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Construction Week discovers how the formwork sector is using the economic downturn to its advantage

Make no mistake - the construction industry is troubled by the recent reports that state-run Dubai World will delay payments on a large proportion of its debt, worth US $80 billion (AED293.8 billion).

Just when there were whispers of recovery in 2010, contractors, developers and suppliers are now thinking they may have spoken too soon. So, how will formwork firms handle this situation and has their confidence been knocked?

CAUSE FOR CONCERN

The first wave of the downturn caused demand of formwork systems to dip slightly as projects were put on hold or cancelled. Now, suppliers fear that the latest news from Dubai World, whose subsidiary is construction giant Nakheel, may be a sign of things to come.

“We do worry, as many developers have not signalled very clearly that they are, in fact, not backed-up by the government and therefore creditors and contractors are basically on their own. This lack of transparency is scary, as one might wonder if there are more debt bombs lurking and the degree of their extent,” says Ulma general manager Andreas Gathmann.

“The debt that has been built so far needs to be repaid sometime and the message we are getting is that Abu Dhabi is not willing to underwrite all of it, only on a case-by-case basis. The perception is that when things start to go wrong, everybody is running for cover and the ones left outside may have to ride the storm by themselves. I do hope that this perception is unfounded.”

Manufacturer of formwork and scaffolding systems Peri also has fears for the future.

“There is a lack of money in the market, which will mean less business for us. Demand is very unlikely to increase in 2010,” says Peri managing director Hans Joachim Rau.

Some contractors and developers affected by the financial storm are choosing to ride it out by delaying payments to formwork companies, as well as other subcontractors.

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“The payment problem persists in Dubai and we, like others, are suffering with contractors taking a long time to honour their agreements,” states RJR Engineering managing director Roger Ratcliffe.

“Down the line, everybody is using the non-payment excuse, whether valid or not.”

Gathmann agrees: “We have a couple of contractors who are not paying with the excuse that they are not getting paid themselves. This is not our problem, as our contract is with the contractor and not with the developer.”
In the meantime, formwork companies like Ulma are insisting on small but regular payments. Some are adhering to strict payments either with cash before delivery or in the case of rental, bank guarantees covering the amount of material on site, to ensure on-time payments.

“Of course, most of our clients are long-term partners, where trust has been built over the years but even with those, payment clearance is taking more time than usual,” adds Gathmann.

Michel Tannous managing director of Sten Gulf, a company specialised in the development and application of formwork, adds: “In some cases there are problems and we have had to be selective when choosing our clients.”

Despite this situation, contractors and suppliers alike are making the best of what they have. It is clear that construction companies are tightening their belts and they need to save money right now and not likely to be convinced by the long-term benefits building materials or equipment could bring.

So what can formwork suppliers offer that will save money, but still ensure high standards of a completed building?

FINDING A SOLUTION

Currently, the most desirable formwork technology from the perspective on the contractor is a speedy and versatile system that can reduce labour costs.

Now, it looks as though formwork firms are working to meet this need.

“As a new formwork company, which supplies products to the GCC, our motto is very simple – we wish to offer simplicity, speed and satisfaction,” explains Sewvac Middle East technical director Vic Warden.

Aluma claims to be the market leader when it comes to offering a formwork system, which is fast and reduces the number of labourers needed on site.

“At our new Zayed University project, we are utilising an Aluma Super-Table, which measures 14m in length, is 7m-wide and 4.7m-high. This 100m2 table will be lowered onto wheels and lifted by crane to the next floor in just 20 minutes under the supervision of six workers,” insists Aluma area manager for Abu Dhabi, Daniel Taylor. “No other system can even come close to stripping, moving and re-erecting this volume of shoring in this time span, using so few laborers.”

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