Face to face: Al Futtaim Engineering
Al Futtaim Engineering's divisional managers talk tactics with CW
From scaffolding to elevators, security systems to air-conditioning, MEP to sanitary ware and FM, Al Futtaim Engineering has succeeded where others have failed since the crash.
Construction Week met all the divisional heads in one room to talk about the firm's ambitions across the region and discover the secret of its continued success. By Gary Wright.
It is impossible to spend any time with the senior bosses at Al Futtaim Engineering without being swept up in their enthusiasm for the business.
Senior managing director, electronics, engineering & technologies, Dawood Bin Ozair has a clear strategy for success and with profits up at least 15% year on year on a business that turns over around $200m, he appears to be doing something right.
Currently the company is working on the Palm Jumeirah Tram and Etihad Rail projects, as well as the Haram extension in Makkah and the Heritage Quarters in Msheireb's Downtown Doha. It recently completed one of the hangars at Dubai World Central, in addition to the IKEA store in Doha.
Ozair, who arrived at Al Futtaim as a project manager in 1980, clearly loves Dubai and has watched two recessions come and go in the emirate.
He said: “I live in Dubai, I have lived in US but I still prefer Dubai. It’s a melting pot of all nationalities, different cultures, it attracts people. The reason is: the infrastructure, the safety of life and the value of a human being.
“Some might say Dubai followed Singapore and Hong Kong but today if they look at Dubai, the culture that they have created here is far above those two countries. There’s a kind of cultural change that has taken place, which is very different. So how will this country not prosper and not attract people?
“And look at the safety, security, hygiene, everything is so spick and span so that’s how this country has prospered. When there is sluggishness in the market, it bounces back.”
His acting managing director SS Murali – with the company for 15 years - sits alongside during our initial chat and emphasises the importance investment in roads, rail and general infrastructure has had.
Dubai Metro was big for Al Futtaim and the ruler Sheikh Mohammed’s imposed opening deadline of September 9, 2009 (09.09.09) serves as a reminder of what can be achieved, said Ozair.
“We were directly involved in that project, six months we worried it could not be achieved, we were ‘reminded’ this cannot change,” said Ozair. “And sure enough he [Sheikh Mohammed] rode on the train that day.
“We all had to slog. AFE was responsible for the MEP works at the depots – which was
comparatively small compared to the size of the project. But we all worked day in, day out – the international consultants, project managers, Dubai Municipality, Civil Defence Authority and ... it got done.”
That achievement sets Dubai’s stall out for all the emirate seeks to achieve, says Ozair. “If they get Expo 2020, it will be done, that’s what instills confidence. People come to see this place.”
And that environment has benefited Al Futtaim, even cast the way it operates says the managing director.
He said: “Al Futtaim has also invested in its organisation, it has not remained constant for one single year. It has consistently grown. Not just in UAE but also across the region. Bahrain, Saudi, Qatar, Egypt Sri Lanka. Taking the benefit of this base we have planted roots in other regions to grow the business.”
A year ago Ozair predicted some competitors would go under. His company continued its policy of refusing to compete on solely price, earning instead the recognition for a job well done and a relationship that wins repeat business.
He points to the wall of the boardroom as he speaks. It is covered in a montage of pictures of projects with which his company has been involved – a “greatest hits” if you like, including Dubai Metro, Atlantis on the Palm, the Burj al Arab, the Pyramid, Emirates Mall and Dubai Mall.
He said: “We demand a certain price for quality. Many of our customers are repeat, so they have tested us.
“We have not come from outside. They know we are reliable, Al Futtaim is behind us and customers have tested us on other projects. They have seen our credentials.”
AFE in Qatar
Al Futtaim has been in Qatar for 10 years with around 700 people working there and it effectively replicates the set up in the UAE.
Francis Lee, divisional manager for scaffolding and formwork said: “Qatar is very bouyant with many opportunities in my business: infrastructure, high rise and we will have a crack at the football stadiums, we’re going back to cinemas, hotels, apartments, housing blocks, labour camps, offices. Anything that you can relate to the whole world coming there.
“The hard part is pricing. It is competitive otherwise it’s not a market.”
Like his colleagues though he believes Al Futtaim will succeed with its philosophy of quality. He said: “Once we’ve done a few jobs we can sell ourselves on the quality. All our men are trained, all are on PPE and we’re now ISO… and probably the biggest selling point is our name - Al Futtaim..”
Al Futtaim has a reputation for setting up scaffolding in difficult to reach places. “Everyone says they can do it but they always seem to come back to us to get it done,” said Ozair.
He offers examples: “The curve face in front of Burj Al Arab, only Al Futtaim could do it. The dome in the Mall of Emirates, it needed scaffolding, tonnes of scaffolding. But people needed to be able to work underneath. Al Futtaim did that.”
The group also believes FM offers another huge potential growth area for the future. “There are very few good FM companies in Qatar who provide the quality services required,” said Subramanya Rao, divisional manger for facilities management.
“There are a lot of technical skills in the UAE that are not available in Qatar, which we have. For example we are very good in electro-mechanical works: rewinding, motors generators, rectifying pumps and all those things.
“For HVAC, we can rebuild chillers, there are very few companies which can rectify these chiller issues and maintain them. We see a lot of potential in Qatar.”
No discussion about Qatar can ignore 2022 and Rajesh Bhatia, the divisional manager for the air conditioning division, refers to Al Futtaim’s likely role in World Cup stadia.
Al Futtaim offers a diverse range of products from window air-conditioner to the latest state-of-the-art building systems. But there are also niche products like specialised air diffuser and special absorption chillers.
Bhatia said: “We are one of the divisions very excited about FIFA, and we have two products specialist diffusers and also absorption chillers, which are very important for us in Qatar.
“With specialised diffusers, we are the only company that has done an open site air conditioning system in Qatar. We installed 39,000 diffusers to air condition the football field at the 13,000 seat Al Sadd open air football stadium in Doha, proving it can be done and can work. We are the only supplier.”
In Qatar we have recently also become the distributors for VTS Clima and are in the process of opening a new ROCA Sanitaryware showroom.
The MEP team has recently delivered an IKEA store and is currently working on projects including Mshreib and Lusail.
With an installed base of over 400 units, the elevator business has some prestigious projects in its portfolio: The St Regis hotel, Kempinski Residence, Al Fardan twin towers, Commercial Bank Plaza and the Intercontinental hotel. Currently more than 150 units are under installation.
AFE the supplier
It is not only elevators that Al Futtaim is known for supplying – sanitary ware is huge for the company and its reputation has seen some of the world’s premier names approaching Al Futtaim to represent them.
As the construction market matures in the UAE, it has been recognised that quality is more important than some of the ‘here-today-gone-tomorrow’ boutique brands. Some of the sanitary ware from the mid 2000s is now almost impossible to repair and maintain.
“Boutique brands here today gone tomorrow, bought today sold tomorrow closed down,” said Wasim Hicham Haider, general manger for the building projects division.
“So a lot of hotels that were supplied to in last five to 10 years are now in that position.
“A lot of projects do not have them anymore because of the spares situation.
“During the boom, there was a shortage of suppliers and many people took advantage. The market has matured now and people realise their mistake. Many MEP operators came but could not sustain their business and now they have disappeard.”
Wasim continues: “My point of view is that brands like Toto, the number one Japanese sanitary brand, has beenaround for 100 years and has a 24-year relationshipwith AFE in the UAE. So, spare parts will still be available in 15 years.
“Toto can be found in Dubai Mall, the Marina Mall, Dubai airport, the Conrad on Sheikh Zayed Road, the One and only, the Sheraton Hotel, Mall of Emirates…” The list is long, even Dubai Metro stations use Toto.
“In certain segments we are market leaders and out of the 10 major malls in UAE we are in seven, hospitals too, we’re market leaders in healthcare.”He reveals during our interview that Al Futtaim is currently reviewing a contract to supply sanitary ware to the Mafraq Hospital.
But Al Futtaim believes those ‘fly-by-night' oeprators have gone.
Ozair said: “Because the market has matured, people know whom to use and whom not to use. Now the government requires that they should have a local partner or local distributor on any project. It’s quite a new initiative by the government, someone they can rely on.”
Interestingly he is sure that this benefit has been carried over to Qatar, which has learned lessons from the UAE experience.“Quality is important in Qatar and they are careful on who is importing.”
And Qatar has seen success for Al Futtaim with the leading Spanish sanitary ware brand ROCA.
Wasim said: “It’s number one in the world and two years ago ROCAsaw our performance in UAE and appointed us their distributors. We are proud to be sole distributor of Roca in Qatar.
AFE on Emiratisation
When the conversation moves to Al Futtaim Engineering‘s approach to Emiratisation and how it works within the company, managers saw it as an integral part of their work.
Hani Nsouli is assistant general manager for the MEP projects decision. He is just starting his third year with the company, having worked for a competitor before.
“I like the team spirit, the oneness in this organisation between all divisions, going the extra mile for our customers. No limits, no hurdles can stop us from our targets. Everything has a solution.”
And he liked the way the company dealt with its “corporate social responsibility” for Emiratisation. The Al Futtaim Group has a department specifically set up to encourage Emirati graduates and integrate them into the organisation.
Nsouli said: “We have good number of Emiratis in our MEP and FM businesses. Both Mr Rao and I have them. They are very good in projects, very willing to learn and willing to develop.”
Murali explains the Emiratis work across all parts of the business: “The Emiratis we employ range from operators, drivers, supervisors to managers, coordinators... across the whole spectrum. He said“We recently recruited a young mechanical engineer – mid 20s - who is doing a fantastic job. He is keen to learn design and has shown his willingness to take on more responsibilities.”
Dawood agrees: “We have a very good team of Emiratis, and people who we have been able to retain. Most of the problem with Emiratisation is that they move on but we have been able to retain quite a few good Emiratis in our organisation.
“They are continuously improving their technical skills through learning and experience. They are a very good team. We have Emiratis who have been with us for 25 years.”
He explained that retention of Emiratis is a problem for Al Futtaim, as it is for most of the private sector in the UAE.
“Government sector is an attraction to Emiratis but I think we engage them very well. We look after them financially but they also become part of our team. We endeavour to provide Emiratis satisfying careers."
There are about 40 Emiratis working for Al Futtaim – eight per cent. “There is a government requirement but apart from this, we look after them well,” said Ozair.
AFE on success and the future
Ozair: “Anyone who wants to be successful in this market has to deliver consistently good quality product and services. It’s a competitive market. Everybody wants to come here and take a share of your business. There is no restriction. Demonstrate you can deliver a service at a competitive price and you can be successful. If you do that again and again you will succeed.
Murali adds: “We seek and maintain relationships; we don’t just look at a business in a transactional manner, do the deed and move on. We build on the relationship.”
He then refers to the wider Al Futtaim Group with its large real estate development. “We do work to last a lifetime and that same principle applies wherever we work.”
Al Futtaim is a company that has rode out the crash and emerged stronger and more focused and it is clear its growth will continue.
To a man the divisional bosses at Al Futtaim speaking to Construction Week are sure that Dubai is on the up again and their company is perfectly placed to capitalize both in their home country and in the markets of Qatar and KSA.
Ozair said: “Al Futtaim provides an end to end solution, we design the scheme we install, we service and we maintain. End to end.”
AFE on buying at the right price
Bupesh Mahajan is head of procurement and his work can ensure maximum profitability for the company and just as importantly, a fair price for the client.
“We buy in a lot of products and one of the reasons for Al Futtaim Engineering’s success is that we buy right,” he said.
“The market is very complicated, so you must buy at the right place. We have a system, online software called Ariba, an American system we’ve used since 2008 enabling us to buy products and services at a competitive price in the market.
“Chillers for example, certain brands will be specified in an MEP project and we will tender out the exact request for quote, which has all the specifications. We check that they comply.
Before we contact suppliers online we ensure they are all on the same platform to give exactly what we want. Price is the final part, we ensure they are all the same. Then we negotiate.
“It is fair with the vendors, they are confident that we are fair with them. Those who don’t meet the exact specification won’t be in the process. Also the decision will be completely fair and transparent.”
Ozair said: “This has helped us increase profitability and get the right price from the market. It services our customer better too, they can’t do it for themselves and we guarantee the best price on time.”
AFE in Saudi Arabia
Saudi Arabia is a clear focus for Al Futtaim where it has already secured projects including MEP work for the Makkah Haram.
It applied the same principle of establishing a mini operation, reflecting the structure in the UAE.
Ozair said: “We’ve only been three years in Saudi and there were initial hiccups because of government regulations.” But Al Futtaim is expanding and opening two offices in Jeddah and Riyadh. “That business [Saudi] is also growing and we have 400 people working there.”
Al Futtaim has secured the elevator contract on Haramain retail center a first for its Toshiba distribution and a hotel in Medina for BLT Elevators.
“In Saudi we represent Toshiba elevators and LM, whereas in the UAE and Qatar we represent Hitachi and LM.”
Syed Shamsulhaq GM Elevators adds that Al Futtaim also represents BLT a leading Chinese Elevators brand in UAE, Qatar and KSA.