It is expected that more than 33 percent of Dubai's budget expenditure in 2009 will be earmarked for infrastructure projects. In spite of the slowdown in the economy in general and the real estate in specific, opportunities in the infrastructure sector in the region remain high.
Drake & Scull International is a leading end-to-end contracting company providing mechanical, electrical and plumbing (MEP), infrastructure, water and power and civil contracting services and has provided quality engineering services to the Middle East since its formation in the UAE in 1966. The firm is making several moves to prepare for its future operations in the region.
In an interview with CEO Middle East Khaldoun R Tabari, vice chairman and CEO of Drake and Scull International, answered our questions:
It is said that what Dubai has achieved in the infrastructure development in the past ten years is what usually takes 50 years to be achieved by other countries. How would you describe opportunities in the infrastructure market now, taking into consideration the demand against what has been achieved and against the current global crisis?
This is true; Dubai and the UAE have an infrastructure system second to none. Dubai has achieved enormous growth and vast developments in the past ten years.
This infrastructure work and urban planning is part of a bigger strategic plan, and it was these developments that attracted the masses to Dubai in the 90s and continues until today. The infrastructure works are still moving forward. The global crisis will not affect the city's infrastructure plans as severely as Europe or the US.
We are a strong, well-established company that offers diversified services in infrastructure, water and power (IWP) in addition to our MEP and civil contracting services. We have been operating in the UAE for over 40 years.
We started with IWP a few years ago when we were awarded the contract for the Jumeirah Beach Residences district cooling scheme. At this time it was the largest district cooling plant worldwide.
We also offer engineering, procurement and construction (EPC) services from Dubai to the MENA region.
The Gulf region has huge infrastructure needs due to rapid population growth. The population increase in countries such as KSA and Qatar is exceeding five and seven percent, respectively. DSI is also looking into expanding into these markets. This expansion will ensure DSI rides through the global crisis.
There is a tendency to clean energy. How is that affecting the market? Is it increasing the cost or creating difficulties in resources?
Clean energy is the future. DSI continuously searches for new enhanced technologies to introduce to the regional market. There is always room for improvement and we must be aware of the responsibility placed upon us to safeguard the environment and provide commercially viable solutions.
Our commitment to improving environmental controls saw DSI invest in new and innovative technologies. The result was the introduction of IWP solutions that provide, among other services, district cooling technology. This technology is an energy-efficient solution that, in the long-term, reduces the overall demand on the electrical grid and controls toxic emissions.
How is the recession in the property sector affecting DSI?
Opportunities exist at every stage of the business cycle. We have been in the UAE since 1966 and the company has continued to grow, despite the ups and downs, by identifying opportunities and taking advantage of them. This current situation is offering many opportunities - we have the means, the finances and the resources to invest in them.
DSI has three business streamlines - MEP (mechanical, electrical and plumbing), civil and IWP (infrastructure, water and power) contracting services. This makes us truly unique and gives us the competitive advantage to withstand the current slowdown in high-rise construction.Recently DSI was listed on DFM, after a very successful IPO in July 2008, and it is now possible for us to use the AED1.2bn ($326m) IPO proceeds to expand our business throughout the region. This will increase our contracts, figures and subsequently, profits.
We currently employ 12,000 people in the UAE. We also recently held a recruitment drive to fill more than 100 vacancies created by our expansion. Because of the recession, there is a readily available pool of talent. We are taking advantage of this and employing the best people with the most experience and knowledge to assist in the expansion of DSI.
DSI has vast experience in the Middle East region, excellent planning and three solid business streamlines which will ensure our survival and success throughout these difficult economic times.
We are very bullish. DSI is in a very stable position.
Do you have any expansion plans now that the boom is shifting in the region towards new markets such as Qatar and Saudi?
Yes, most of our work is currently in the UAE but we are also working on IWP projects in Sudan, Bahrain and KSA. It was mentioned in our IPO prospectus back in July 2008 that our growth strategy was to expand horizontally and vertically throughout the region. We are actually in the process now of evaluating companies in KSA and Qatar for the purposes of acquiring them by Q3 2009. We are also in the process of tendering for the works for the new airport in Libya.
DSI listed on the Dubai Financial Markets on March 16. How do you describe the move under the current situation of the Financial Markets in the region?
No one saw this global economic crisis coming. It hit fast and hard so there was little time to prepare. We had been planning our listing for over a year, when the market was completely different. We are still very confident and we know that the listing has provided us with the leverage to take advantage of the opportunities that many markets still offer.
Our growth strategy has not changed and the management has spent much of their time, between our IPO in July 2008 and our listing in March 2009, in streamlining and preparing for the expansion that the listing will facilitate.
The unstable situation worldwide is just a temporary reaction based on lack of confidence in the market and lack of liquidity. We are sure that we will soon witness a reasonable correction to the markets and DSI will be at the forefront of this revival.
DSI has the projects, the people and the capabilities. We are a very strong company that will be profitable in 2009, despite the world economic conditions.