Dawood Bin Ozair sees signs of revival in Dubai
Al-Futtaim Engineering MD Dawood Bin 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.
Dawood Bin Ozair
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.
Al-Futtaim Engineering, established in 1974 as part of the larger Al-Futtaim group, has been instrumental in many of the tower projects that now stand shoulder to shoulder on both sides of Dubai’s main highway. “We have been involved in some way or other with more than half of the projects there,” he says proudly.
Born in India, Ozair has a BSc in Mechanical Engineering. He began his professional career in major Indian business groups such as Tata, EPI and APJ. He joined the Al-Futtaim Group in 1980. In 1996 he was appointed GM of the GIBCA Group, managing Hitachi air-con, building products and defence supplies.
From 1999 to 2003 he was GM of Panatech Engineering, managing the Panasonic brand of products and technical solutions. From 2003 to 2007 he was the GM of Al-Futtaim Engineering.
Here he was responsible for heading up the elevator division (Hitachi), air-con division (Sanyo), building products division (Toto), MEP division and scaffolding division. In 2007 he was promoted to MD, a position he has held to date.
In terms of professional qualifications, Ozair studied business management at the Bajaj Institute of Business Management in Mumbai, India in 1976, and financial management and general management at the Tata Institute of Management Services in Pune, India in 1975.
He also has various management courses under his belt from the Al-Futtaim Management Training Centre.
Ozair is a member of the Institute of Engineers, India and is also a member of ASHRAE. His wife is a teacher with an MA in Education from the University of California in the US and together they have three sons.
The eldest graduated from the University of California and works in Dubai, the second is working with a Japanese conglomerate in Jebel Ali, while the third, the youngest, is working in the US.
Al-Futtaim Engineering is carrying out major contracts worth AED83million for the supply and installation of Hitachi and LM lifts in key real-estate projects in the UAE.
The company’s elevators division is supplying a total of 79 elevators and 12 escalators to developments including the Nation Towers and the Al Bahr Towers Investment Council headquarters in Abu Dhabi and the Al Hikma Tower project in Dubai.
The 64-floor Nation Towers project in Abu Dhabi is being supplied and installed with 45 Hitachi elevator units and eight escalators.
This mixed-use project includes a 350-room, five-star hotel, serviced apartments, loft apartments, office space and an upmarket niche retail destination with a total built up area of 300,000m2.
The project was awarded by Arabtec and National Projects & Construction (NPC), and is scheduled for completion by the end of the year.
The 29-level Investment Council Tower project was awarded by Al-Futtaim Carillion. Al-Futtaim Engineering will supply 22 Hitachi elevators and four escalators with destination control selection. The contract was awarded in April 2010, with final completion scheduled for the middle of this year.
Al-Futtaim Engineering will also supply 12 high-speed elevators with destination control technology for the 61-floor Al Hikma Tower project in Dubai. The contract, which was awarded by China State Construction, was won in April 2010 and is expected to be completed in October 2011
“Dubai is relatively quiet now, while our major activity is in Abu Dhabi.
We are supplying elevators and escalators, including many high-speed units, to Nation Towers on the Corniche.
We are also involved at Masdar University,” says Al-Futtaim Engineering elevator division GM Syed Shamsul Haq. He also points to the division’s ongoing involvement at Hotel JAL Tower and Al Hikm Hotel.