Big 5 Saudi preview
Exhbitors confident ahead of this year's event in Jeddah
As this year’s The Big 5 Saudi event approaches, Hadi Khatib finds exhibitors and show organisers remain upbeat about the construction sector’s prospects in the Kingdom.
This year’s Big 5 Saudi trade show takes place in interesting times for both the Kingdom and the wider region. Its timing coincides with a report that forecasts continued, if somewhat moderate, growth for the Kingdom’s construction sector despite the ongoing decline in oil prices.
Nathan Waugh, event director for Big 5 Saudi organiser DMG Events, says: “Generally, we are expecting strong growth for the event. This year we are celebrating the fifth anniversary of the Big 5 Saudi, which has been on a serious growth pattern since its inauguration.
“We are looking to sell all available internal and external areas, or 20,000m2 of exhibition space.”
The Big 5 Saudi takes place at Jeddah Centre for Forums from 9-12 March. Waugh says the event has grown by around 90% since the first show was held in 2011. The number of exhibitors has increased from 300 in 2011 to 540 last year, and visitor numbers have grown from an initial 9,000 to more than 15,000 in 2014.
He adds: “The construction industry is a crucial pillar of Saudi Arabia’s growing economy. It is widely acknowledged that well-managed and successfully delivered construction projects can improve the delivery of public and private services.
“But it needs a strong foundation, which is why the Big 5 Saudi has gone from strength to strength.
“It brings together decision-makers, procurement managers, international visitors, and large companies for four days, providing them with the opportunity to network and see first-hand what new products are on the market.”
The event will feature national pavilions from 15 countries including Germany, Turkey, Greece, Italy, China and India, as well as witnessing the first national participation from Hungary.
“We hope such an increase in exhibitor and international participation, in addition to the educational courses offered at the event, will reflect positively on the number of visitors,” says Waugh.
The Kingdom’s buoyant construction sector is the main reason for increasing interest in the market. Saudi Arabia has made great leaps forwards in the past decade, moving from a fully oil-dependent economy into a more diversified one supported by a policy aimed at providing huge financial resources towards economic development projects.
A focus on social infrastructure has continued in four consecutive public budgets (2011-2014), especially on the need for reasonably-priced housing programmes that address large shortages in the sector, while simultaneously creating more investment opportunities in the construction industry.
Even in the most recent budget, where spending on physical infrastructure was trimmed, healthcare and education spending was increased to fund the building of a series of new medical cities, hospitals, healthcare centres, schools and universities.
Healthcare and social affairs spending rose by 48% to $42.6bn, while education spending rose by 3% to $57.7bn. To keep pace with these and other developments, the trade show will offer a series of useful seminars on opportunities.
Waugh says: “The main focus for this year has been on educational content. [This is] In addition to the popular two day ‘Seminar Series’, which we launched in 2014 and will be expanding to over 20 sessions this year.
“We will also for the very first time be running more than ten, free-to-attend workshops officially accredited by CPD so that visitors can gain points to advance their careers.”
This increase in the total educational offering came in direct response to the need, highlighted by previous visitors through focus groups, who asked for more access to comprehensive educational content.
“We believe that moving towards a more learning-focused event, while still continuing to offer the widest range of international products, will generate a higher volume of visitors, leading to more opportunities and a better return for our exhibitors,” Waugh says.
He adds: “The main difference here is that we always seek ministerial endorsement for the event, being that the majority of projects are government-led. This year, once again, we are honoured to be able to have the endorsement of the Ministry of Municipal and Rural Affairs, who will also be hosting two workshops at The Big 5 Saudi 2015.”
The World Bank expects Saudi Arabia’s economy to grow by 4.5% during 2015-2016, backed by a 5.5% growth in the non-oil private sector, representing 14% of government revenues in 2014. Ventures Middle East is forecasting that $3tn worth of development projects will be launched in the Kingdom by 2020.
It published a report last month into the Saudi construction market, which states that “the most important driver is its strong demand base (nearly 40% of population are under 14 years old, and the population is growing at over 2%”.
The 2015 budget has made its third-largest allocation to the transport and infrastructure sector – a total of $167.8bn.
The projects include plans for railroads and roads, such as Riyadh Metro, Makkah Metro, the Dammam and Haramain rail projects, the Saudi-Bahrain causeway and new airports in Madinah and Abha, as well as upgrade to both KKIA (King Khaled International Airport) in Riyadh and KAIA (King Abdullah International Airport) in Jeddah. More than 4,000km of new roadworks are also included.
Other massive projects underway include mega-cities such as King Abdullah Economic City, which is one of six new economic cities being planned as long term projects, and infrastructure works to continue the development of industrial cities in Jubail, Yanbu and Ras Al-Khair.
Given such strong market dynamics, exhibitors are confident of making their appearance at The Big 5 Saudi pay off.
“We consider 2015 as a launch pad for us to focus on achieving higher sales figures,” says Ahmed Sayed, marketing manager at Arabian Roots Group (ARG).
In 2013, ARG agreed a deal with construction machinery giant Case to open the Kingdom’s first Case Construction Equipment showroom in Jeddah as part of its plan to expand its product portfolio range and to offer a more comprehensive after sales service to equipment buyers.
ARG, which is partly owned by Saudi Binladin Group, is exhibiting at Big 5 Saudi for the first time in 2015.
“We are planning to offer our complete sets of heavy mechanics, including bulldozers, forklifts, and more,” said Sayed. “In addition, we will launch the new Case excavator and crane. Our message at this event [is] we are here to stay.”
Muawia Yamak, marketing manager at Shaker Group-LG, which provides air-conditioning systems, said the firm had missed out on exhibiting at the Big 5 Dubai showcase event, which sold out when it took place at Dubai World Trade Centre in November 2014.
“However, we will make it up with a strong presence at the Big 5 Saudi, where we will launch our newest products such as compressors, air conditioners, chillers and more, which are compliant with the latest energy-efficiency benchmarks set forth by the Saudi Standards, Metrology and Quality Organisation (SASO).
“Anyone can survive without a job in the Kingdom, but not without air conditioning,” he says.
Al Hassan Ghazi Ibrahim Shaker has been operating in the Kingdom for more than 61 years. The company, whose shares are listed on Saudi Arabia’s stockmarket, recently declared a $121m (SR455m) profit for 2015.
It owns a 51% share of a joint venture with South Korean electronics giant LG, which has a factory in the Kingdom as well as 22 service centres offering after sales and spare parts support.
“We know what customers are looking for, backed by strong R&D support from LG in Korea, and in addition to the range of products for residential and commercial applications, we are here as well to promote our after-sales services, which is the best in the region,” says Yamak.
Al Fursan, meanwhile, is a much more recently established company that specialises in manufacturing ceramics, porcelain, and sanitary supplies.
“This is our first participation and we are new in the market. We seek to promote our products, as this exhibition is one of the largest events where we can communicate with contractors, engineers, architects and interior designers,” says Yusuf Maymoun, an expert in multimedia design at Al-Fursan.
With 1.5 km2 of manufacturing facilities in three locations, Al-Fursan is targeting a place among the top producers of sanitary and tile products in the Kingdom.
Meanwhile, in its third participation at Big 5 Saudi, Zamil Industrial is looking forward to meeting customers, competitors and influencers.
Established in 1998 and based in Dammam, KSA, Zamil Industrial is part of a large, family-owned group that offers a range of building and construction materials – everything from pre-engineered steel buildings, steel structures, air conditioning, telecoms towers, concrete products and fiberglass, among others.
The company employs more than 10,000 staff in 55 countries, with 30% of its revenues coming from exports.
Zamil Industrial’s exhibitions manager, Hossam Nassar, says: “We are not here to look for new projects. We have the proper channels for that. Our goals are to highlight the company’s achievements through the projects we built in and out of the country, explore the latest sector trends and communicate our robust abilities as solutions providers.”
He said that the company’s focus would be on insulation materials.
“We have more than 25 factories locally and globally, and current trends are about looking for ways to save energy. We provide fully integrated solutions that exceed local requirements and meet the toughest international standards, he says.
“Our strength lies in product diversification and the ability to provide comprehensive and integrated solutions.”
It will also be promoting its pre-engineered steel buildings, which he says will be of interest for those looking to build industrial units. “We have patented a design that enables to save space by excluding the central columns.”
Waugh says that as organisers, DMG Events wants to make sure that those who have specialist requirements can find their way to providers such as Zamil Industrial and is in talks with several providers of matchmaking software that can be integrated within Big 5’s own website to facilitate pre-event meetings between visitors and exhibitors.
“With over 550 exhibitors spread across two halls, offering visitors the chance to actively engage pre-show saves them time and ensures that they see more of the products which interest them.”
Though the prevailing atmosphere around the event is positive, there are challenges facing the Saudi construction market and which may be on the minds of exhibitors and visitors alike.
Saudisation procedures have led to a shortage in skilled and unskilled labour and in turn led to some delays in projects awarded in 2013-2014.
The Government was asked to postpone a new, tougher wave of Saudisation in order to allow the market to adjust to growing demand and avoid the prospect of delays on the Kingdom’s mega-projects.
“With oil prices continuing to drop and the 2015 budget projecting a deficit of $38.7bn, a sustained drop could prove detrimental to long term development plans for the construction industry.”
While Big 5 organisers have not allocated any specific topics dedicated to labour and Saudisation issues, some panel sessions will cover them, such as ‘New developments and opportunities in the Saudi Arabian construction and infrastructure sectors’, where elements of these topics will feature as part of a wider discussion on the future of the market.
According to Ventures ME, the value of awarded contracts in Saudi Arabia dropped from $79.2bn in 2013 to $58.2bn in 2014, which it said was propelled largely by supply constraints and strict Saudisation measures that accentuated a labour shortage and caused prior year projects to run over.
It predicts that the falling oil price will mean the value of contracts set to be awarded will continue to drop in 2015 – to $53bn. Overall, though, it forecasts that moderate growth in the sector will continue – at least until oil markets stage a recovery.
Waugh says the economic situation, including its impact on infrastructure investment, will be discussed as part of its seminar programme.
“This will help participants understand the relationship between construction and overall economic growth, and will allow for better forecasting,” he says.
“At this stage, we are not planning any sessions around the oil issue, principally because the situation is one which is rapidly changing.
“Nevertheless, we will continue to closely monitor the situation, talk to stakeholders and if the industry requires such a session, then we will look into the possibility of adding a dedicated seminar or workshop into the programme.”
Other workshops include a range of more technical issues, such as techniques for laying deep foundations, best practice for reducing water waste, managing projects and other topics. All of the workshops are CPD-accredited and attendance certificates will be offered to those who attend them.
Waugh says: “A huge number of infrastructure projects are either planned in the near future or currently underway – many in Jeddah and the surrounding territory. [This] makes the Big 5 Saudi the perfect platform for international and local companies to increase their business in the market.
“But it is crucial that companies wishing to participate in the Saudi construction market, whether on the supplier or contractor/consultant/engineer side, remain up to date with the regulatory environment.
“A panel session at the event on outlining the latest updates and developments to Saudi building codes and regulations is a must-attend for anyone needing to stay ahead of the curve on these topics.”
The Kingdom has recently achieved significant progress in making it easier to do business in the country. For companies looking to work in the Saudi construction market, return on investment has largely remained unquestioned due to the size of the market and the opportunities available.
However, recent changes such as relaxing constraints on foreign developers and contractors will open up the market, increase competition and ensure international best practices are adopted.
As for conferences and exhibitions, procedures are being designed to be adopted by the Saudi Exhibitions & Conventions Bureau (SECB), including issuing visas to allow international companies not only the chance to participate but also provide them with support in helping them to set up a presence in the local market. It should be interesting.