The Life: Patrick Decker, president of Tyco Flow Control, discusses the strategy behind Tyco International's $300 million investment with a UAE based company.
Tyco opens release valve for growth
Tyco International recently plonked down US$300 million (Dh1.1 billion) for a 75 per cent equity stake in KEF Holdings, a specialty valve maker based in the UAE. Patrick Decker, the president of Tyco Flow Control, explains how the global manufacturer of valves for the oil and gas, construction and pharmaceutical industries plans to expand into this region.
Why did you choose to invest in the UAE?
We are the leader globally in all the industries that we serve. In order to be a global leader you have to be in those markets where the growth is occurring. This is the fastest-growing region for us in terms of revenue growth around the world. It's clear that we were [under-represented] in this part of the world and over the last few years we have been working to address that. This opportunity was unique in the way it was presented.
In what way was it unique?
It was prompted by Faizal and KEF Holdings realising that they needed a strategic partner to be able help them support their plan going forward. (Faizal Kottikollon is the founder and chief executive of KEF Holdings.)
How will a local factory help your growth strategy?
These are highly technical engineering products that we're talking about so customers need to come in and inspect the quality of the casting and inspect the quality of the valve and testing along the way. Another advantage is the speed to market to take their specific design requirements and turn that into casting and valve. The lead times are tremendously shorter when you've got a local factory close to a customer. The quality of the relationship with the customer is also better.
What other plans do you have for the region?
Each one of our businesses in Tyco has a view towards, in some cases actually providing, local manufacturing, which we're doing in the valve side now with this acquisition, but also actually building stronger service capability here in the region. With the installed base of products that our customers have it's critically important to them that they have service coming in from the original manufacturer, so we are going to continue to make investments in that. We also realise that we cannot necessarily serve the entire region out of the UAE. We plan to continue making investments elsewhere in the region.
So will you be taking the manufacturing model from the UAE and focus on growth elsewhere in the Middle East?
Yes, we can't discuss specifics yet of what our plans are because we want to make sure that we partner with our customers in other parts of the region to make sure that what we put in place is what they need; otherwise it's a wasted opportunity. But we certainly are committed to extending into Saudi Arabia with local manufacturing, which would have a foundry, a valve factory and a service footprint.
* Gillian Duncan