Face to face: Peter Brechtelsbauer, Waagner Biro
Peter Brechtelsbauer on taking tough decisions to rebuild Waagner Biro
Waagner Biro Gulf LLC CEO Peter Brechtelsbauer reveals how the company is on a growth curve and details its strategy for staying competitive in the Middle East.
Good projects and profits are what Waagner Biro Gulf LLC is focusing on this year says CEO Peter Brechtelsbauer. You see, the German-born troubleshooter was brought in by the Austrian parent company in September 2011 to reinvigorate the firm following the downturn.
Judging by its current performance he is delivering the goods but admits there’s still plenty of work to be done.
“It’s always complicated to say we concentrate on profit but our focus was to come back on track because when I came in one-and-half years ago the company was not in a good position,” says father-of-three Brechtelsbauer.
The problem was Waagner, famous for building Abu Dhabi’s Maqta Bridge in 1967 and Dubai’s Floating Bridge in 2007, had a burdening backlog of late payments on its books, and was facing stiff competition from new entrants in the market.
“We had more than AED80m outstanding. The worst thing was that about 90% was outstanding between 180 days and 360 days. This was the biggest challenge,” says Brechtelsbauer.
“So when I first came in I changed 50% of the management. I brought in my own people whom I had known for years and years in this market together with the remaining team, who worked and continue to work tirelessly for the company. And that worked. Management has to work, management has to perform. If I don’t perform I’ll have to search for another job as well.
"It hurts me a lot because it’s not easy to release people. If you ask anyone in my company they can confirm that every single person I release I had real difficulties."
In total around 100 people were released, including 10 senior staff as Brechtelsbauer looked to adopt a new business model around a leaner structure, less projects; but most importantly, projects with a profit.
Having broken even in 2011 Brechtelsbauer says it took around six months for his and his new management’s plans to bear fruit.
The next year Waagner posted a profit as late payments were recouped and specialist higher yield projects were sought and won within its core activities of steel and bridge engineering, marine engineering, maintenance and MEP, and environment and water and waste water treatment.
“It was a huge success for us in terms of everything: turnover and profit. We started to hire again,” explains Brechtelsbauer.
“Years ago we built the Floating Bridge, we built the Al Maktoum Bridge, and we’ve been more or less the only one [in the market]. Then slowly, slowly the companies in Europe, Africa and India realised there was a business here and it became more competitive.
So we’ve tried to focus on specialised construction where other firms might have problems to do so because there’s more knowledge involved, more engineering involved and not every single blacksmith or workshop can do it."
Interestingly, he says this new selective approach means if a massive engineering project like the Floating Bridge was coming to the market now the firm would not look to take it on as a main contractor like it did before, but instead seek a joint venture or subcontractor position. Back then, the project stretched Waagner to its limits in terms of operations and manpower, although it was completed on time and on budget.
“The Floating Bridge was quite different because we got a lot of support from our headquarters in Vienna and it was needed for that,” says Brechtelsbauer.
“Now if there’s a huge project we can’t do it because we’re still a small company in terms of revenue and turnover. We’re not capable of making a contract for AED1bn. For such projects we are a JV or subcontractors for specialised engineering works so the bigger firms can concentrate on their main business.”
With Bavarian Brechtelsbauer revealing last year’s order book has already been surpassed it would appear Waagner is continuing its upward trajectory in 2013. And he says he is awaiting the outcome of several lucrative infrastructure and maintenance tenders that could further boost its coffers.
Today Waagner is present in the UAE and Qatar, with the former accounting for about 80% of its business. Government work totals more than 80% of revenue across both countries. Maintenance makes up the greatest chunk of UAE work, while in Qatar environment and water and waste water treatment is its sole activity for now.
The firm recently signed AED104m five-year contract for maintenance of road structures in Deira and Bur Dubai with the Roads and Transport Authority (RTA), along with an AED8m maintenance deal with Abu Dhabi Aircraft Technologies. It also has a number of maintenance and construction projects on its books with UAE developer Nakheel.
Elsewhere, steel and bridge engineering bagged three projects for eight pedestrian bridges in 2012 and 2013 worth approximately AED25m in the likes of Dubai’s Jumeirah Lakes Towers, Jebel Ali and Umm Suqeim.
The marine division scooped five Dubai and Abu Dhabi projects this year worth AED14m, while environment and water and waste water treatment sealed two Qatar deals worth AED8m.
Brechtelsbauer sees real growth potential across all four divisions but when he first joined from Huber Technology he was actually considering closing maintenance because it was extremely labour intensive at a time when work was slowing down.
“Maintenance is a major achievement for us,” he says. “When we came into the UAE we built up the bridge business but we thought: ‘Ok, we’ve built a lot of bridges, we’ve built a lot of streets and so on, but where’s the maintenance?’ That’s why we established the maintenance section in ’93 and MEP in ’94.
Now, whatever time you look around the streets you’ll find people and cars from Waagner cleaning them, taking care of the street lights, taking care of the control panels for the street lights, carrying out road safety measures. I soon realised that this is one of our biggest pillars in the UAE and I expect it to grow.”
He describes Waagner as a “marine pioneer” as “again it’s not about manpower, it’s not about machinery, it’s about engineering.” A major project to date is the new Deira fish market where Dubai Municipality hired it to carry out enabling works up to June this year.
“I’m amazed whenever we have these Shamal winds. Because of the structure and nature of these artificial islands like Palm Jumeirah and The World the waves have been converted in an artificial way that destroys the beach,” says Brechtelsbauer.
“We step in and we do the rehabilitation of the beaches and build all these barriers for the waves. I see potential and a fast growing market.”
He sees signs the UAE construction industry is picking up as investor confidence returns, pointing to recent announcements of massive projects like Mohammad Bin Rashid City in Dubai. Schemes such as this represent an opportunity for Waagner to win work.
“A project like Mohammad Bin Rashid City is going to be connected to the creek. You have to cross the water. Water means bridges, bridges means maintenance and it means marine work as well, as you need pontoons for the ship docking stations; so that’s in our favour,” Brechtelsbauer points out.
“When you find there’s a new project coming you have to be active. If you wait up to when the tender is there, for me, it’s too late.”
In Qatar, where the company has been present for the last five years, Brechtelsbauer would like to see a similar UAE business model adopted. Currently it is operating and maintaining for Ashghal 48 sewage pumping stations, 13 package treatment plants and one sewage treatment works.
It is also undertaking associated sewer networks and sewer system within a 100km catchment area, and associated treated sewage effluent (TSE) networks and tower feeding the networks with a total length of 11.9km.
But the intention is to register with Ashghal to qualify for bridge and marine engineering, and maintenance and MEP work. Crucially, Waagner has just “refreshed” its association with its local sponsor enabling it to press ahead with its plans.
“The feedback has to come back from the Qatar sponsor and then we have to work it out with them. Environment and water and waste water treatment should be the supporting tool for the other divisions.
Within the next two years we are quite keen to establish in the market,” says Brechtelsbauer. “Qatar is in a quite healthy position. It’s not like what we would expect but it’s making profit.”
Elsewhere in the Gulf, Brechtelsbauer describes Saudi Arabia and Oman as longer terms prospects but says for now the focus is firmly on existing markets. “The parent company said first of all the goal is to recover here [UAE and Qatar]. Recover here first then grow into other markets.”
Project name: Al Raha Beach Development - scour protection and dredging works
Location: Abu Dhabi | United Arab Emirates
Commencement: February 2013
Completion: May 2013
Contract value: AED 2.1m
Client: Al Futtaim Carillion – Abu Dhabi
Steel and bridge engineering
Project name: Footbridges in Jebel Ali (within improvements of parallel road project R881-4)
Contract value: AED8.9m
Location: Jebel Ali, Dubai – UAE
Main Contractor: Al Naboodah
Completion: July 2013
Maintenance and MEP
Project name: Routine maintenance of roads structures at Deira (M1009/D1) and Bur Dubai (M1009/B1)
Location: Dubai | United Arab Emirates
Commencement: 18 April 2013
Completion: 17 April 2018
Contract Value: AED104m
Client: RTA – Road & Transport Authority
Environment, water and waste water treatment
Project name: Qatar Petroleum pilot reed beds
City: Mesaieed l Qatar
Commencement: 6 January 2013
Completion: 31 August 2013
Contract value: QR764,000
Client: Qatar Petroleum, Technip, Sinbio, WBQ
Waagner Biro Gulf LLC
Ahmed and Hussain Lootah
Sponsor (Abu Dhabi)
Sheikh Mohd. Bin Butti
Steel and bridge engineering, marine engineering, maintenance and MEP, environment and water and waste water treatment
Waagner Biro (Vienna) Est. 1854