JEDDAH, 27 March 2007 — Contrary to popular belief, if young Saudis will work in factories and get their hands dirty, the Kingdom can produce a world-class product — and it does.

The Middle East Battery Company (MEBCO) — a joint venture between General Motors and Johnson Controls on the one hand and a Saudi consortium on the other — is an example of just how productive the youth can be. So productive in fact that 39 percent of passenger vehicle batteries in the Gulf region are made in this modest industrial unit just north of Dammam.

“It made perfect sense for several reasons to locate here,” John Grant, marketing manager for MEBCO, said. “One was that AC Delco needed a supplier in the region because of the increasing demand and the transport cost of importing batteries.”

The Dammam unit produced 2.232 million batteries in 2006 and has set an achievable target of 2.5 million this year. Seen from another perspective, local production saves the cost of importing 31,250 tons of batteries. Other reasons for choosing Dammam were the availability of labor, access to local knowledge and the unique physical conditions. The last, said Muneef Al-Dawood, sales engineer and warranty manager, had driven the plant to employ a very sophisticated design of battery from their technology partner Johnson Controls and a unique production process.

“Extreme heat and heavy vibration are battery killers,” he explained. “Batteries literally fall apart internally. We developed engineering strategies that overcame these problems.” Batteries that lasted two years here would, he said, double or triple their life in the less harsh conditions of Europe or the US. The proof of the quality is that the returns under warranty are “well under” the global average of two percent, despite the extreme conditions. “We have great experience of the conditions and at this point, (we supply) 39 percent of the regional market,” he said, “and 80 percent of the batteries go into Asian cars.”

Fifty one percent of the labor force are Saudis. Apart from a few senior managers, the vast majority, and almost exclusively young, work in the production section. “There was a concerted drive to achieve that,” Grant said, “but we wanted Saudi employees in from the very beginning. The majority of our management team and factory work force are Saudis.”

The secret of attracting and keeping young workers is in the combination of decent working conditions, good training, a real prospect of promotion and good pay structure. “We have high paying jobs in the Saudi labor force,” Grant said. “They are compensated well and they work well. The production metrics and the fact that most of the staff have been here since we started prove that.”

Battery manufacture is by nature not a clinically clean job. Acids, heavy metals and fumes are part of the process.

Al-Dawood though pointed out that the environment in the plant is extremely safe and the staff were looked after. “The whole plant is air conditioned, the staff have regular medical checkups and there is a real and visible promotion structure. They have real incentives to stay,” he said.

Most of the labor force enter from high school or after two years at college. MEBCO’s plan is to have all team leaders as Saudis. New entrants start on the factory floor and rotate through the various tasks while attending in-house training and classroom instruction. “We bring in English language, technical and management instructors,” he said. “The whole process is in-house. It would probably be easier to hire staff from outside, but we believe that as part of the community here, we gain a great deal in local knowledge and goodwill and it demonstrates a commitment to the country.”

Senior level engineers are sent to train overseas. Recently four were sent for three years on the company payroll.

Such faith is placed in the reliability of labor that MEBCO works on a “Just-In-Time” delivery management. Batteries have a limited charge life — perhaps a year — after delivery. Delivering them to the customer as early as possible from the time of sale to the final user reduces the need to recharge the units by the dealers. “No warehouse-stacked high with inventory here,” said Grant, indicating a few palletized orders ready for shipment that day.

One of the secrets of continuing success lies in the battery technology. A genuine maintenance-free unit — fully sealed for life — uses calcium-to-calcium technology for the anodes and cathodes and a secret structure to the intervening plates. The upward sales curve proves it.

Not only does the staff benefit from MEBCO’s policy of attention to detail, so does the environment. Before disposal, acids and effluents are neutralized in three stages: subjected to ISO 14000, environmental management standards that help organizations minimize their operations’ negative environmental affects, comply with applicable laws, regulations, and other environmental requirements and continually improve. “The clincher,” Grant said, “Is that we use no virgin lead. Everything is recycled.”

By adopting a policy of having old batteries collected and sent to their Riyadh smelter, Al-Dawood eliminated at a stroke the problem of having their batteries collected by itinerant scrap dealers, the acid dumped in the desert and polluting the water table and the plastic cases left to rot over hundreds of years.

Pointing at a rectangular snake of lead being extruded from the factory hot lead machine, he grinned and said “that’s been here before and will be back some day.”