Helwan Company for Metallic Appliances (Military Factory 360) seeks to double the size of its production of household appliances during 2017, according to Darwish Mustafa El-Gendy, chairperson of the company.
El-Gendy stressed, in an exclusive interview with Daily News Egypt, that military production companies do not crowd the private sector, but rather aim at offering high-quality products and low prices in order to ease the burdens on citizens.
He revealed that the company produces gas cookers with 100% local components, and aims to apply the same policies on the rest of its products in cooperation with other military production factories and private companies in order to stop importing any production inputs from abroad to ease the pressure on foreign currency.
According to Darwish, the profit margin of the company’s products does not exceed 8%. The company has also taken harsh technical measures in order to avoid being affected by the Egyptian pound’s flotation.
Darwish is a civil engineer, graduated from the faculty on engineering at Cairo University. The start of his work in military production began in a factory to produce and repair armoured vehicles. He received a number of training sessions abroad, after which he returned as the chairperson of Helwan Company.
First, we would like to get introduced to the origin of the company and its activities.
Helwan Company for Metallic Appliances is one of the companies affiliated to the National Corporation for Military Production. It was established in 1962, and is specialised in engineering industries with about 1,300 employees.
The beginning of military production factories’ establishment was in 1954. This trend was quickly pushed forward by the revolution of July 1952. The phase of the 1950s and 1960s witnessed large nourishment of these factories, whether in the production of military or civilian products.
Military production companies support the industry in general, and military industry in particular, because this is the main aim of their establishment.
What are the company’s products?
Military Factory 360 has two types of activities. The first is related to military products; the second is related to the production and maintenance of durable home appliances, such as gas cookers, gas water heaters, refrigerators, air conditioners, and automatic washing machines.
The gas water heater production line of 10 litres and 5 litres is the oldest production line in the company. These heaters are produced with a licence of a German company with the highest quality standards.
The company also produces cookers of different types, and has begun to produce the three-flame furnace, and still produces it given the demand for it. The company also manufactures the four-flame, five-flame, and six-flame furnaces, besides the flat cooker.
We also manufacture air conditioners that are environmentally friendly with 1.5-, 2.5-, and 3-hp capacity, under the name Archos. They are produced in cooperation with Chinese Galanz Company.
The company also produces Helwan 360 No-frost deep freezers with seven vertical drawers, and Helwan Refrigerator 360 of 16 feet.
The air conditioners, full-automatic washing machines, and refrigerators are in fact the latest lines in the companies, as the air conditioners line was established in 2011 with a production capacity of 40,000 units a year. The washing machines line was established in 2013 with 20,000 machines per year, and the refrigerators line was also established in 2013 with a production capacity of 90,000 units a year.
The refrigerators production line is characterised by being a manufacturing and assembly line at once, in which materials are formed using special devices until the refrigerator reaches its final form. Moreover, there is an inspection room with the latest global technology in the field of refrigerators’ security and testing.
What are the new products aimed to be offered by the company over the upcoming period?
We are currently looking into producing mini-bar fridges and microwaves in 2017. We also aim to produce display refrigerators and water dispensers over the upcoming period.
It is important to note that these new products will be on the same production lines we currently have, without the need to inject new investments.
What is the company’s plan in the new year?
The company aims to double its production by 100% in 2017. These are the orders of the Minister of Military Production. We are doing the best we can to achieve this aim through the optimum utilisation of the capacities we already have without increasing costs.
Does the company depend on domestic or imported components in its production?
The amount of domestic components in the company’s products varies depending on the product. For example, cookers depend 100% on domestic components.
We aim to increase the rate of domestic components in the production of water heaters to 98% by the end of this year. The same thing goes for the rest of our products.
The company had been importing some raw materials to produce water heaters, such as copper-free oxygen, but after the currency crisis, we began to cooperate with sister factories, including 63 military factories to produce these components in order to prevent the need for import.
In terms of deep freezers, the company used to import their components, but now we are targeting that all their components will be 100% locally manufactures by the end of 2017.
The policy of military production companies aims to rely on its own efforts to find alternatives to what is being imported, both in cooperation between sister companies, or in cooperation with private sector companies.
Are military production companies open to deal with the private sector?
Yes, we always welcome cooperation with the private sector, as we serve the same goal which is to promote the national industry. The private sector is a national sector and we must support it.
Instead of importing some of our production components, it is better to get them from the private sector, especially if the products are of high quality and at suitable prices.
Some criticise the army’s involvement in the economy and commodities production that competes with the private sector. How do you respond to that?
We must reaffirm that the aim of the establishment of military production plants is the production of military equipment, but why not work on the production of high quality, efficient, and low-price products to help citizens and reduce the burden of living?
What is the problem of having a hand that builds and supports the national industry?
We do not compete with the private sector at all, but let us agree that the presence of more than one product or company in the market is in favour of the production process and in favour of the consumer.
I believe that the military production companies must increase their production size and quality during the coming period to maintain the balance of the market and goods prices, which is what we are already working on at the moment.
We do not compete with the private sector, but we are integrating to serve our homeland and the citizen at the end. Companies produce by doubling the profit margin; however, the products’ quality cannot be compared to that of military products.
Some people believe that the company’s product prices are not much lower compared to imported or private sector products.
I want to explain that the product pricing policy inside military production companies is one of the most important pillars monitored by the minister of military production himself, because the minister and senior leadership care about easing the burdens on citizens.
I emphasise that the profit margin obtained by the company from its civilian products ranges between 5% and a maximum of 8%, and we are not allowed to get more than that.
Citizens believe in the armed forces and the armed forces work hard to live up to the responsibility. We are always working on reducing the cost of our production to the maximum extent possible, without affecting the quality of the product.
Ironically, the decline in profit margins of the company’s production hinders the expansion of products’ marketing process. The major shopping centres insist on obtaining ratios of up to 20% of the product price or profit margin to display the product, which is not achievable. Our profit margin is very limited; therefore, we rely on our showrooms or our presence within government bodies and syndicates to market our products.
How did the Egyptian pound’s flotation affect the company?
The decision has definitely affected our company—in the end, we are an economic entity managed by self-efforts and we do not obtain any support from any parties. We faced a problem initially in securing foreign currency; however, our prior import agreements on certain production components eased the crisis.
We depend on local production inputs in most of our products, and we are working to reduce spoilage and waste on the production lines, which reduced the impact of the crisis on the size of our production and commodity prices as well.