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Executive Director - DCM
Industry: Finance
Location: Middle East -
Human Resources Operations Manager
Industry: Finance
Location: Dubai, UAE
The Industrial Revolution
by Andrew White on Sunday, 14 January 2007
Road to success: The new Transpark development will offer vital logistical support to DIC investors.
"We always strive to put the client first, to give them what they need, and make them happy"
Some weekends, I like to go and stand on one of the hills overlooking the project. I look at it, and the masterplan, and take a couple of photos.”
In front of Rashed Al Ansari lies 560m sq ft of land, a vast empty stretch of sand contrasted against its concreted neighbour, the new Jebel Ali Airport City, and the bustling Jebel Ali Port in the distance.
Yet within the coming months, Al Ansari will oversee the laying of the foundations of a new chapter in Dubai’s ambitious bid to corner the Middle East’s logistics market. For the new CEO of Dubai Industrial City (DIC), the view will be ever-changing.
Al Ansari’s sales patter is well rehearsed, and delivered with a smooth assurance.
“We’re half way between Dubai and Abu Dhabi, and we’re perfectly situated for companies to come and ‘plug in and play’,” he says.
Such firms will ‘plug and play’ in one of Dubai’s most high-profile industrial developments, albeit concentrating on light and medium industries as opposed to heavy industry. DIC has six specific sectors — chemical, mineral, metal, food & beverage, mechanical & equipment, and automobile & transportation — and these six industries are currently the fastest growing in the GCC.
Such healthy growth has meant that DIC is ahead of schedule, insists Al Ansari. With over 200 companies on board, the response has exceeded targets set at the project’s launch.
“We’ve leased out 80 million sq ft of land with phase one which is 100%. The second phase is another 45 million sq ft, and we have begun to lease that,” he explains. “We even have three companies already on site, building right now. We grade the area first, and once the grading is done companies are welcome to come in and start construction, working from generators if needs be.”
Such flexibility means that companies have been able to begin work even with the most basic of infrastructures in place. Not that those businesses will have to wait for long for the project to take full shape. The first level of infrastructure — which includes power, electricity, roads, and utilities — will be completed by October 2008. This is the first phase of three, with the total cost of phase one coming to US$211.5m (AED777m).
There is, however, one limitation on the direction of DIC’s current development. Crucially, DIC is not classified as a free zone, and therefore does not offer 100% foreign ownership within its perimeters. As a result, DIC’s focus has necessarily remained on local and regional industrial market players.
“We are not a free zone, and we go by the same laws of the Government of Dubai — you have to have a 51% local partner,” says Al Ansari. Yet there is hope on the horizon, as proposed amendments to the UAE Company Law may allow, in specific industrial zones, foreign companies to have 100% ownership.
“Our targets so far have been local, but the amendment to the law will help us become a far more international destination,” he insists. “Internationally, companies would usually like to have 100% ownership when they come to a foreign country, and this is something that only happens in the free zone areas.
“It is of course out of my control, but right now we’re trying hard in order to push for this company law to come in, because it will save quite a lot of issues with the foreign companies,” continues Al Ansari, with a smile. “We promised that we’d open our head office in January 2007, and last week we moved into them and are on site. Things that are under my control, we will achieve, but things that are not in my hands, I can do nothing about.”
In the meantime, Al Ansari insists, DIC continues to offer an opportunity to clients, which is unmatched within the Middle East region.
“You have to play with what the real market gives you, and we’re trying our best. I believe that if you provide a quality of service and an innovative industrial area, companies will come to you regardless,” he explains.
“DIC will be a fully-fledged, stand-alone city — its own township. For example, all government departments and services will be under one roof, where you will have all your processes made for you,” he continues. “We always strive to put the client first. Whatever the clients need, whatever makes the clients happy, we do.”
In the absence of 100% foreign ownership, Al Ansari is instead keen to emphasise the GAFTA benefits that companies registered outside free zones are entitled to. “The added value for a company manufacturing within DIC is that if you produce 40% of your products within the DIC, you get preferential treatment in terms of fees and customs across the GCC,” he explains. “Plus, companies need to be close to their market. Logistics is very important to them, and we’re hoping that this will give us the advantage over projects like the new one in Saudi Arabia.”
Another potential advantage over competing projects will be DIC’s innovative approach to quality control. The project has launched its own quality standard – the Dubai Quality Mark – that is designed to raise the bar in terms of logistics services.
“We reject about 30% of the applications that come to us because they don’t meet our quality requirements,” insists Al Ansari, proudly. “We are the custodians of the DQM, and we are the promoters of it, so we are making sure that we lead by example. We’re putting a platform down, by which we’re educating the companies here to compete in the world arena.”
Yet while the conceptual platform may have been laid, Al Ansari admits that the achievement in terms of construction has been “minimal”. This, he insists, will soon change.
“I have been put in this position to look after the infrastructure, make sure the construction is in place, make sure that the contracts are in place, and to make sure that the delivery is on time,” he says. “We have promised our investors delivery times, and we would like to stick to them, which is my main focus at the moment.
“It goes in phases, and right now we’re heavy on construction. DIC still needs to be built, and it’s my job to make sure that happens,” he continues. “I have to make sure that the timelines are kept, and that the engineering team is delivering what we have promised.”
The key challenge, Al Ansari concedes, will be that of successfully developing the real estate aspect of the project in tandem with the more service-driven needs of a modern logistics hub.
“To put it in a nutshell, DIC is a real estate project and beyond,” he says. “We don’t stop at the real estate part, but right now it dictates that it has to be a real estate issue. Over the next year, we’ll have the normal pains with contractors, with prices going up and down and the usual fluctuations — but these are just the pains we have to go through on a project of this scale.
“Fortunately, Khalid Al Malik, my predecessor, did a fantastic job in building the team and putting the resources together, so the strategic direction is already there,” he adds.
Al Ansari realises that on a project of such a scale, it is not always possible to adopt a hands-on approach to the everyday minutae of modern management. “On a project this big you can’t handle everything, and I don’t want to. Once you establish the critical areas where you have to involve yourself on a daily or weekly basis, then if you monitor those, then the managers who are in place must do their jobs, and you must trust them.
“I’ve been with the team just over a month and a half, and every time I look at things I find that they’re being done perfectly,” he continues. “I have made minimal changes, and the team is very mature in their approach, yet young in terms of their energy.”
Over the next few months and years, as DIC rises from the dust of Jebel Ali, Al Ansari and his team will need all of his energy in order to establish themselves in the battle for investors in the Middle East’s logistics hub.
“Now I am sure that when I come back in six months’ time, it will be completely different,” Al Ansari smiles. “The city is slowly coming up. In five years time, the photos I take will be very different.”
Transpark: DPWN joins DIC development
DIC has announced the establishment up of a partnership with Deutsche Post World Net (DPWN) — the parent company of firms including DHL, Danzas and Exel — to support its new 20 million sq ft logistics facility, Transpark.
“With Transpark, we will be providing the main four pillars of logistical services to customers: storage and warehousing facilities, freight services, express distribution, and logistical consultancy,” DIC CEO Rashed Al Ansari told Arabian Business. “Our aim is to produce a tailor-made service for companies within DIC.
“Transpark will be the interface with the clients, while DPWN will actually execute the logistics. Logistical services are essential to make us a complete integrated industrial city, and the advantage of this service is that you have one point of contact,” he continued. “This is part of our innovation — we will always provide a one-stop-shop solution to the tenants of DIC. We will also provide them with one invoice for all the logistical activities, and so this is something that relieves customers from the headaches of logistics contracting.”
DPWN is the world’s number one logistics company, offering three main products: global freight, express, and logistics.
With a projected revenue of US$78bn in 2006 and operations in 220 countries, DPWN employs 500,000 people and operates 76,000 vehicles and 420 aircraft from 6,500 offices across the globe. Moreover, the firm has targeted the Middle East as one of its top three areas for growth.
“The investment we’re making locally is very significant — the growth in the logistics market in Dubai and the Middle East is around the 40 or 50% level at the moment, and we see that continuing over the next few years into the medium term,” David Christmas, country manager, UAE, contract logistics, and special projects director, Middle East, DPWN, told Arabian Business.
“Globally the Middle East represents less than 5% of our turnover, but in terms of growth it’s in the top three behind India and China. So revenue-wise it’s quite small, but in terms of opportunity it is very significant,” continued Christmas. “For example in the year 2006-7, which we’re halfway through right now, our net profit in the UAE is up over 1000% over the entire previous year, which is something I’ve never seen in business before.”
Transpark’s key physical asset will be a new 72,000 sq ft warehousing facility that will be used as a distribution centre. However, Al Ansari insisted that DIC would not impose Transpark upon its 200-plus investors.
“The investor has a choice to go with any logistical company they choose. We will obviously try to keep on our toes and make sure that we give them the value, and that we are competitive in the market, so that they don’t need to go somewhere else,” he said.
“There are cost benefits to firms using this service, because you’re serving so many customers that people don’t want the headaches of running their own warehousing facilities and so forth, and because there is a huge manpower requirement to run these distribution centres efficiently,” he continued. “If you’re providing these services to companies then there will be quite a lot of cost savings benefits passed down to the tenants.”
The strategic alliance involves a transfer of both knowledge and skills, benefiting from DPWN’s considerable experience across the region and worldwide.
“As far as investment is concerned, it’s largely intellectual capital, because the investment is in the network, which is in the express network globally, in the freight forwarding, and all the warehouses that are going to be used,” explained Christmas. “From the Transpark perspective, the investment is limited. From our perspective, the investment has already been made. Our commitment is to provide on tap the resources that Transpark require when needed.”
DIC has announced the establishment up of a partnership with Deutsche Post World Net (DPWN) — the parent company of firms including DHL, Danzas and Exel — to support its new 20 million sq ft logistics facility, Transpark.
“With Transpark, we will be providing the main four pillars of logistical services to customers: storage and warehousing facilities, freight services, express distribution, and logistical consultancy,” DIC CEO Rashed Al Ansari told Arabian Business. “Our aim is to produce a tailor-made service for companies within DIC.
“Transpark will be the interface with the clients, while DPWN will actually execute the logistics. Logistical services are essential to make us a complete integrated industrial city, and the advantage of this service is that you have one point of contact,” he continued. “This is part of our innovation — we will always provide a one-stop-shop solution to the tenants of DIC. We will also provide them with one invoice for all the logistical activities, and so this is something that relieves customers from the headaches of logistics contracting.”
DPWN is the world’s number one logistics company, offering three main products: global freight, express, and logistics.
With a projected revenue of US$78bn in 2006 and operations in 220 countries, DPWN employs 500,000 people and operates 76,000 vehicles and 420 aircraft from 6,500 offices across the globe. Moreover, the firm has targeted the Middle East as one of its top three areas for growth.
“The investment we’re making locally is very significant — the growth in the logistics market in Dubai and the Middle East is around the 40 or 50% level at the moment, and we see that continuing over the next few years into the medium term,” David Christmas, country manager, UAE, contract logistics, and special projects director, Middle East, DPWN, told Arabian Business.
“Globally the Middle East represents less than 5% of our turnover, but in terms of growth it’s in the top three behind India and China. So revenue-wise it’s quite small, but in terms of opportunity it is very significant,” continued Christmas. “For example in the year 2006-7, which we’re halfway through right now, our net profit in the UAE is up over 1000% over the entire previous year, which is something I’ve never seen in business before.”
Transpark’s key physical asset will be a new 72,000 sq ft warehousing facility that will be used as a distribution centre. However, Al Ansari insisted that DIC would not impose Transpark upon its 200-plus investors.
“The investor has a choice to go with any logistical company they choose. We will obviously try to keep on our toes and make sure that we give them the value, and that we are competitive in the market, so that they don’t need to go somewhere else,” he said.
“There are cost benefits to firms using this service, because you’re serving so many customers that people don’t want the headaches of running their own warehousing facilities and so forth, and because there is a huge manpower requirement to run these distribution centres efficiently,” he continued. “If you’re providing these services to companies then there will be quite a lot of cost savings benefits passed down to the tenants.”
The strategic alliance involves a transfer of both knowledge and skills, benefiting from DPWN’s considerable experience across the region and worldwide.
“As far as investment is concerned, it’s largely intellectual capital, because the investment is in the network, which is in the express network globally, in the freight forwarding, and all the warehouses that are going to be used,” explained Christmas. “From the Transpark perspective, the investment is limited. From our perspective, the investment has already been made. Our commitment is to provide on tap the resources that Transpark require when needed.”
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