More than Lucky

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Lucky Group has drawn upon much more than luck to spark its growing presence in the international recycling industry.

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September 13, 2011

The company started by the Shaban family may go by the name Lucky Group, but the Shabans have left little to fortune as they have built their Dubai-based recycling company.

In a journey that has involved migrations to several different countries and knowledge passed down to a second generation, the Shaban family points to hard work and ethical behavior as the cornerstones of the business they have built.

As of mid-2011, Lucky Group consists of more than 300 employees. It operates a network of recycling facilities, a secondary aluminum alloy smelting plant in the Middle East, associated trading offices in Toronto and a liaison office in Shanghai. 

Getting Started

The first leg in the journey that is the Lucky Group story starts in the early 1970s, when as a young man Dilawar Shaban moved to Dubai in the United Arab Emirates.

Dilawar tried his hand at several entrepreneurial ventures, including textile recycling and finding markets for foodstuff, before his foray into scrap metal proved to be the business idea with staying power. Dilawar was soon joined by his younger brother Iqbal, and together they created the foundation for Lucky Group in 1973.

As the business grew, there was soon enough activity for their brothers Rafique, Raza and Saleem to come on board also. Throughout the past several decades, the five brothers, together with their sons and daughters, have transformed the business into a collection of companies known as Lucky Group.

The company now has recycling facilities in Dubai and Qatar and a secondary aluminum alloy smelting plant in Jebel Ali, United Arab Emirates, which manufactures secondary and semi-primary aluminum alloy ingots.

The Shaban family migration also has included journeys to Canada. From an office in Richmond Hill, Ontario, Lucky Group's associate company, Fortune Metals Inc., operates as a scrap trading firm headed by Saleem.

Dilawar serves as honorary chairman of the overall Lucky Group, while Iqbal, based in Dubai, holds the post of Lucky Group president.
 

Staying in Touch
Although the company has grown to include more than 300 employees, the five Shaban brothers from the first generation (G1, as they call it) say they strive to stay near the company's front-line operations.

"I believe in down-the-line communication," says Raza, who serves as executive director of business development and is based in Dubai. "I'm willing to go directly to a team member and transmit a message firsthand, so there is no confusion," he adds.

Leading by example also is critical, Saleem says. "We believe a culture of quality flows from the top," he says. "If we are quality-conscious, then my son Zohair and my nephew Riz and the other members of G2 (the second generation) will also be quality conscious, and employees will follow suit. But if I become relaxed, or he does, then everybody around us will become relaxed as well."

The five Shaban brothers in G1 learned the recycling business from the shop floor and have taken steps to ensure the members of G2 learn the same way.

Riz recalls working outside in Dubai on days when it was 45 degrees Celsius (113 degrees Fahrenheit) and says the production employees at the time were happy to assign him the most menial tasks. "It can be a real struggle when your father's company's staff treats you just like any other employee," he recalls with a smile.

Saleem recalls Riz' training period with pride. "He went through a rigorous metals identification test, and his score was the highest," he notes.

Saleem says the test involved identifying and sorting metals by grade, including calculating the attachments percentage for some grades. Once he passed the test in 2003, he was permitted to work in the office, starting with basic functions such as cashiering and then moving into account management and other roles with increasing responsibility.

Both generations of Shabans say the training method has resulted in family members who appreciate the level of effort and skill it can take to perform any role within the company.
 

Risk Aversion
Despite its steady pattern of growth in the past 38 years, the G1 Shaban brothers of Lucky Group say they have accomplished it while still taking a very hard line against going into debt.

"We believe that borrowing freely increases your financial exposure; it can be a good recipe for bankruptcy," according to Saleem.

Several of the Shabans point to the period of turmoil in the fall of 2008 as an example of why they intend to stick by that philosophy. "In the last quarter of 2008, we lost a lot of money that we had earned in the first nine months," Saleem notes. "But there was no banker at the door at Lucky Group. It was, for us, a relatively peaceful feeling compared to those who were in debt."

Raza says, "I feel that there will still be bumpy rides for our industry in the foreseeable future, and we have to be prepared for that. We see volatile situations in the world, and possibly a couple of bubbles yet to burst. As Saleem mentioned, we want long-term organic growth in a safe and steady way."

In addition to avoiding bank debt, Lucky Group chooses its trading partners and suppliers carefully, the Shabans say.

"For us, the most important thing to managing risk is knowing our customers," Riz says. "Before we proceed with any deal, we make sure we know the customer and that we have a good reference point from someone we can rely on. Conducting business with reliable suppliers and customers is very important.

"We like those clients who are like us," Riz adds. "Companies with family essence that care about relationships, have self-respect, ethical values and care about others—those are the customers we seek."

Riz continues, "Having a liaison office in Shanghai has offered us a strategic advantage. Though we are geographically far, we are very close to our customers, as we have the convenience of asking our Shanghai staff to visit them at any time. I also visit our customers in China frequently and can act as a customer contact person and problem-solver as well."

Raza adds, "We regularly visit our customers in China and in the ASEAN (Association of Southeast Asian Nations) region to review product feedback and also simply to make goodwill visits."
 

The Right Image
Having spent several decades establishing a recycling company with a solid financial structure and a robust infrastructure, Shaban family members say they devote considerable energy to protect what they have built—most importantly the reputation of Lucky Group.

Raza says, "I think it has always been our top priority to protect the image and reputation of our organization." He adds, "It has paid off over time, many times, because the level of confidence people have in us is very high."

The family members say that ethical behavior combined with cumulative experience and a global view should serve Lucky Group well as the first generation continues to groom the second generation for their leadership roles.

"I think, as a company, we are benefitting a lot from our previous 38 years of experience, and it's truly international experience," Raza says. "I've lived in eight countries, and our Honarary Chairman Dilawar has lived in eight. We have a lot of exposure to international business."

That experience will be most valuable if it is transferrable, adds Raza. "There is no reason for our second generation not to learn from our mistakes," he states. "We all spend time to teach and train our G2 (both sons and daughters)."

The Shabans are unanimous in saying Lucky Group will continue to operate in a "safe mode" as far as growing organically and carefully without debt. Although the company's growth will be cautious, the family will continue to pursue new opportunities. "We see a big potential for growth in North America," Saleem says. "I am now spearheading a team to partner with suppliers in Canada, U.S.A. and Mexico for long-term sourcing of ferrous scrap for our clients in ASEAN regions.


 

The author is editorial director of Recycling Today and can be contacted at btaylor@gie.net.