Bin Omran, FAMCO, and Case Construction explain what it takes to succeed in the Middle East’s challenging, but lucrative, road construction sector
During the past 15 years, the population of the GCC has grown by approximately 67%, soaring from 29.4m people in 2000 to more than 49m in 2014. With this figure expected to increase to 53m by 2020, it seems likely that the Gulf will remain one of the fastest-growing regions on the planet for the foreseeable future.
Of course, the more people a region attracts, the greater the transport infrastructure it needs to support them. Thankfully, local governments haven’t been slow to invest in this field.
At present, it’s the $11bn GCC Rail Network that’s grabbing the majority of the headlines, with national constituents – such as the UAE’s Etihad Rail – signing seemingly endless memoranda of understanding with regional stakeholders. All the while, fresh roads are continuing to creep across the Middle Eastern desert, albeit with less fanfare.
Dubai’s Roads and Transport Authority (RTA) approved a budget of almost $2bn in 2014, more than half of which was ring-fenced for new projects. Not to be outdone, Saudi Arabia, began work on a 256km-long highway cutting through its Empty Quarter and stretching all the way to Oman. Qatar’s Public Works Authority, Ashghal, meanwhile, signed seven major road contracts worth a combined $2.8bn in 2014, under its local roads development programme.
One party to benefit from the latter was Qatari joint venture, QDVC-Bin Omran. The outfit was awarded a $1.16bn design and construction road contract by Ashghal to build the Orbital Highway and Truck Route, which forms part of the Salwa Road to North Relief Road Project. And let’s be clear; this is no walk in the park. The JV is responsible for a 47km stretch consisting of five general-traffic and dedicated truck lanes – in both directions.
It doesn’t take a genius to work out that in order to complete a project of this magnitude on time and to specification, you’re going to need some high-end road-construction machinery. Fortunately for Ashghal, QDVC-Bin Omran hasn’t cut corners in this respect.
“We have invested heavily in securing the right machinery; we only have the best,” pointed out Dori Labaki, Bin Omran’s chief executive officer.
With the aim of creating “the smoothest road in Qatar”, Konstantinos Kanellaidis, head of pavement works, is also confident that he and his colleagues have sourced the most appropriate equipment for the job.
“On the Orbital Highway, the average productivity required from us is 5,000 tonnes of asphalt per day. Laid at 70mm thick, one kilometre takes 1,500 tonnes of asphalt, so that equates to 3km per day.
“But bear in mind, the road is made up of three separate layers. Also, this is only one lane of the carriageway, which comprises three lanes per side, in opposite directions, excluding the truck and cycle lanes. That means that we have to produce 2m tonnes of asphalt,” he calculated.
With this in mind, the company has invested heavily in paving equipment; close to QAR30m ($8.24m), in fact. Two of the primary models being used are the Vögele 2100-3 tracked paver and its scaled-down sibling, the Super 800. At the larger end of the spectrum, Bin Omran has purchased a QAR20 ($5.49) Benninghoven asphalt plant to replace the units it was operating previously.
Granted, this is a mammoth project, but with a single JV investing at this level, it’s easy to see that road machinery represents a lucrative sector in the Middle East. One regional player already enjoying a sizeable share of this market is UAE-headquartered equipment distributor, FAMCO.
“Last year, the road machinery sector picked up,” explained Ahmad Halwani, general manager of FAMCO’s Construction Equipment Division.
“The road machinery market, for us, has been exceptionally good. To be frank, we expect this to continue for the rest of the year,” he added.
Halwani is not exaggerating. FAMCO’s Saudi Arabian division, for instance, managed to muscle in on one of the largest road projects currently taking place in the Middle East: the aforementioned highway that cuts through the Kingdom’s Empty Quarter. As Volvo Construction Equipment’s authorised KSA distributor, FAMCO Saudi supplied 95 brand-new machines to the project’s main contractor, Al-Rosan Company.
Not content to rest on its laurels, however, FAMCO is doing all it can to maintain this momentum, and not solely in Saudi Arabia. Last month, Halwani and his colleagues targeted UAE construction contractors with a day-long road machinery event in Abu Dhabi.
“Last year, we invited a selection of our customers from Abu Dhabi and Al Ain to attend the road machinery event in Dubai, but not many of them were able to make the journey,” Halwani recounted. “We therefore decided to hold a similar event in 2015 focused primarily on customers active in Abu Dhabi’s road construction sector.”
FAMCO welcomed a selection of the Emirate’s road construction professionals to Abu Dhabi’s Armed Forces Officers Club (AFOC), allowing them to get up close with an array of Volvo CE’s pavers and rollers. In addition to machinery, the distributor used the event to showcase soft products ranging from acquisition options to aftersales support.
“When a contractor orders this type of machine, he is making a long-term investment,” said Halwani. “We offer superior products, and we are committed to supporting them. With this in mind, we can offer a range of aftersales support packages to meet customers’ needs. We must ensure that their machines continue to make money.”
One brand keen to break into the GCC’s lucrative road machinery sector is US manufacturer, Case Construction. The company already enjoys a strong presence within the region’s construction equipment market, and is ready to complete its line-up with the roll-out of compactors.
“There is only one gap in our GCC product offering, and this is within the compaction segment,” said Bassem Al-Bermawy, regional marketing manager for Case’s parent group, CNH Industrial.
“I’m pleased to say that we are in the process of filling this gap. At the beginning of this year, we launched a 12-tonne model in the Middle East: the Case 1107DX vibratory compactor. We are now looking into the possibility of bringing our other compactors to the region,” he revealed.
Despite Case’s eagerness to cement its position as a full-line manufacturer in the Middle East, Al-Bermawy emphasised that it is not willing to rush this transition. The brand is adopting a measured approach so as to ensure that the products that do ultimately arrive in the market are the best possible variants.
“By the end of 2015, we will have assessed the size of the sector and from where demand is coming,” Al-Bermawi explained.
“Essentially, this is a one-year strategic study that will enable us to bring the most suitable machines to the GCC. We cannot afford to rush. We must take time to identify the most appropriate target segments, and configure our machines accordingly. We can see that there is significant demand in the market for compaction equipment, but we still need to conduct in depth-research to ensure longer-term success,” he added.
Nevertheless, Al-Bermawi told PMV that the compaction equipment roll-out is likely to take place during the course of 2016, so Case won’t have to wait too much longer before it can legitimately count itself amongst the GCC’s elite full-range manufacturers. In the meantime, no doubt, outfits like Bin Omran and FAMCO will continue to blaze new trails across the Middle Eastern landscape.
