During 2008 we will add a new service to our portfolio. In our new Jubail facility we start assembly for some of our main principals. This will result in three main advantages.
The first is cost. As local labour rates are considerably lower than in the USA or Europe, the labour intensive process of assembly is more cost effective in KSA. On top of that, where components are sources from Asia, shipping cost can be reduced by shipping these parts directly to KSA. In addition, some of the parts can nowadays be sourced from within KSA.
The second advantage is local content. This gives us a competitive advantage with major customers like Saudi Aramco, who actively stimulate economic growth in KSA. This advantage can be expressed in an allowed higher margin and long term supply contracts.
And thirdly speed. Under current market conditions many suppliers have reached their capacity limits. By shifting part of the manufacturing process to bfim additional capacity is created and deliveries can be accelerated.
In the longer term we intend to build on the assembly experience to offer Repair & Maintenance services for the products that we have supplied.
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