October 22nd, 2012
10:02 AM GMT
Despite rising fuel costs, one sector that is not witnessing a downturn is defense. Rising tensions over Iran and growing security concerns are not only driving regional governments to boost their weaponry but are forcing them to boost protection as well.
The Middle East spent $111 billion on defense in 2011 and one company that wants to tap into that market is the Streit group, a Canadian company that is using the Middle East's strategic location to boost its growth.
Guerman Goutorov, chairman and founder of the Streit Group, began his quest from the garage of his home in Canada.
“I was the welder, I was the painter and only one employee in the company,” he told CNN’s Leone Lakhani at the world's largest privately owned armoured car manufacturing plant.
With a handful of tools Goutorov set out to build him first armoured car. He recognised its value as a niche market.
“Originally I came from Russia. I was in the police force for five years. Then I see so many criminal situations happening. I decide to bring something that can protect the people – and I start to look for armoured cars but I end up making them myself.
That was back in 1996. Today Goutorov is at the helm of the Streit group, the largest privately owned armoured vehicle company in the world.
But he operates his business not from Canada or Russia but from Ras Al-Khaimah – or Rak for short – in the United Arab Emirates.
It is the group’s single largest operation. One building in particular is 400,000 square feet.
“We have 386 employees right now but we will be by the next six months around 500 employees,” Goutorov said.
Goutorov said he chose to locate in the UAE because the business practices suited them – and it was more cost effective than some if its neighbours.
“We visited the UAE, and we visited Kuwait, Jordan, Iraq and our choice was UAE.”
Currently, 140 vehicles a month are produced in the Rak plant. Every part of the process is done in house.
When a commercial car is first brought in, it's stripped of all of its interiors. The upholstry, the wiring. brought right down to the very bare bones. It takes four to 10 days to armour the car from the ground up.
Streit says 70 percent of the cars are made for commercial rather than military security vehicles.
The bulk of the business is armouring commercial vehicles. And the trick is to keep it low profile. A bus for instance can look ordinary from the outside. On the inside it's reinforced by steel.
Vehicles assembled at the Rak plant are exported all over the world. But Goutorov said – with the volatility in the region – the Middle East is still the largest market
“I would say 30 percent is Middle East and the rest of th world is around 70 percent. Different political situations, different countries would see some progress. Its going on in Africa and also in South Asia.”
Goutorov plans to double the capacity at the Rak plant – and increase production of its military vehicles.
“Next year, we should be going to 60/40. 60 percent commerical . 40 military side. The purpose is the same - they have to protect the lives, they have to save the soldiers, they have to save VIPS, individuals and government entities.
Goutorov is gearing up to expand his business in Rak – to meet the rising demand for security worldwide.
Along the Silk Road
“Along the Silk Road” explores the burgeoning trade and investment links from the Middle East to Asia – Beijing, Mumbai, Istanbul, Kabul, Moscow, Hong Kong, Jakarta and Dubai.
The series surveys the export-driven economies, countries with vast capitals of reserve and natural resources, that economic forecasters pinpoint as ringleaders of growth for the next quarter of a century.
Catch “Along the Silk Road” every Wednesday on CNN International within Global Exchange:
Follow the show on Twitter @CNNGlobalEx and use the hashtag #CNNGlobalEx to join the conversation.