BIG MACHINES

Iran 2017 | CONSTRUCTION & REAL ESTATE | INTERVIEW

TBY talks to Kiarash Ahmadpour, CEO of Heavy Equipment Production Company (HEPCO), on the history and development of the firm and expectations for the Iranian economy.

 Kiarash Ahmadpour
BIOGRAPHY
Kiarash Ahmadpour finished his master’s degree in business administration. His family started Hydro Atlas Company, also active in the heavy equipment industry, almost 45 years ago. Recently, Ahmadpour purchased HEPCO and took over management.

How do you evaluate HEPCO's evolution, including its acquisition by Hydro Atlas?

My background lies in Hydro Atlas, and with this company I recently acquired HEPCO. About 45 years ago, Hydro Atlas was the exclusive agent for Atlas Copco from Sweden, and at the same time HEPCO was the Liebherr agent. Around 10 years ago, the government adopted policies to transfer companies to the private sector. Among these companies was HEPCO, which now is 61% privately held with the rest belonging to various investors on the stock market. At the moment, HEPCO is not in a good position. Some years ago the sanctions ended long-lasting partnerships with companies such as Liebherr, Komatsu, and Volvo. We decided that we could not stop our business and we would start to produce by ourselves. We started cooperating with some Chinese companies, but we found out their quality was not sufficient so we stopped and focused on our own capacities. Today we produce machinery such as excavators, motor graders, and rollers under our own name, and we have a plan for producing HEPCO-branded dozers. Now that sanctions have been lifted, we are also interested to resume some partnerships. We asked Liebherr and Komatsu if they wanted to come back and reestablish themselves in Iran through HEPCO. We have a short- and a long-term strategy. For this year, we have a plan to produce about 500 units of new machinery, and we are also going to take one deal to produce about 3,000 units for the next two years. We have around 2,000 employees working at HEPCO. Around 80% of HEPCO consists of producing machinery, mostly mining and construction machinery. Another 20% consists of some other project lines, such as complex high-tech steel structures that can be used by the oil and gas industry and others. We have contracts with European companies such as Siemens and Liebherr in these project lines. When we go to produce the heavy machinery, we make a product that will stay in production for several years, but we acknowledge the need to stay active and innovative at the same time. Therefore, we have allocated 20% of the company's resources and capacity to R&D. In the future, I think Hydro Atlas will concentrate on the cranes business, and HEPCO will concentrate on the construction and port business.

What is your long-term outlook for economic development in Iran?

We believe the perception of Iran has improved and will continue to do so. Recently, Iran signed a large contract with Total, and they came because they found out that it is safe in Iran and can trust us. It is going to get better day by day, but the entire world economy is in a bad situation, which started in the US and is coming through Europe to the Middle East. In the next 10 years, the price of oil will continue to fall, and in the future, gas will become more important. The largest holder of gas reserves is Russia, followed by Iran. This is something investors are thinking about.

How is the agriculture business going?

In the agriculture business, we are doing better than in construction. We now work with good companies such as New Holland, and we have a contract to produce 1,000 units next year. We are going to start a new line of machinery for port solutions, and we are in the process of signing a contract for this. We have some special machines and robots that are unique in the Middle East, and the quality of the products we produce is of a quality comparable to international standards

Are you looking to grow your exports to increase your international footprint?

One of the conditions that I asked from the big companies that want to get back to Iran and partner with HEPCO, is to get the permission to export to other countries. We have other brands in HEPCO, and these days, our grader is number one in the Middle East as it has the best quality and price. In our business, brands tend to have a limited portfolio of products. We want to produce the whole package in the future. As part of our strategy, our exports will develop phase by phase. We will start with the neighboring countries like Iraq and Pakistan. In the next four years, we will export to our neighbors, and in the following years, we will think about exporting to other countries.