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Sun 6 Feb 2011 12:00 AM

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Growth path

Al-Futtaim Engineering MD Dawood Bin Ozair sees signs of revival in Dubai and growth from Abu Dhabi to Egypt.

Growth path

Ozair is philosophical about the global financial crisis and
its impact on the construction industry. “When the economic crisis happened at
the end of 2008, I was not so shocked, as it has happened before and I knew the
market would come back again. This time it is a bit different because of the
global downturn. I was always very positive about Dubai, and I am still very positive. The
place remains attractive to the rest of the world. People still want to come
here, invest here, and do business here.”

Al-Futtaim Engineering was established in 1974 as an entrant
in the fledgling air-conditioning market in Dubai. Part of the larger Al-Futtaim group,
it now boasts six divisions, namely MEP, scaffolding and formwork, elevators
and escalators, security and low-voltage systems, building products and
air-conditioning. It represents major international brands such as Hitachi elevators, Toto
sanitaryware, Sanyo, Aftron and Toshiba air-con systems.

From an initially low-key inception, the company took a
strategic decision in 2003 to become part of the Dubai building boom that was then in its
infancy. “We realised the great potential in assisting the construction
activity in Dubai
and the rest of the region. We were in a unique position because of our six
divisions, which were all related to the construction industry. The big
advantage this gave us was customers in common.” The company did not focus on
major MEP works until about 2004, by which point it had essentially vetted its
own capability in this regard.

“As a matter of fact, the elevator division was the first
business to become involved in constructed-related activity, so it became aware
of all the projects going on. This meant it was a small step to progress to
major MEP works, as we had access to all the enquiries coming in. In 2004, in
fact, we doubled our business, and since then we are doubling almost every year
– and in each business segment we are involved in. Since most of the projects
require major MEP services, we have also doubled our turnover in this sector
year-on-year. MEP is one of those businesses where, if you provide a good
service, you are called upon again and again.”

Despite his unflailing optimisim, Ozair admits that “the
construction industry has taken a dip in 2010. What we have noticed is that the
jobs we booked in 2008-09 are progressing well, and that none of those jobs
have been cancelled. We carry an order book of about $136.15million, and
therefore we are confident that 2011 will also be an active year for us.” Such
confidence is based on the elevator division having clinched some major
contracts, including the Nation Towers and the Al Bahr Towers Investment Council
headquarters in Abu Dhabi and the Al Hikma Tower
in Dubai.

“In Dubai
there was a tower project called Burj Al Salam on Sheikh Zayed Road, which was delayed last
year either because of the recession and/or problems with the main contractor,
but this year it has started again afresh. That is a very healthy sign, when a
delayed project comes on-line again,” says Ozair.

However, Ozair is reluctant to say this is a sign that the Dubai market is
recovering. “I do not know if I should say ‘revived’ … but the very fact that
some of the projects that were delayed are now active is a good sign. Generally
speaking, I think there is more confidence in the market now than there was in
2009 and at the beginning of 2010.”

Al-Futtaim Engineering is also not that involved in the high
end of the market, focusing mainly on medium-sized projects. “There are still
very active projects in terms of individual owners, where there is no bank
borrowing involved. We do a lot of villa complexes, small buildings and private
development.”

Ozair maintains though that “Abu Dhabi is the big one, where there is a
lot of activity going on. Qatar
is also coming up in a big way.” This broader regional focus has allowed the
company to maintain a 15% growth rate, even during the downturn, which Ozair
describes as “very healthy.” In addition, he adds: “we are still expanding our
team. I think we are one of the only contractors in this market that is still
recruiting.”

Recruitment is a major problem at the moment, says Ozair. “Despite
the so-called recession and cut-down on construction activity, there is still a
shortage of skilled, qualified staff, and their demands are ever-increasing.
One of the reasons for this, of course, is that people are migrating to Qatar, Saudi
Arabia and Abu
Dhabi.” Countries like Qatar, in particular, pose
demographic challenges in that there is a shortage of Indian and Pakistani
personnel, which is a challenge that Al-Futtaim Engineering is meeting “by
bringing in mixed nationalities and getting special permission from the
relevant ministries.”

Ozair says the company “also has plans to grow in Saudi Arabia,
where we do not have proper representation, but there are offices and the
various documentation is in process. Demand in Saudi is big; the whole group is
planning to operate there.” Ozair says the company will “definitely welcome
partnership on a project by project basis.”

Another growth market is Egypt,
of course, where the company is involved with Cairo Festival
City in terms of MEP
works and elevator supply. Commenting on the impact of the recent unrest and
political instability in Egypt
affecting investor confidence, Ozair says: “The current situation is that it is
too soon to understand the implications of what is happening. We have closed
the site and the office for one or two days, and we are monitoring the
situation. Egypt
is a big market, it is a growing market, and any number of real-estate
developments get absorbed and sold out very fast. I think once the situation
has settled down, the market will come up again.”

Al-Futtaim Engineering is involved with the similarly-sized Doha Festival
City in Qatar,
having originally established Dubai
Festival City
as the master template for this type of development. “We are well-established
in Qatar,
as we have been there for six years already, and have undertaken some
prestigious work in that market.” This bodes well for positioning the company
to play a central role in Qatar’s
build programme for the 2022 FIFA World Cup.

Ozair says that energy efficiency and sustainability “are
becoming very important in our business, and we are all taking major actions to
further this. We have a control centre where we can monitor the energy
efficiency of each individual building. At the moment we are using it within Dubai Festival
City, but it can be
expanded externally at any time.” Such centralised control of building
performance is a major trend in the industry, says Ozair.

“Electricity and water are becoming incrementally more
expensive, which will mean a continual effort on the part of end users to
monitor their consumption. Of course, this is critical in terms of
sustainability.” Ozair says that Al-Futtaim Engineering is an ISO9001 certified
company, which means that health and safety and quality management are afforded
a high priority.

Commenting on general challenges, Ozair says liquidity is
still an issue. “We are very careful in taking on any project. We evaluate the
financial strength of the customer, because if ultimately you do not get paid,
it is a major issue. We carry out a lot of due diligence when taking on any
project. We also have good experience of the market, having been in the
industry for 45 years.”

This means the company has nurtured long-term relationships
with key customers. “Having said that, it is important to note that only 20% of
our customer base is Al-Futtaim; the balance is external. We have to be very
careful in terms of growth that we are not only doing in-house work. And then
we have to continue to remain competitive in a market where the competition has
increased dramatically due to the slowdown. There are contractors sitting with
no work on hand, and they would be willing to take on a contract at any price,
so it is a balancing act. Margins are under pressure, and if you do not get cash
flowing in, then it is a serious problem.”

As for the future, Ozair remains upbeat: “I am still very
hopeful for 2011, because we are seeing a little buoyancy in the Dubai and Northern
Emirates market. Abu Dhabi remains a big focus
for us, and Qatar
is growing. Saudi Arabia is
almost greenfield
in terms of its potential for us. Egypt also has major potential; we
just need to slow down a bit in terms of the current situation.”

Al-Futtaim Engineering also undertook MEP works on the Dubai
Metro Red Line, and is forging ahead with the Green Line, due to open in
August. “We are undertaking the main depot in Al Qusais, and are completing
that. It is progressing according to schedule. We have been talking with the
RTA on a regular basis. We are still not sure about the Purple Line, whether or
not that will happen. But there is potential for the Purple Line to also be
revived, and for metros coming up in Abu Dhabi and Qatar, so the experience we
have gained in Dubai will be well utilised throughout the region,” says Ozair.

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Joyveer Dutt 9 years ago

I admire Mr. Dawood a lot. He is very charismatic and a very good team leader; he has an unique management skill - which i coin as - "Management with human touch". I think this particular principle of management is very unique and would urge top managers to imbibe this principle to boost their business in true moral values with immense potential financial gains.

Syed Huda 9 years ago

I fully agree with Joyveer as i was a part of Mr. Dawood's team and experienced this style of working.