VZCZCXYZ0002
PP RUEHWEB

DE RUEHTU #0171/01 0851458
ZNR UUUUU ZZH
P 261458Z MAR 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 6110
INFO RUCNMGH/MAGHREB COLLECTIVE PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS TUNIS 000171 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/IFD/OMA, EEB/EPPD, AND NEA/MAG 
(PATTERSON/HAYES) 
STATE PASS USTR (BURKHEAD) 
USDOC FOR ITA/MAC/ONE (MASON), ADVOCACY CTR (TABINE), AND 
CLDP (TEJTEL AND MCMANUS) 
CASABLANCA FOR FCS (ORTIZ) 
RABAT FOR FAS (HASSAN) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD FAO TS
SUBJECT: THE ELLOUMI GROUP: A TUNISIAN COMPANY SUCCESS STORY 
 
This cable contains sensitive but unclassified proprietary 
company information. Please protect accordingly. 
 
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Summary 
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¶1.  (U)  The Elloumi Group calls itself Tunisia's most 
international company.  Starting out as an electrical 
equipment manufacturer in the late 1940s, the group has grown 
to become one of Tunisia's most diverse and successful global 
companies, expanding operations into cable and electrical 
component manufacturing for the auto industry, industrial 
cable production, real estate, food processing and 
consulting.  With over 7,000 employees, factories in Europe, 
the Maghreb and Latin America, over US $900 million in 
turnover, and active expansion plans, the company is a true 
Tunisian success story.  During the Ambassador's March 18 
visit to two Elloumi Group factories just outside Tunis, the 
group's CEO admitted a key to their success was using an 
American business model.  Although the economic crisis 
affected sales in late 2008, the Elloumi Group has bounced 
back with strong growth figures for early 2009.  End Summary. 
 
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Overview of the Elloumi Group 
----------------------------- 
 
¶2.  (U)  The Elloumi Group began in 1946, founded by Mohamed 
Taoufik Elloumi, father of current Elloumi Group CEO Faouzi 
Elloumi.  The first company in the group, Elloumi, Inc., 
specialized in electrical contracting for low, medium, and 
high voltage networks, as well as manufacturing of electrical 
equipment and household products.  Over the next 40 years, 
the Elloumi Group became a holding company, where each core 
business activity split into separate groups.  They expanded 
into manufacturing of cable, power and telecom wires as well 
as design and manufacturing of household appliances.  By 
1986, they had created four separate groups.  The largest, 
Cofat, still produces automotive electrical and electronic 
distribution systems, and Coficab, another of the original 
four, produces cable.  In the late 1980s, a division of Cofat 
formed a joint venture with Delphi corporation, an American 
automotive products and systems manufacturer.  Since that 
partnership, the Elloumi Group has expanded into real estate, 
agricultural research and production, food processing, and 
consulting in management and information systems. 
 
¶3.  (U)  Today, the Elloumi Group has 7,000 employees and 
factories in Tunisia, Egypt, Morocco, Romania and Portugal. 
They have research and development facilities in Tunisia and 
Portugal, and their worldwide delivery network includes 
clients from Mexico, Botswana, Australia, Ireland, Sweden, 
and Iran.  With a 25 percent market share, Cofat is the 
second largest supplier of automotive cables and wire 
harnesses for the EU.  According to Faouzi Elloumi, Cofat 
provides half of Chrysler's DC cables in the United States, 
and half of Volkswagen's and Peugeot's DC cables in Europe. 
They are also a large supplier of the Lear Company, an 
American automotive seat and electrical distribution systems 
manufacturer, which also has a subsidiary in Tunisia.  Cofat 
has control over their entire production line, and uses heavy 
equipment imported from the United States, Austria, 
Switzerland and Germany. 
 
¶4. (U)  The Elloumi Group's food processing branch, Stifen 
Company, also has a fully integrated product chain. 
Concentrating mainly on frozen fruits, they supply Kellogg's, 
Danone and Nestle.  They report covering 100 percent of the 
Tunisian market for fruits destined for yogurt and ice cream 
and 70 percent of the Algerian market.  Silfen recently 
presented their artesanal jams at the Fancy Foods Trade Show 
in San Francisco in January of this year. 
 
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The Secret to Success: Following a US Company Model 
--------------------------------------------- ------ 
 
¶5.  (U)  According to Faouzi Elloumi, the Elloumi Group's 
structure (a holding company and split groups based on 
business activity) is based on the General Motors (GM) 
business model.  He said his vision for the group is akin to 
that of IBM, with gradual targeted expansion into certain 
foreign markets.  Elloumi also credited cooperation with 
Delphi as the first step in industrialization and 
modernization for the group.  As part of the joint venture 
with Delphi, the Elloumi Group bought shares of the company 
and signed a 10 year cooperation agreement with them, which 
they extended recently to 19 years. 
 
¶6. (U)  According to Hichem Elloumi, the CEO of Chakira, part 
of Elloumi Group's cable production division, the impetus to 
build factories abroad came after a sales trip to Europe. 
The prospective Portuguese buyer told the Group they would 
not purchase from them based out of Tunisia, rather only if 
they produced locally.  Stifen, on the other hand, was born 
after the Ministry of Industry approached the Elloumi Group 
requesting their assistance in industrializing the 
agricultural sector. 
 
¶7.  (U)  Internally, the group takes cues from GM on how to 
manage internal employee relations by focusing on cultural 
differences and emphasizing continuous training.  Faouzi 
Elloumi noted that their plant in Mexico integrated more 
religious and local cultural events into factory schedules, 
and that for the inauguration of their Portuguese plant they 
hired a Catholic priest to bless the premises.  Employees 
undergo frequent training, with an average of 20,000 training 
sessions per year globally.  The official language of the 
Elloumi Group is English, and they place a high premium on 
English skills when hiring.  In fact, Faouzi Elloumi said it 
is easier for the company to hire skilled English speakers 
and subsequently train them in technical skills than 
vice-versa. 
 
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Finances and What's Next for Elloumi Group 
------------------------------------------ 
 
¶8.  (U)  The Elloumi Group reports a US $900 million turnover 
rate for 2008, which is a downward revised figure from a 
projected US $1 billion.  Faouzi Elloumi explained this was 
due to the global economic crisis, which led to a 50 percent 
decrease in demand for the last three months of 2008. 
Although production has decreased siginificantly for large 
cars and trucks since mid-2008 (down 50 percent for Volvo 
trucks, for instance), the Elloumi Group reported 14 percent 
growth year-on-year for the first two months of 2009.  This 
was due to a rise in production for smaller cars.  Orders for 
wire harnesses for the Fiat Punto were down to 800 per day in 
late 2008, but rose to 1800 per day by March 2009. 
 
¶9.  (U)  In general, the Elloumi Group takes on six-year debt 
for new country investments.  For internal financing, Cofat 
uses internal capital only and does not take on external 
debt.  Coficab only takes short-run working capital loans of 
two years from international banks.  As a result, the company 
has not been affected by the global credit crunch. 
 
¶10.  (U)  The Elloumi Group is going ahead with 2009 
expansion plans, albeit with a few delays due to the economic 
crisis.  Cofat will start construction on a 14 hectare 
industrial park in Medjez El Bab (Tunisia) in July 2009, 
which represents a three month delay from the original ground 
breaking date.  They are also planning to construct an eight 
hectare park in Brazil -- a cooperative agreement with Delphi 
whereby each company will have two plants in the park.  The 
Elloumi Group has also been approached by customers who want 
to invest in Iran, and they are studying this possibility. 
 
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COMMENT 
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¶11.  (SBU)  The Elloumi Group's story is an example of how a 
relatively small company can expand globally with the right 
vision and business model.  Its 60 year trajectory is notable 
given the breadth of its activities in disparate sectors. 
Although the automotive industry has been affected worldwide 
by the economic crisis, the Elloumi Group seems to be 
weathering it.  The Elloumi family is clearly close to 
Tunisia's leaders, which no doubt has helped the group over 
the years.  Today, however, its size and international 
operations appear to have given it a degree of independence. 
The Elloumi Group is certainly a model for other Tunisian 
enterprises who wish to enter the global market.  It is a 
Tunisian success story.  End Comment. 
Godec