annaba who believes that the presence of his company in Algeria was motivated by the several opportunities the country offers; first because of the existence of an important local market and then due to its closeness to Tunisia and Morocco. The association Ispat-Sider shall ensure a minimum turnover of 300 million US$ and save in the meantime 12 ,000 jobs. Besides, a 30% production growth has already been reached. Mr Marar notices that his company has got all the necessary support from the local authorities beyond all the advantages offered by the site itself among which the existence of a port and the fact of being close to the European south coast.
Within an associated segment, ENCC is one of the rare equipment manufacturer operating in mechanics and boiler works the products of which are customized and meant for the equipment of the infrastructures and industry. The company cooperates with different sectors such as the building materials, hydraulics and energy. The company, says Mr Karadja, General Manager of ENCC, is looking forward to acquiring new technologies but also to enhance its financial resources through subsidiaries i.e. share the risks ands increase its markets shares. The company will not be at its first experience of partnership since it had already been involved in a partnership contract with Asian companies like JVC, Mitsubishi and CIETO.
Bati-or, is a company operating in the construction field and opted for a collaboration in partnership. " We have talked to many partners in order to agree on a collaboration that would allow us to render our construction systems cost-effective. That's why , we are looking for serious partners so that to make of our existing material capacities profitable" asserts Mr Gana, CEO of Bati-Or. This company is also characterized by its recourse to subcontracting. " The mastery of the yield and deadlines is easily implemented by subcontracting than by the management of an internal staff in the company. This process is directly related to the social charges decrease and to the satisfaction of both the partners and the customers" says Mr Gana who also notices that subcontracting generates lots of indirect job positions.
| Mr Zani, CEO of Ceralg, a Building Company, wishes that this type of personnel management were implemented earlier." We could have had the possibility, in collaboration with the European countries, to relocate some costly activities due to the energy cost and labor force , and then perform and realize that in Algeria. We re-export part of the production and keep the remaining part for our own development". Mr Zani impatiently expects the total privatization of Ceralg. " It is essential for us to go forward and make of this privatization a real success" Mr Zani says. In fact this would enable the company to go even farther in its partnership with Lafarge.
| Mechanical Engineering: A Promising future |
The pharmaceutics sector has been remarkably enhancing its activities in the Algerian industry. Indeed, after four years of the sector liberalization, Algeria succeeded in bringing down the imports expenditure on medicines to nearly 500 million US$ a year. These encouraging figures are mainly due to the restructuring of the public pharmaceutical sector by redefining its missions , notably that of production. The new implemented policy favored the emergence of important public groups which ,on their side, have developed joint ventures with international pharmaceutical companies such as Pfizer, Novo Nordisk, Dar Dawa, Lilly, Rhone Poulenc and Pierre Fabre. The strategy of the local producers targets the generic medicines and the progressive substitution of the widely used products like those treating chronic diseases. There are twenty Algerian private producers, the majority of which is gathered within the same union SAIP ( Algerian Union for The Pharmaceutical Industries) and ten foreign groups operating in the country.
As for the engineering sector, the National Company For Industrial Vehicles (SNVI) is firmly determined to take the track of an ambitious development; notably after the appreciable figures resulting from its restructuring plan and its good growth rates. According to Mr Chahboub, CEO of The SNVI: " through partnerships, the company is willing to attract lots of investments in the country" . This is the case for some activities well illustrated by the contract of association with the German ZF and concerning the manufacturing of gear boxes. Besides; the company has started negotiations with international major car manufacturers like Renault Industrial Vehicles, MAN or even Mercedes. The sector is also orientated towards external markets essentially those of the Arab and the African French-speaking countries. However, the sector of the mechanics in Algeria remains full of promises with a demand expected to grow even more in the coming years in case the economic stimulation policy, previously announced, would be implemented.
| Objective: Exports |
The restructuring policy, leading to the gathering of certain companies according to their basic activity, has already enabled the emergence of GIPEC, national leader in the paper industry. Having a good financial solvency , the company clearly shows its ambitions through its CEO Mr Mustapha Merzouk who asserts: " Our strategy consists of opening our group to possible partners, whether local or foreigners, likely to end up to the total or partial privatization of our subsidiaries" . Mr Merzouk also notices that the only issue for the company to enhance and modernize its production is to collaborate in partnership in order to acquire new markets. Indeed, the company GIPEC makes of exportation one of its priorities in the development of the company. " We presently target the maghreb market and we also realized significant figures in the middle east. We do believe that we will probably have shares in the Asian and European markets" Mr Merzouk added.
The same spirit of competition and economy opening is noticed in the words of Mr Belhadj Mokhtar CEO of Belcol, an Algerian private company operating in the industrial glue and having 60 % of the market shares making thus of Belcol the leader in the sector. " Despite the fact that we are the national leader in the sector, we still look forward to enhancing our know how and widen our experience in the field. Our techniques can still be perfected and we rely on our firm will to go forward as well as on our partners to go beyond our capacities and erase for good our weaknesses. Our partner shall have the know-how and the technology and we provide him with a well trained and efficient labor force and a well rooted reputation in the Algerian market". The objective of Mr Belhadj is to penetrate more markets in order to increase the exports of the company up to 25% of their production which presently represents only 5% of their turnover.
It is agreed that the building materials sector is expected to have a promising future. We noticed the increasing demand rate of cement in the local market. Presently , the yearly consumption of cement is about 8,5 million tons. Five years from now , this consumption will ,in all probability, reach 12 to 13 million tons a year. All the state owned cement plants will be subject to a program of restructuring and privatization within the two coming years ( three calls for tenders have been launched for three of them). This process shall be sustained by the stimulation of new private investments. The environmental issue shall undeniably be taken into consideration.
Stimulated by a new and ambitious generation of managers and committed in the road of an adapted liberalism, the Algerian industry is progressively recovering a new wind and is determinedly worldwide orientated. Moreover, reinforced by its assets such as its proximity to the immense European market and its favorable production costs, the Algerian industry offers attractive investment opportunities to the economic operators. These investors can, not only take advantage of the Algerian wide market, but they will also be supported by a government ready to facilitate their process of investment. In this respect, Mr Menasra says: " There would be no segregation between investors, either nationals or foreigners. The Algerian law is rather clear in this context. The government shall undoubtedly favor any actions related to the implementation and the realization of the said investments" . The former minister also asserts that Algeria is considered as a promising market thanks to its solid industrial basis, a qualified labor force, energy sources and significant business opportunities.
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