Full Steam Ahead

Al-Futtaim Engineering MD Dawood Bin Ozair tells MEP Middle East why he is so optimistic about the future of Dubai, how his company has played a major role in its current development, and its plans for expanding into Bahrain and Saudi Arabia.

The head office of Al-Futtaim Engineering is an unassuming, single-level structure tucked away inconspicuously behind a much more ostentatious building. This is very much in keeping with the philosophy of the company itself, which is to eschew those big flashy projects that Dubai has become synonymous with – and which have been associated so prominently with its current downfall.

However, Ozair is quick to defend both the allure of Dubai, and his allegiance towards it. “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 little 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.”

Having been in Dubai for the past 27 years, Ozair says he can recall when Sheikh Zayed Road was merely a dusty track in the desert. He adds that Al-Futtaim Engineering has been instrumental in many of the tower projects that now stand shoulder to shoulder on both sides of this iconic highway. “We have been involved in some way or other with more than half of the projects there,” he declares proudly.

This is a notable achievement for a company established in 1974 as an entrant in the fledgling air-conditioning market. 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.

Ozair reveals the company is branching into facilities management as the next phase of its development. “We already encompass all the services required, such as electro-mechanical, security and elevator maintenance, so it is a natural fit for us.” This is also an example of the synergies the company is able to draw from its various divisions.

STRATEGIC DECISION

From an initially low-key inception, the company took a strategic decision in 2003 to become part of the building boom that was beginning to take off. “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.” Ozair says 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.” Ozair says that, while all the divisions were present from the beginning, the company as a whole adopted a slow, but progressive, pace.

“In 2004, in fact, we doubled our business from 2003, 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.”

The company has been careful to nurture this reputation for quality, and has been ISO 9001:2000 certified for many years. Ozair says this means the company almost pre-qualifies for major MEP works automatically, “as it is recognition of the fact we have been maintaining our quality and health and safety standards very well. We are well-received in all the projects we are involved with.”

In keeping with this philosophy, Al-Futtaim Engineering recently signed the Build Safe UAE member’s charter, which Ozair says is “a tremendous step forward for health and safety. We look forward to sharing our expertise with charter members so as to trigger wider commitment to more stringent standards.”

EARLY SUCCESS

An early example of the company’s success in adopting a strategic approach to growth, rather than trying to keep pace with the booming market, was the Al-Futtaim group’s successful development of the flagship Dubai Festival City project. A ‘city-within-a-city’, this 1 600 acre waterfront project extends along 4 km of the Dubai Creek shoreline, including an 18-hole championship-standard golf course.

Al-Futtaim Engineering also built a 50 000 TR district cooling plant for the project, including the complete pipeline reticulation, and is also responsible for maintenance aspects such as lighting. “Dubai Festival City gave us a major base to build on. Now the group has a Festival City underway in Cairo, where we are already involved, and of course there is Morocco coming up, where we will also be involved.”

Ozair explains the involvement of the company in the larger group: “Al-Futtaim Engineering is involved right from the design stage of every project, and forms part of a turnkey package – that helps the group and the contractor, as well as the end user, in that a complete end-to-end solution is provided.” In terms of regional expansion, Ozair explains that there are two main ways of achieving this. “One is we go wherever the group goes in terms of developments; the other is we decide which territories to go into ourselves, like we did with Qatar.

“At the moment we are very keen to enter Bahrain and Saudi Arabia, as these regions are developing and there is a lot of potential. The group has already taken the step to enter Saudi Arabia, so for us to do so will not be difficult, once we have identified the market parameters. So we are looking at this very seriously.

“The other area which has future potential for us is Abu Dhabi. We are already conducting business there, but it is growing in a big way. Thus it will be easy for us to escalate our presence and extend our market reach there much further. We already have very good customers onboard,” says Ozair. He adds that Abu Dhabi’s successful bid to host the global headquarters of the International Renewable Energy Agency (IRENA) has focused the spotlight firmly on Masdar City.

“This project is now the prime project for everybody. Everyone will thus make sure this project is completed on time.” Another mega-project in Abu Dhabi that Al-Futtaim Engineering is playing a major role in is the new US$100 million aluminium smelter at the Khalifa Port and Industrial Zone, a joint development by the Abu Dhabi Basic Industries Corporation (ADBIC) and Midal Cables, an aluminium rod and electrical conductor manufacturer in Bahrain.

In Dubai itself, Al-Futtaim Engineering has played a leading role in the flagship Dubai Metro project, being responsible for all the MEP works at the Rashidiya, Al Ras and Jebel Ali train depots. “Our area of responsibility encompassed the car parks around these areas, the complete electro-mechanical works, and of course all the scaffolding and building products at all the stations and depots.”

Ozair comments that the deadline of 09/09/09 is “very tight, but achievable”, with all contractors committed to achieving this date. “The Dubai Metro project has been very challenging from the MEP side, as we had to propose all the initial specifications based on our own experience,” in line with the stringent requirements of the JT Metro JV, which comprises an international team of Turkish and Japanese contractors and consultants.

REGIONAL MILESTONE

“The Dubai Metro is the first of its kind in the region, let alone the Emirates, so there was no model to follow, as with a shopping mall, for example. In addition there were complicating factors such as underground stations and tracks, which posed specific MEP and cooling-system challenges,” says Ozair.

Looking to the future, Ozair reveals that the company has a solid order book taking it well up to 2010, mainly due to it securing work outside Dubai. “Thus we are very hopeful about the future. A major criterion of a company’s progress is recruitment, and our workforce has been expanding from 2007 until today. We have not been as adversely affected as other companies have been, and are still growing.

“There is no signal within our business that the market is slowing down. Our recruitment has not stopped either because business has continued.” Indeed, Ozair says that in 2008 “it was impossible to recruit skilled professionals from traditional markets like India, Sri Lanka, the Philippines and even the UK.

TURKISH ENGINEERS

“We ended up recruiting engineers from Turkey. Today the manpower availability is not such an issue, though I am not saying it is better for the people themselves. The problem has been exacerbated by the near total collapse of some of the major players, which has flooded the market with literally thousands.”

In terms of other challenges facing the company, Ozair points to the perennial issue of payment. “This is a major challenges faced by everyone in the market. However, it can be dealt with by careful planning, discussion and negotiation with customers. Yes, this problem is likely to persist, as liquidity is an issue in the market. That situation has not been created by our customers, but the banks whose lending has been constrained by the global crisis.

“For example, we had a significant project lined up from a reputable developer. But he could not secure a facility from his bank, so was struggling to finance the project, and ended up leveraging his own limited resource base. It was not planned that way, and hence he is now struggling, through no fault of his own. He was dependent on a financial system that encountered major problems, and was hence a victim of the market,” argues Ozair.

STABILISING MARKET

Contrary to the bad press accrued by many developers due to the cancellation of high-profile projects, Ozair says this is often the last resort, as it is not in the interests of either the developers or the market. “Projects on the ground and those on the drawing board should be allowed to proceed; I think that is what will stabilise the market and give people renewed confidence.

“I think it is already changing; I can see the liquidity seeping back. The government’s efforts to prop up the banks are starting to filter through to businesses. I feel there is a certain amount of improvement. You can see a little bit of renewed liveliness in the market compared to what it used to be.” Though he is optimistic, Ozair is prudent enough to add a measure of caution to his prognosis for recovery.

“Optimism is something you have to be very careful of, as in ending up with what you wish for. I am sure we will not return to the prior boom period for some time to come in Dubai, and indeed I think we should not even aspire to this, as it was not a natural situation. We have learnt our lesson,” concludes Ozair. This prudent approach bodes well for the future of Al-Futtaim Engineering and Dubai.