Keep it covered

Multiforms carried out the fa?ade work for the Index Tower.

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The downturn in the construction industry has affected a lot of companies, says Multiform business development manager Paul Haslam.

“We now see more competition from the larger companies venturing into the middle range of projects valued at $60m to $100m. The market has flattened and contracts are being chased by all major players.”

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The situation is exacerbated by the presence of a range of players in the market, which has increased the level of competition, which has contributed to a major decline in prices.

Neil Anthony Doe, Formawall product manager at Rigidal, says: “The local market is best described as fiercely competitive.” Haslam urges companies to consider quality when choosing contractors. Companies do need to factor in build quality, and not just to look for the cheapest option.

“They must also look at the past history of companies and their ability to actually deliver great results, as opposed to failing to deliver, or sub-standard delivery. It is possible to have a quality product at a reasonable price, within budget and within international standards,” says Haslam.

The alternative to this is a market where profit margins and bottom lines are eroded for all players concerned, warns Haslam. “In Dubai, the main driver is cost. Presently we are seeing in excess of 15 main contractors bidding for the same work, with each one bringing at least three suppliers. This, as you will imagine, is driving cost down locally to a point that is simply not sustainable.”

Doe says cost is the major driver. “In Dubai, things are tight, and without question cost is the single biggest driver. Further afield the picture is different; this largely explains why our 30% export and 70% domestic sales is now reversed.”

The biggest challenge for the cladding sector, as Doe points out, is convincing companies that these prices are unsustainable. “The market needs to take time to breathe and recover.

To be fair, if I were a client in Dubai, now is probably the best time to build. That said, as a supplier, this mentality – at a time when costs are on the rise – leaves you little room to manoeuvre, and if sustained becomes uncomfortable.

“This happens in the steel sector occasionally, and those guys simply shut a mill or two to reduce capacity in the market and stabilise prices. We sadly do not have that luxury, and we all have overheads to cover,” says Doe.

Despite such intense competition, however, business is still viable as the number of projects in the GCC is on the increase, and therefore the demand for cladding is still very much present.