Engine maker Cummins Inc. and the Olayan Group announced they have formed Cummins Arabia, a 50-50, three-country distribution joint venture company in the Middle East.
The new relationship consolidates the distribution of Cummins products in the United Arab Emirates, Saudi Arabia and Kuwait, according to Cummins.
These three countries represent some of the largest markets for Cummins in the Middle East, according to the company. The partnership allows Cummins to operate closer to its customer base. At the same time, it will provide a valuable platform for the training and employment of nationals in each country, the company said.
“Cummins is pleased to partner with Olayan, which is a highly respected leader in the global distribution business,” Tom Linebarger, Cummins Chairman and CEO, said in a release. “Olayan brings years of Middle East experience, and this partnership provides opportunities for our companies to grow and expand in this region while enhancing the service and support we provide to customers.”
Cummins Arabia will be headquartered in Saudi Arabia. Plans are under way to build dedicated facilities there, Cummins said, adding the new operating structure will be implemented in the second half of 2016.
“We view our new joint venture as a natural evolution of the close working relationship that has existed between us and Cummins for more than 60 years. We began distributing Cummins products in Saudi Arabia in 1956 and have always viewed ourselves as operating in a real spirit of partnership,” Lubna Olayan, CEO of Olayan Financing Co., said in a statement.
The joint venture allows Cummins and Olayan, they said, to achieve greater scale, improve parts availability and inventory management, and centralize specific functional support.
Cummins, through its various business units, designs, manufactures, distributes and services diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems.