United in business

There seems no end to the number of UK construction firms trying to enter the GCC market.

ANALYSIS, Business

Hugo Berger examines why British firms see the Middle East as a fertile ground for expansion.

The UK can claim to have founded many of the construction techniques which have revolutionised the world.

Companies which are not established here can find it difficult to break into the Middle East markets if they are not patient.

From the world's first cast-iron bridge in the county of Shropshire, to the Channel Tunnel, the country has led the world in construction expertise for centuries.

Yet as planning regulations and lack of space led to a slowdown in the UK's indigenous building industry, companies inevitably began to eye up other parts of the globe.

One of the regions where this gaze has become most focused is the GCC.

Britain has had strong links to the area since its imperial heyday in the 18th and 19th centuries. And as the GCC's construction industry begins to make safety standards and quality issues its top priority, it is perhaps natural it would turn to its old ally for advice and guidance.

The UK and Dubai have had a mutual bond since an exclusive trade agreement was signed between the countries in 1892.

These were strengthened over the ensuing decades as commercial links led to Dubai becoming an important trading post en route to India and the Far East.

Britain may have lost its empire and Dubai may have grown from a small pearling port to a major financial hub, but the bonds seem to remain.

And as the rest of the UAE begins to seek its share of the growth, imports from Britain are helping fuel the boom.

In 2006, the last year figures are available for, exports from the UK to the UAE were at US $10.7 billion (AED 39.3 billion) making it the ninth biggest export market for the UK.

But with the dollar-peg creating a strong sterling, and a string of companies having already established themselves over here, many newcomers are not finding the UAE the licence to print money they had envisaged.

Terry Willis is managing director of the Energy Industries Council UK, which advises a number of construction companies in the oil and gas sector.

The council provides support to its members to help market their products at home and abroad.

Willis says: "Companies which are not established here can find it difficult to break into the Middle East markets if they are not patient."

"Everything over here is about contacts and relationships, and if you do not go about building these, you are unlikely to succeed."

"I wouldn't say companies are reluctant to come here, I mean if you are a construction company there's no bigger market in the world."

"But it's not all sweetness and light and there is a cultural bridge which has to be negotiated."

"Obviously the dollar peg is affecting things, as is the rise in prices of renting and buying property, but companies are still lining up to come over here."

"Our advice is not to be naïve about it and don't expect to make a packet overnight, but if you have patience and go about building good relationships you can do very well out here."

"They do really like the Brits out here - there wouldn't be 120,000 UK ex-pats here if they didn't."

"But just don't rush into things with your eyes closed."

One of the firms which have already proved a success in the region is Whitby and Bird, which set up an office in Dubai about three years ago.

Heath Anderson, associate director, said: "After we had got a couple of jobs under our belt, a lot of the reputation Whitby and Bird had in the UK was transferred over here and things have really exploded in Dubai."

"I do think the whole engineering, one-stop or multi-disciplinary approach which we offer to clients is very attractive as we can not only offer easy communication, but also less work for them."

And Anderson agreed that the GCC market was built on relationships. "A lot of this market is built on client contact," he says.

"A lot of clients do like to see you in their office to sit down and have a chat."

"That is why you find a lot of companies which do their design work in an overseas office do struggle."

"Clients are continually ringing up and saying ‘can you come down', which is impossible if you are not readily available."

And Heath believes that there were specific traits of the UK construction industry which were helping it to assimilate into the GCC markets.

Working in the UK, you have to work with lots of different regulatory bodies, communities and focus groups - from the councils to the government to the heritage groups.

While Dubai has different ones, it does require a diplomatic, political stance to do well over here. And obviously a lot of these British engineering companies are decades old so they have the runs on the board which goes a long way.

But despite this, Anderson believes the pace of construction in the UAE does take getting used to.

"One of the challenges here is getting accustomed to the timescale things need to get done in," he says.

"Over here you get very fast-track projects which take a different kind of mind-set and approach while still maintaining quality and standards."

"It's not just speeding things up and throwing more people at it, it has to be very considered because a lot of the work has to happen in sequence."

"You have to make sure it's pretty well planned out and you have the right people doing the right jobs or you'll have a big mess on your hands."

And as the construction boom spreads to other parts of the GCC, UK firms are lining up to play their part.

One of the most high-profile of these has been Laing O'Rourke's partnership with Abu Dhabi construction giant Aldar, which was formed in 2006.

The joint venture, which is handling projects such as the $18 billion Al Raha Beach project, signifies the use of British expertise in construction.

Laing O'Rourke has completed some of the most prestigious projects in the UK in recent years, including the new grandstand at Ascot Racecourse and Heathrow Airport's Terminal 5.

Now it is passing on its knowledge of building techniques to the huge projects which are planned in Abu Dhabi.

As Ray O'Rourke, chairman and CEO of Laing O'Rourke Group said at the signing of the partnership: "The joint venture with Aldar represents a major opportunity for Laing O'Rourke as an international construction group."

"We will be using all the innovative skills and modern construction techniques that we have adopted from our experience around the world and focus them on Al Raha Beach and other future developments in Abu Dhabi."

Other renowned projects include the Bahrain World Trade Centre, designed by Atkins, and the West Bay project in Qatar, which Halcrow has been appointed to project manage.

So although there are risks involved in trying to get a foothold in this market, if patience and tact are used, the relationship between the UK and the GCC could flourish even further.

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