Interview
Dated: 07-02-2017

“Companies in the Middle East have seen the necessity to replace manpower with machines with a more rapid pace."

Preben Laustsen, Managing Director, Hako Group East Asia Ltd., has been in the cleaning industry for over two decades now, out of which he has spent 15 years in Thailand. Handling a global company like Hako Group for the East Asia and Middle East region brings its own set of experiences and challenges. Laustsen speaks about the cleaning industry in general and Hako Group’s operations in the Middle East with Shanti Petiwala.

Tell us about Hako’s presence in the GCC region and UAE specifically.

Hako’s starting point in the Middle East was in the UAE some 20 plus years ago when we partnered with a local, strong positioned company to market our products. Then, with the internationalization of Hako Group, we increased our focus and presence in the region to also include other countries like Bahrain, Qatar, KSA, Oman. We are also back in Iran and new in Iraq and have plans to set up a network in Jordan very soon.

We have an office in the Middle East, and we plan to add continuously to our resources going forward to help oversee the region’s development. Last year was overall a difficult one in the region because of the dip in the economy, but we see positive signs again now and are confident that it will start picking up from the second half of this year.

What kind of fleet do you have here, and are any of your products customised specifically for the Middle East?

The Hako Group has three main brands under it – Hako, Minuteman and PowerBoss - each representing different strengths. While the Minuteman brand offers a great value line with commercial, light equipment ideal for cleaning contractors, hotels, commercial applications; PowerBoss has rugged, heavy-duty, industrial engine machines as its core strength; and then there is Hako – our flagship brand – with a full-fledged product portfolio of cost-in-use, eco-friendly, hi-tech engineered products. One of the core product strengths in this range is the outdoor cleaning Citymaster Range. This is already a best-selling range and is at the top of the market. As a result of the varying product portfolios, we see it beneficial for the market,the end customers and the business to have different partners for each brand to allow them a more focused selling proposition and professional follow-up service.

Given the Middle East’s some times extreme climate, we have had to customise our Citymaster range to specifically suit the climate conditions. As a result, we need products that can withstand very high C degrees, sand stormy conditions, different quality fuel supply options. Hence, we have in general increased air-conditioning, cooling, water supply etc. capacities on equipment being sold in the ME region. Plus, we have had to ensure that the equipment fits in better with the local fuel quality supply options of the region.

Tell us more about your distributor channel and marketing activities in the GCC

We believe that it is important for us to have strong, local partners in every country where we are present. And we prefer to continue to expand like this with additional resources for support and sales. Example, we have been associated with Viking Gulf in the UAE since more than 20 years now and are very proud to have such a strong partner in the country. Thanks to our successful long-term relationship, we understand our common goals very well, and what we want to accomplish mutually in terms of branding and service. In 2012, we reestablished ourselves in KSA, Bahrain and Qatar with a very strong partnership together with Reza Hygiene Group. As our partner, they’ve built a solid business in the equipment, supply, service and total value of floor cleaning, which has fitted very naturally into their already strong business concept. We also have strong and long partnerships with Al Mana for our Minuteman products and Shaiba and Hatcon for our PowerBoss branded equipment in KSA.

We participate together with them in exhibitions, create marketing materials like flyers, brochures, and also invite key clients and prospects to end-user seminars with specific targeted presentations, etc.

One of the latest trends currently is robotics. What are Hako’s initiatives in this sector? Any new products in the pipeline?

Like several of our industry counterparts, we, too, are working on robotics and on being able to have equipment that doesn’t require manpower. However, this is not an easy task to achieve because cleaning operations still require labour in functions other than the actual floor cleaning time. While every company’s goal is to come up with a winning solution, we see that it may take a while to get to something that truly ticks all the boxes. One of the biggest considerations would be to manage the cost of the equipment against the cost of the labour in the step by step automation process. I believe that it may still be a while till we get to the ideal robotics cleaning equipment solution.

The region will however see new developments from Hako already in 2017. We will be introducing news within both indoor and outdoor cleaning machines; our brand new Citymaster 2200 has already been sold to a key client in the UAE, thus here we are again, together with our strong partner Viking Gulf - again first with brand new technology in this category of professional outdoor equipment.

You have been in the cleaning industry for over 2 decades now, half of which has been spent at Hako. What is your opinion of how the industries in Asia and the Middle East differ?

Since 2005, the global industry has been mechanising its cleaning operations increasingly. The side benefits of this include more environment-friendly solutions and effective performance. But the clear main driver in the cleaning business is cost.

I’ve been based in Asia for 18 years now, and the actual cleaners here are not different from those in the Middle East in terms of their nationalities. As a result, when I took over the Middle East Operations for Hako Group, it was rather straightforward for me to understand the market and the people working in it. Both regions have clear manpower-oriented cleaning markets. However, the Middle East has more rapidly been mechanizing its cleaning applications. Not only is manpower more expensive, local manpower is almost negligible and the hassle of visas and accommodation also exists. As a result, companies here have seen the necessity to replace manpower with machines with a more rapid pace than what we see in some Asian countries.

What is your opinion of the current economy? How has 2017 started off for the market?

The last three-four years have been quite successful for us as a group in terms of our business growth; not every company in the industry has seen this sort of growth. Last year, the business environment in the Middle East was difficult due to the low oil prices, and we foresee the first half of 2017 to be just as difficult. But, we believe that we will see some light at the end of the tunnel in the middle of this year.

What are your strategies to stay ahead of companies with competing products in the market?

Our biggest strength is that we do not compromise on our heritage and quality. All machines from Hako Group are engineered and designed in Germany (Hako) or the USA (Minuteman and PowerBoss). While several of our competitors have set up manufacturing facilities in more low-cost countries, we have chosen to elevate ourselves through excellent products and by taking into consideration the environment. We still remain competitive on our prices – I’m not saying that we are the lowest-priced, but we do offer maximum value when you look at the total cost of ownership and the life span of our equipment. Historically, we are the leaders in performance with best cost-in-use, life span and quality, and our partners are equally capable of selling our entire value proposition very well.

Where do you see the industry in the next 5 years? And what are your plans for Hako Group East Asia Ltd.

Cleaning is an interesting business – in general it doesn’t matter too much whether there is an economic slowdown, crisis or a blooming economic outlook – cleaning still has to be done regularly. The only difference in a crisis is that the supply and new and renewal purchases can be somewhat delayed. But work must go on. I foresee the next 5 years as being continued stable with solid growth in both Middle East and Asia markets.