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THE EMIRATES
United Planet Enters UAE Market
The Syrian crises impacted not only on the displacement of large numbers of people from Syria to neighbouring countries but also pushed people from the most affected countries to spill over to other nations of the region. Jordan, which borders Syria, adopted open- arm policy to the fleeing Syrians and now hosts around 1 million refugees, putting a lot of pressure on the economy of the small country. “The economic situation is very bad in Jordan these days due to the influx of large number of Syrian refugees. It is now a crisis situation for a small country like Jordan and it is forcing us to close down our retreading plant in Amman and shift to the UAE,” said a concerned Eng Riyadh Elshqeirat of United Planet Tyres LLC. The new entrant in the UAE market had started operations about a week prior to our visit and is located around in the outskirts of Dubai in the Ras Alkor Industrial area.
External pressures on Jordan’s economy have intensified since 2011 and have created a fiscal crisis and a quick slowdown in growth and employment due to effect of the spill over of regional tensions on tourism and investment, the limited access to natural gas resources for electricity generation following the interruption
in the flow of gas from Egypt, in addition to the flow of 1 million Syrian refugees in Jordanian cities. “The situation is further compounded by the virtual halt of movement of goods through Syria to Jordan’s major export markets in Europe,” Elshqeirat explained.
Jordan’s fiscal situation is worsened by the increasing economic and social cost of hosting Syrian refugees in Jordanian cities. The influx of Syrian refugees has increased the pressure on existing infrastructure and public service provision and has worsened already stretched public finances.“The influx is also having an impact on Jordanians working in the labour market, both in terms of competition for jobs and downward pressure on wages, thus creating social tensions in areas that are facing high unemployment and difficult economic conditions. Now the locals hardly have cash or fluid money forcing us to flee from our own country,” he stated. Overall, the conflict continues to pose significant downside risks to growth in Jordan.
United Planet has two Elgi chambers of 11 and 8 tyres respectively. “The production in our Jordan plant was barely 20-30 tyres per day, but we are picking up here slowly as very few
people or fleet owners know about our presence. Our plan is to make 50 tyres a day soon,” said Elshqeirat. The Jordanian charges a high 1,200 AED for retreading a 385 tyre size but finds competition tough in the UAE as companies are often charging less than half of the Jordan price. “We are charging AED 800 as promotion for the same size but finds that competitors are charging even less than AED 600,” stated Elshqeirat. The firm uses Goodway’s Supercool brand in the UAE market. Jordan has around 18 retreading plants with United Planets starteing retreading in Jordan around two decades ago in 1993.
Ironically, the Jordanian retreading industry is also facing a challenge for its survival from the negative policies of its own government. “How come it is possible to survive
in a country that
imposes only 4 per
cent sales tax on
new tyres but 16 per
cent on
retreads?”demanded
Elshqeirat.
Therefore, in the
worsening economic
scenario in Jordan,
industry may not
have a promising
future. Companies are closing their operations and looking for better investment avenues elsewhere, preferably out of the country. Although the new company finds it hard to move in the already highly competitive conditions in the UAE, Elshqeirat still finds that there are opportunities to grow. “The UAE is a big market and there is scope for everyone to grow,” he says. The company has retreaded 110 tyres in the first ten days since starting operation, which it sees as a satisfying beginning. “We are targeting 1,000 tyres per month production within the next six months,” stressed Elshqeirat.
Eng Riyadh Elshqeirat of United Planet Tyres LLC