From consultant, to equipment supplier to diving instructor, Rene Irani adapts when money dries up. Now he's helping green technology prosper in the UAE.
Head above water
Rene Irani is the prototype of a recession man, a modern-day jack of all trades. When he suffers a setback and one line of business stops paying the bills, he looks for the next. Since Irani arrived in Dubai from Germany in 2005 to scout out opportunities in the sun, the businessman has been forced to react to changing economic cycles, and the 39-year-old Lebanese-German has done so in the most ingenious ways.
Committed to making new jobs work, he is equally ready to pull the rip cord when the money is no longer right. Building on prior experiences and personal passions, be it for diving or the financial and environmental aspects of a greener world, is the secret to his success. One year after "checking out Dubai" he found a small German consulting company that hired him to open an office in Dubai. Irani, who has a degree in business administration, decided to move to Dubai with his wife and three children to advise companies on how to lower their purchasing costs. His clients included water-treatment companies, heavy-equipment rental agencies, companies in the gas and oil sectors and shipbuilders.
But cost-cutting was the last thing on anybody's mind during the heyday of Dubai's construction boom. Instead, everyone was chasing the extra dollar in sales. Mr Irani, who fell in love with the weather, the sea and diving during a two-year stint in the oil and gas industries in Muscat from 1999 to 2000, was determined to prevail. He quickly realised that construction companies were desperate to get their hands on equipment and began thinking about shifting career gears and carving himself a niche finding used construction equipment and making it available to customers on short notice.
"I had been specialising in purchasing for a long time," he says. "There comes a point when you know how to filter the reliable suppliers, who make serious offers you can rely on, from the fishy ones, who merely act as brokers." By the end of 2007, a year and a half after his difficult start as a purchasing consultant with the German company, he had enough contacts to take the plunge. He left the consultancy and set up his own business, buying second-hand equipment, such as high-quality cranes, for impatient Dubai constructors. His new clients were construction companies struggling to meet - at the time very tight - Dubai deadlines. I&K Industries was born.
"At the time it took up to 20 months to deliver a Liebherr or Demag crane, the ones everybody wanted," Irani explains. So he bought used Liebherr cranes from China, where the building boom had come to a halt after the build-up to the Olympic Games. Spain had also entered a slowdown and proved an equally lucrative market. He used cargo ships to get the equipment to his customers. "The price varied from one day to the next, depending on the speed of shipment, the other cargo and the route," he says. "The prices were as unpredictable as haggling over a carpet in a bazaar."
To create his own company he needed an initial Dh300,000 as shared capital to set aside in a bank account. He needed another Dh10,000 to register his company and Dh15,000 for the trade licence. In addition, he pays a passive sponsor, who is not actively involved in the business. Mr Irani preferred to not name his sponsor and keep these costs private. Depending on his workload, Mr Irani uses freelancers, whom he paid a provision to keep his overhead low. These employees handle tasks such as shipping logistics and paperwork. He also partnered up with a Hong Kong business, which serves as his gateway into China.
"We simply share the revenue of the deals," Mr Irani explains. But it did not take long for things to turn sour. In Sept 2008 a "once-in-a lifetime order" worth US$500,000 (Dh1.84 million), in which he had a verbal agreement to sell 15 cement mixers to an Indian company planning to open a cement factory in Oman, was suddenly cancelled. The deal would have marked the high point of his business. In the first half of 2008, Irani had made US$200,000 in commissions. Average contracts tended to earn worth between $5,000 and $15,000 per project. "Back then business was picking up nicely," Mr Irani says.
"Ideally, with those kinds of contracts, I could earn enough to dive the rest of the year," he says about the cancelled deal. "I never imagined it this way. I wanted to save considerable amounts, and after 10 years in Dubai I planned to retire and buy a house in Germany. Now I will pat myself on the back if I return home as I came. Now I must lower my expectations." With more time on his hands as equipment orders stagnated, he spent more time working as a freelance diving instructor at Jumeirah Beach Hotel in Dubai. Passionate about diving since a young age, the sport was one of his reasons for returning to the region in 2006. Although he had dived when he was a youth, he became certified only in 1999 during his time spent working in Oman. "They [Oman] have many types of fish as in the Red Sea, and although the water is not quite as clear, it is by far more pristine and untouched," he said.
Irani instructs on a part-time basis. But the pay, which mostly covers the cost of equipment and serves as pocket money for his family, was a far cry from what he had earned in his previous work. Instructors receive a fixed portion of the cost of the five-day diving course, which costs around Dh2,400. He sometimes takes on private clients, who come to him through word of mouth advertising. He Irani pays the hotel a fee to use its facilities and is free to charge the clients as he sees fit.
But in only a few months the demand for diving lessons started to diminish. Fewer tourists - with less loose change - were visiting Dubai. And things were even worse in his construction-equipment business. Irani's living expenses are steep, and he pays a total of Dh300,000 a month to cover the rent for his home and school and nursery fees. By March of this year, what he first perceived as a "short blip" in machinery orders had left him without a single order - or commission fee - in six months; his equipment supply company had not earned any income since the autumn of 2008.
Things were starting to become dire. Irani and his family sat down and decided they would pack their bags and return to Germany this summer if the company's order book remained empty. Despite not having a job to return to, "life in Germany is just so much cheaper", he says. "There are no private school fees, rent is cheaper and I can get compulsory health care." Irani considers Düsseldorf his home base, since he lived there for many years; he and his wife have relatives near the Germany city. Irani's parents live in Lebanon.
Mr Irani says the adventure of being self-employed in Dubai, "with five mouths to feed", is very different from being sent on an "all inclusive expat package with rent, schools, a company car and moving fees". That was the type of package he had from the middle of 2006 until the end of 2007, when he stopped working for the small German consultancy. But again, his fortunes changed. Not long after the family decided to leave in the summer if things did not pick up, Irani saw new construction equipment orders from Iraq and within the UAE. He once again has reason to be optimistic.
Instead of selling heavy equipment such as bulldozers, cranes and large lorries, which requires large investments few companies are now willing or able to make, Iran is dealing in lighter, less costly equipment. Construction companies setting up military and labour camps in the region, which, of course, require water and sewage infrastructure, are ordering light lorries, water lorries and large-scale pickup lorries with attached working gear such as lifting cranes. At the moment, they are his bread and butter.
Most recently, he has received orders for light lorries for reconstruction camps in Iraq. He hopes the country will be his new frontier. Despite this renewed success, Irani is anything but complacent, and already has his sights on another venture. He is upbeat that the UAE's commitment to environmentally- conscious development will create a healthy market for solar-cell technology and renewable energies.
He was first inspired to work in environmental-sustainable technology when he visited the World Energy Future symposium in Abu Dhabi earlier this year. "There are a lot of, for example, small and medium-sized German companies that have the technology, but not the manpower, local knowledge and visibility to take things a step further," he says. For starters, Irani and his business partner are in talks with a number of German companies to put together a complete solar energy system (including equipment installation and the feeding of the power grid) to private residences, small businesses and urban developments in the Gulf.
His business partner, a lawyer who specialises in helping German companies establish in the UAE, has a background in energy. For now, the new company, named Environgy, is still in the making. But Irani and his partner will go through the motions of setting up another company once the first order comes through. Indeed, his list of money-making possibilities seems never-ending and perhaps just right for a world caught in the doldrums. In the medium term he dreams of running a large network of companies including a law firm, a construction materials retailer, a green/sustainable energy consulting firm and a representative office for German hi-tech energy companies.
"And with all that I could finance my own diving business," he says with a smile. firstname.lastname@example.org