From Dubai to the world: OSE targets global expansion
Aluminium multiport extrusion tubes manufactured by OSE Industries in the UAE are finding their way into the air conditioning systems of global automotive brands. Magdy Samoul, CEO, OSE Industries, speaks to PMV Middle East, about new export markets and the company’s plans to expand its production capacity in Dubai.
UAE-based aluminium extrusion company OSE Industries is gearing up for global expansion in the automotive parts market. Currently contributing 65% of OSE’s business, its automotive customer base includes tier one companies worldwide supplying condensers to the top global automotive original equipment manufacturers (OEMs).
By the end of 2018, OSE’s plans to increase the production capacity of its 10,000m2 plant in Dubai Industrial Park (DIP) by 5,000MT from its current annual production capacity of 10,000MT.
Driving this expansion is growing recognition of OSE’s core competency, the manufacturing of aluminium multiport extrusion (MPE) tubes for constructing condenser coils used in air-conditioners and heat exchangers in automotive and HVAC equipment.
Another recent achievement has given the company impetus to explore new markets. OSE Industries has become the first aluminium extrusion company in the MENA region to obtain the International Automotive Task Force (IATF) 16949:2016 certification by TUV Rheinland, Germany. One of the automotive industry's most widely used international standards for quality management, the IATF 16949:2016 is a mandatory certification in the global automotive supply chain.
OSE Industries’ aluminium extrusion plant in Dubai Industrial Park.
According to Magdy Samoul, OSE Industries is now in in a stronger position to expand its business globally in the automotive sector. Two years ago, OSE started supplying to the European market, and since 2017, the company started catering to the North American market.
“Achieving the IATF 16949:2016 certification is an acknowledgement of our expertise in manufacturing aluminium MPE tubes and profiles for the automotive sector. Currently, our MPE tubes are used by leading vehicle brands worldwide through tier 1 automotive companies. We are also qualified to supply directly to OEMs that make condensers themselves. To cater to increase in demand, we are looking to add another production line to increase the capacity of our plant in Dubai,” says Samoul.
For a manufacturer of this size and global ambition, OSE is a young company which has managed to compete with top players in the automotive sector within a span of five years. Established in 2012, OSE started commercial operations in 2014 after finishing construction of its plant in Dubai. By the end of 2014, the company started producing initial samples of its aluminium MPE tubes. Although ready to start full production then, it took a while before OSE acquired its automotive customers.
“It was a big challenge for us to start supplying MPE tubes from Dubai to the world. People were curious why we would establish this business in the UAE when we didn’t have customers in this region. Sales were slow in the beginning as we knocked on the doors of all leading automotive manufacturers. As a new company, we were fully aware that it would take a couple of years to get approved for automotive OEMs. We were willing to take the risk because we believed in the market opportunity and the quality of our products,” says Samoul.
OSE had to depend on its biggest strengths, among which were the close availability of raw materials and access to Dubai’s logistics infrastructure. Within a 15-minute drive from OSE’s plant is the Jebel Ali site of Emirates Global Aluminium (EGA), one of the top five aluminium producers in the world. EGA is the sole aluminium supplier to OSE, which procures the raw material based on its quarterly forecasts. Once the aluminium billets, mainly the 1xxx and 3xxx series alloys, are delivered to the plant, the first step of extrusion involves cleaning and brushing the billets, followed by heating them close to 480°C. Then, they are pressed through special dies and passed through zinc arc spray coating. Subsequently, the material is auto winded into coils and transferred for precise cutting according to customer preferences. Finally, they are packed and dispatched to customers worldwide.
“The advantages of having easy access to raw materials and a world-class production facility enabled us to produce MPE tubes of the highest quality, which helped us to obtain approvals without any delay from global OEMs, first in Europe and later in the US,” says Samoul.
MPE tubes arranged in coils and then cut according to customer preferences.
OSE’s first customers didn’t come from the automotive industry; they were from the air-conditioning industry in India and the aftermarket industry in Egypt. The company began to supply MPE tubes to several industries in the Middle East and South Asia from 2015 onwards before finding acceptance among OEMs in Europe and North America.
According to Samoul, North America, followed by India, South East Asia and Middle East present the biggest growth opportunities for OSE Industries.
“North America, particularly, is an attractive market for us because local production is not sufficient to meet demand and we have the product quality and tariff advantages over other global suppliers. The same is true for Europe where we are able to offer highly competitive prices. However, Asian countries have high import tariffs which makes it relatively difficult for us compete with global suppliers,” he says.
An emerging market for OSE is electric vehicles for their battery cooling tubes. Another growth opportunity is in commercial vehicles such as mobile refrigeration vans in which copper tubes are being replaced with aluminium.
“We are one of the main suppliers to one of the world’s leading electric car manufacturer brand for their battery cooling tubes. For such applications, the MPE tubes have different sizes and geometries as compared to those used in condensers,” says Samoul.
Samoul estimates that OSE’s MPE tubes will find increasing demand in HVAC, refrigeration, and various engineering and industrial applications as copper is replaced with aluminium due to its superior properties.
“The global demand for MPE tubes is about 250,000–300,000 tonnes a year. The automotive industry took the lead and made the transition from copper to aluminium during the past two decades. We will see a similar trend in other industries, particularly HVAC. Aluminium extrusion tubes provide safer, higher heat transfer efficiencies, less maintenance and lower fuel consumption,” says Samoul.
Samoul points out that the company’s entry into new markets is setting the stage for geographic expansion in the near future. The company’s five year plan includes expansion of its manufacturing facilities into Asia and North America.
“Manufacturing of MPE tubes will continue to be core business. Having built our foundations in European and North American markets among the biggest tier one suppliers, we have the confidence to make a bigger impact in global markets with a direct presence,” says Samoul.
Condenser coils with aluminium multiport extrusion (MPE) tubes.