If the scene outside Almoayyed Contracting Group’s offices in Manama could be taken as an indicator of the Bahraini construction market’s health, then things might not be as gloomy as some commentators suggest. With scaffolding lining the front of a series of connected glass-façade offices, all related in some way or other to the group’s various business interests, it appears the company is indulging in some self-improvement – and presumably has the capital to afford it.
Inside, director and CEO Mannil Thomas Mathews is keen to paint a picture of a prosperous company operating in a recovering market.
“Due to the local disturbances, the construction market saw a slowdown, but now it’s picking up,” he says. “The announcement of major projects has happened and the recovery will come and MEP will benefit from that. A PPP [public/private partnership] project has been announced for 580 villas and another 5,000-villa project is coming, as well as some towers. The government sector is planning residential, hospital and school projects. We have bid for six of these schools. It might take a little bit of time for these projects to start, and we are all waiting.”
As Mathews highlights, Bahrain has not only had to contend with the crippling effects of the global financial crisis and its devastating consequences for the regional construction market, but has also experienced spurts of civil unrest as part of the so-called “Arab Spring”. This has further repelled prospective outside investment in the country, exacerbating the challenging environment in which the construction market was already operating.
Mathews recalls how the peak of that unrest in 2010 affected the island’s business environment and how Almoayyed had to adjust to the difficult circumstances.
“In some areas and on some projects we were not very active for a few days or a few weeks,” says Mathews. “In other areas the projects continued. Of course, during this time, our business decreased but everybody’s business decreased. We had to make some adjustments and streamlined the system completely in some areas. We managed to do this without much difficulty. Revenues were affected for a time, but not to a great degree.”
The suffering Bahrain’s construction market has had to endure during this period of political unrest has been accompanied by a more general damaging of the country’s image in the eyes of the outside world, particularly the west. Mathews, who has lived in the country since 1969 when he moved from India, is quick to jump to its defence and highlight the country’s longstanding reputation as one of the more progressive nations in the Gulf region.
“Bahrain has always been out in front,” he says. “If you go back many years, Bahrain has long been considered as one of the best places in the Middle East, like Beirut. Most of the offshore banking in the region has been based here and it has always had the latest technology.”
The affection with which Mathews speaks of his adopted country is apparent, and perhaps unsurprising considering it has facilitated his rise to the top of his profession over the last 45 years. He is very much a company man, having joined the Almoayyed Group when he arrived in the country, starting out as an air conditioning service technician. Having worked his way up to general manager of that particular branch of the company by 1987, he says he turned an underperforming operation around and was soon expanding the company’s mechanical operations into electrical and plumbing. By 1990, Almoayyed Contracting Group had a fully operational MEP division and was on its way to establishing a significant presence in the Bahraini market. Mathews was then made CEO in 1995.
Since that time the company’s now 1,500-strong MEP division has delivered some of Bahrain’s most renowned projects, such as the Formula 1 racing venue, as well as a host of tower developments and smaller jobs. While Mathews says that competition in the market is now intense, Almoayyed’s “AA” status has helped it to transcend the scrap for work in some instances.
“The market is very tight nowadays because some new local contractors have established themselves recently,” he says. “But on certain projects there are pre-qualifications for ‘AA’ contractors or ‘A’ contractors and there won’t be many bidders for those. That is one advantage we have over the rest of the market. But on the private, smaller projects we are seeing a lot of new contractors bidding with low prices.”
Tempting as it may be for Almoayyed to use its financial clout and experience in the industry to squeeze out these fresh upstarts, Mathews says that the company will not stoop to conquer and will retain its philosophy of quality above all else.
“When we are pricing, it is all about maintaining our standards,” he says. “We always look for the satisfaction of the customers; they should come back again. Some contractors offer lower prices but still clients come to us. When clients say that other contractors are offering lower prices, then we will look into that to see if there is any value engineering we can do without affecting the quality of the project.”
In such a competitive environment, it is perhaps understandable to find that Mathews and Almoayyed has looked beyond the constrained shores of Bahrain for further business opportunities. Almoayyed found Saudi Arabia to be a “hard market” to enter, according to Mathews. It has also taken a step back from the UAE after experiencing difficulties with receiving payment for work it completed on Dubai’s International City project, prior to that construction market’s collapse in 2009.
However, a few miles across the Gulf the company’s MEP division has already made inroads into the Qatari market and Mathews is confident that it can be a rising source of revenue in the coming years.
“We’ve had a presence in Qatar for more than 10 years now,” he says. “We’ve an MEP team of 150 to 250 in Qatar at the moment. At the moment, about 70% of our MEP revenue comes from Bahrain and 30% from Qatar. But we are targeting a 50-50 split in the next few years.”