cardboard factory in Jeddah, Saudi Arabia. The factory will be able to produce 50 tons of cardboard per month. The plant requires 10,000 m2 of land, which has already been acquired in an industrial area.

Finances

The budget for the plant is $700,000 U.S., with $400,000US going towards the equipment. The equipment needed for the project will be:

layer corrugated cardboard production line

Gluing machine

Flexo printing machine

Stitching machine

Die cutting machine

Box making machine

The remaining funds will be used as follows:

Working Capital ($100,000)

Raw materials Inventory ($100,000)

Building upgrades and leasehold improvements ($100,000)

The Market

Saudi Arabia is a growing economy and the demand for materials such as corrugated boxes is high, to support the nation’s growing manufacturing base. Much of the industrial capacity of the country is situated along the Red Sea coast, especially the cities of Jeddah and Mecca, home to multiple economic development initiatives such as the King Abdullah Economic City (Saudi Embassy, 2013). The combined population of the area is close to 7 million people (just under 1/4 of the country’s population). However, Jeddah is also 3-4 hours from the industrial area of Yanbu. Thus, our factory will serve two of the four largest industrial markets in the country, the second-largest city (Jeddah) and the country’s largest and most important port. The potential market therefore is substantial, much more than our proposed initial capacity.

Organizational Structure

The organization will be based on a traditional hierarchical structure, with the CEO and President at the head of the company. There will be four divisions, based on functions. These are operations, human resources, finance and marketing. Each division will have a Vice President, reporting back to the CEO. There will be sub-managers for each area of the different departments.

Human Resources

The plant is expected to have a high level of automation. The requirement for the entire plant including office staff is expected to be 50-60 workers in total. The company will follow efforts to hire Saudis, especially for managerial roles, but is willing to hire foreign workers to contain costs and to fill requirements for manual labor positions. All workers must be fluent in Arabic and all managers must also have a working knowledge of English.

Marketing

The location of the factory is close to industrial areas in Jeddah and along the Red Sea coast, and these areas will be the main target market initially. The market size is significantly more than the expected output of the factory. Jeddah is a historic trade centre and a major port, and so there are also opportunities to export our cardboard to other, nearby countries like Egypt, Jordan, Ethiopia, through the Suez Canal to the Mediterranean markets or across the Arabian Peninsula to Riyadh and the Gulf States. Marketing is primarily going to be done on the basis of strong relationships of the management team with other manufacturing and trading concerns in the region. The company has set a goal to be at 80% capacity in the first year, thereby providing some funding for future expansion of capacity.

Conclusions

The size of the market is sufficient that this project has a high likelihood of success. Equipment for cardboard production is relatively easy and inexpensive to source, and to ship to Jeddah. Furthermore, there is ample labor supply in the area. The region has a large market for cardboard and is a strong trading centre as well, which provides even more opportunity for market growth. It is likely that we can meet our market objectives for the first year, and probably our financial ones as well.

References

Saudi Embassy. (2013). Industrial cities. Embassy of the Kingdom of Saudi Arabia to Washington, DC. Retrieved February 25, 2014 from http://www.saudiembassy.net/about/country-information/economy_global_trade/industrial_cities.aspx