Tonic: Investing big with a strong belief in Algeria

Hugh O’Brian

The man behind it all is a 38 year old Algerian entrepreneur and gentleman, by the name of Mr. Abdelghani Djerrar. He clearly is a man in a hurry who gives the impression that he can be extremely competitive if the situation calls for it. Indeed, during an informal chat about his background he mentions that in earlier days he was a top class distance runner who trained in the 1980s with some of Algeria’s elite runners. He specialized in the middle distances like 1,500 m and 5,000 m as well as the 11 km cross country event.

“I see a strong relation between sport and business,” says Djerrar (pronounced jar-are). “I think they go hand in hand and are really very similar. To achieve something, you have to work hard and be strong enough to push the limits, to go faster than the others. At the same time, teamwork and trust are very important. And you must be ready to take the ups with the downs”.

Djerrar, and Tonic, seem to have had more ups than downs recently, with the business thriving as it has grown into a 150 million Euro company and one of the most respected enterprises in Algeria. Of course it isn’t Djerrar himself that makes the ‘most respected’ claim but instead many of his employees at various levels. There seems to be true respect among them for what he is doing and the way in which he is doing it.

STARTED WITH WASTEPAPER. Tonic is an interesting story. Djerrar founded the company about 20 years ago, with the first activity based on wastepaper recovery. He was simply collecting and trading wastepaper. That was in 1985. One thing led to another and Tonic was soon making various packaging products such as egg cartons from the wastepaper. The business grew slowly but surely during the 1990s and in 1998 he made an important move into corrugated board production, with the installation of a corrugated line from Bobst/BHS. Tonic’s major production facility is located in the industrial zone of Bou Ismail, 50 km to the west of the capital city of Algiers. There Tonic Emballage produces an extremely wide variety of mainly paper-based packaging products such as corrugated board and corrugated boxes, paper cups and tubes, sacks, shopping bags, boxes for consumer goods such as detergent, soaps, food, etc. The quality of the various packaging and printed products is very impressive with high-quality printing machines using flexo and offset for top class graphic arts. Among the equipment on site are machines from the world’s leading paper-converting and printing machinery makers such as Heidelberg, Bobst, BHS, Martin, Hartmann, Master Flex and Rapidex. The site is not one large factory but a series of small, medium and large sized buildings that have been added as Tonic has grown over the years. In fact, Djerrar was constructing so many buildings and structures to house his expanding company that he started a new company called Alstra, which is an industrial construction company working both for Tonic and outside clients.

THE ALGERIAN SITUATION. The thing that makes the achievements of Tonic all the more impressive is that it has happened in Algeria. Located in North Africa, essentially bordered by the Mediterranean Sea, the Sahara Desert, Morocco and Tunisia, the country has had an extremely difficult past 20 years. Especially during the 1990s, when Algeria was for all intents and purposes at civil war, business and daily life were very difficult. Political upheaval, religious strife, terrorism and massacres were all part of the 1990s in Algeria. In such a situation, it was not surprising that the Algerian economy stagnated.

There was no investment, both people and capital left the country and the future did not look very bright. Slowly but surely, since around 2000, things seem to have improved as the government declared a general amnesty for the armed rebels, on the condition that they turned in their arms. This strategy seems to have worked with an initially uneasy but slowly growing peace taking hold.

I must admit that before coming to Algeria, I was curious to see what I would find. I was also a bit concerned after reading the reports of violence and terrorism in past years. What I found was a very positive belief in the future, symbolized by Tonic. Of course there is a long way to go before Algeria will be back on its feet and perhaps one day join the ranks of developed countries. But the first steps, like those of a small child, are clearly being made. And Tonic is helping to increase the size of those steps.

The company name, Tonic, is actually a synonym for words like “boost, stimulate, energize, refresh”. To help boost the economy, Tonic is building two paper machines this year which will go a long way to reducing imports of both paperboard and tissue into Algeria. And over the long term, Djerrar sees real possibilities to export tonnage, further helping the Algerian balance of trade.

TISSUE MACHINE AND BOARD MACHINE AT THE SAME TIME. The new project will be Tonic’s first move into paper making. And it is no small project. Currently not one but two paper machines are being built on a new 25 hectare (250,000 sqm) plot of land just five minutes up the road from Tonic’s existing plants. The machines were originally planned for installation at a smaller site closer to the existing one but, with big plans for future growth in mind, Tonic opted to go for the new, larger mill site.

At a cost of around 150 million Euro, the project includes the following key items:

- Tissue machine, from Metso. A 2.7-m crescent former with capacity of 26,000 tpy of recovered fiber-based tissue. The machine can also swing over to MG papers if needed, depending on how the tissue market develops;

- Converting and wrapping machinery, mainly from Fabio Perini S.p.A. and KPL Packaging. Products will include high quality facial tissue, napkins, handkerchiefs, toilet paper and paper towels;

- Board machine, rebuilt by Metso. Originally a 2.95-m wide Bellmer machine which was installed in Germany in the 1970s, it has been completely rebuilt and modernized by Metso to make around 140,000 tpy of two-ply board grades based mainly on recovered paper;

- Recycled fiber (RCF) line, from Metso capable of producing about 30,000 tpy of high brightness pulp;

- Co-Generation power plant, from General Electric using gas as the fuel source;

- Desalination plant, from Ionics which can clean 5,000 m3 per day of process water;

- Water treatment plant, from Biwater.

Due to the change in site as well as some other construction delays mainly with the civil engineering and building, the project time plan has been slightly delayed. The latest time schedule calls for the tissue machine and converting to be running by September of this year. Most probably tissue converting will start several months ahead of the tissue machine. Then, in December of this year, the board machine is expected to start, thereby reducing the need for Tonic to import board for its corrugating lines.

QUALITY FOR THE LONG RUN. As far as buying quality, it appears that Djerrar makes no compromises when it comes to machinery. His existing packaging and printing businesses include equipment from the world’s leading suppliers. The paper machine project is no different.

“I want to work with the best and I know it will pay off in the long run,” says the former long distance runner. “Fabio Perini S.p.A., Metso, General Electric. With top of the line equipment, I can make more product at higher quality, with lower production costs. I don’t negotiate very much over prices with the equipment suppliers. I see it as a partnership and I need to be sure that we are both happy with the deal. I need their support for the long term and am willing to pay for that service. It works for me”.

DISNEY LICENSE RIGHTS IN AFRICA. As an indication of the quality that Tonic achieves, it has recently been granted the exclusive license rights for all of Africa to use Disney characters on its products such as paper cups and napkins. As Disney is well known to be very demanding with respect to its trademarks, and always looks for the highest-level partners, the fact that Tonic got the rights says a lot about the company. The two most important units in the delivery from Fabio Perini S.p.A. include a Sincro 4.0 line, for kitchen towel and toilet paper, and the Fold 8.7 Napkin line. Both are high-capacity, world class lines which are targeted at making very high quality tissue both for Algeria and for export markets. The Sincro 4.0 includes two embossing groups; one for micro-embossing and one for DESL for kitchen towels. Both the micro-embossing unit and the DESL unit are the first such deliveries in Africa.

In addition, a two-color printing station is also part of the line, allowing manufacturing of high level products to compete with imported items. The top-of-the-line Fold 8.7 Napkin machine will be capable of making a very impressive 4,000 pieces per minute. For extra high graphic appeal and product appearance, the line will feature four-color printing as well as point-to-point embossing.

RENEWING THE PAPER INDUSTRY. In addition to building the paper machines, Djerrar is also building a paper making team. As the company has not made paper previously, it obviously did not have much in-house paper engineering competence. That has now changed with Tonic hiring a team of experienced managers with paper industry background. Among them are: Mr. Tahar Fezari, Mill Manager and Project Director; Mr. Bendou Mustapha, Technical Director; Mr. Ahmed Boungab, Assistant Project Manager and Mr. Kamel Idir, Project Engineer.

Djerrar says he is very happy to have such a team: “We are working to renew the Algerian paper industry and these people are important. Quite frankly, a lot of the paper industry was state-owned for too long and much of it died. But there once existed a large pool of papermaking talent here in Algeria. This resource and expertise is still available but for many of them there is no future in the paper industry, so they leave the profession. I want to give these people an opportunity to use that talent and I also want to give younger people a future”.

THE TISSUE MAKING SUBSIDIARY OF TONIC EMBALLAGE WILL OPERATE UNDER THE NAME SARL OUATE-INDUSTRIES. Currently in Algeria there is only one very small producer of tissue, called GIPEC, which makes about 2,000-3,000 tons per year and is located 1,000 km from the capital of Algiers. Djerrar comments that he expects the much higher tissue quality, at what he says will be a lower price, to stimulate the Algerian market. Consumption is very roughly estimated to be on the order of 15,000-20,000 tons per year, meaning the new machine capacity of 26,000 tpy will easily cover that. Thus, the focus on exports.

“I see these investments as helping the Algerian people in several ways. The tissue project will make quality tissue products much more affordable for the average person. This is a quality of life and comfort issue. In addition we will replace imports with domestically produced materials based on domestic wastepaper. That will help the national economy. The board machine will do much the same: raise quality, lower prices, use domestic raw material and reduce imports”. Looking further into the future, Tonic has even bigger plans to attack the imports of paperboard. Djerrar is now studying a pre-feasibility plan to install a very modern 800 ton per day board machine to make white lined chipboard and folding boxboard, with recycled fiber as raw material. The price tag for the project is on the order of 300 million Euro.

RIGHT IDEA, RIGHT TIME AND LOTS OF WORK. Djerrar has built a very successful business based on having the right idea at the right time and believing in it. Of course, mixed into the equation is a lot of very hard work that often includes work days of 16 hours or more. On the day of our visit, we first met him early in the morning at the mill site, then after various tours, discussions, interviews and meals, he invited us back to his impressive home above Algiers for a late night coffee. As midnight rolled around, we decided it was time to return to the hotel. But not Djerrar. He was going back to the plant just to make sure everything was proceeding as it should. All in a day’s work for a long-distance runner.•