Iraq could be 'next Saudi Arabia': MAN Trucks
Sales VP spies potential for oil-rich country as rebuilding continues
Iraq’s extensive rebuilding requirements could make it “the next Saudi Arabia” for contractors and suppliers, according to an executive at MAN Trucks.
Dave van Graan, vice president of sales at the German heavy vehicle giant, said the gradual pick up in demand for machinery to help develop the troubled northern Gulf country has already given the company “four-fold” what it had earned in income in the previous five or six years – with a lot more potentially to come.
“We see a number of the long-awaited government spending projects come to fruition, and those companies that stood the test of time that maintain the infrastructure, they are the ones that will be with the boom,” he told an audience at a construction industry round table organised by PMV Live and Middle East Concrete - two events to happen at the same time as The Big 5 in November - in Dubai last week.
Saudi Arabia is currently the chief market for the truck maker on the back of high construction activity from state-sponsored programmes to build new airports, housing projects, financial centres and economic cities along with a rise in private-sector development.
Van Graan said the country’s size, population density and oil reserves created an ongoing pipeline of projects, and these attributes can be applied to Iraq.
“Saudi will be very strong but the next that follows will be in that region, purely by way of population density and it is a rich country; [Iraq] has money to spend,” he said. “If you’re developing a pipeline and you have the staying power to handle the economical and political challenges there, then obviously you will benefit. So it’s [a question of] how long you’re strategically thinking: is it six months, or five years?”
Contractors, consultants and suppliers across the Gulf have been divided as to the potential and reality of working in the Iraq market, which has many billions of dollars worth of projects planned in the wake of the international conflict in the country since 2003 that has stymied development. Infrastructure such as ports and airports, as well as hotels and shopping centres make up an active market, though concerns remain about the security costs.
Demand for trucks and other vehicles remains high. Earlier this year the country extended its $42m deal made in 2008 with vehicle giant Scania to include the production of 5,000 trucks and buses over a five-year period. Further deals with Mercedes and Renault mean that Iraq has boosted both its vehicle production and parts manufacturing industry in the past 12 months, and hopes to produce trucks domestically within the next ten years.
But other speakers on the panel, which included representatives from the cement giant Lafarge, Doka, Manitowoc, consultants ADC and Richie Brothers, the auction house, all spoke of the inevitable focus on Saudi Arabia.
David Semple, vice president of sales for Manitowoc, said the country is likely to have the “biggest construction projects in the world”, and that a more stable oil price would help create a steady stream of energy related projects.
“After the rollercoaster of oil prices from $147 to $40 back to $70-$80-$100, we’re back to a normal, oil maintenance-refurbishment-replacement, construction, and that’s good for our mobile crane lines. I’m seeing this for the next few years.”