Face to face: Yu Tao, CSCEC Middle East

Yu Tao explains how China State Construction Engineering Corporation Middle East (CSCEC ME) is working to maintain its competitive edge despite the challenging economic climate

INTERVIEWS, Projects, China state construction engineering corporation middle east, CSCEC, CSCEC ME

Maintaining employee motivation within today’s challenging construction market is a difficult task. But Yu Tao, long-standing president and chief executive officer of China State Construction Engineering Corporation Middle East (CSCEC ME), makes it look easy.

Tao has headed CSCEC ME’s operations since it secured its first project on Dubai’s Palm Jumeirah 12 years ago. Since then, he has worked to cement the firm’s managerial efficiency and worker productivity. With approximately 15,000 employees operating across the region, and a plethora of large-scale projects in its portfolio, the China-headquartered contractor has firmly established itself as a powerhouse of Middle East construction.

In conversation with Construction Week, Tao emphasises the importance of a motivated workforce. “It is always an important task to ensure that our workforce is productive, and that it can produce something more than others,” he explains. “[This allows CSCEC ME] to maintain its competitive edge in the market.”

Even for the most experienced managers, the prospect of guiding a 15,000-strong regional workforce could seem overwhelming. Tao, however, remains undaunted. On the contrary, he intends to further increase CSCEC ME’s employees by 20% by the end of this year.

“This industry is very much dependent on human resources,” he explains.

CSCEC ME’s annual turnover for 2015 passed $650m (AED2.5bn). Tao contends that this figure was only possible due to the breadth of the contractor’s regional service offering.

“I doubt there are many contractors that can do what we are doing in the Middle East market,” he says.

“As part of our complete supply chain [offering], we can arrange project finance for a client, act as the design-and-build (D&B) contractor, conduct mechanical, electrical, and plumbing (MEP) works, and look after the whole structure. This certainly gives us a competitive edge over other companies,” Tao adds.

But despite its extensive capabilities, CSCEC ME is not immune from market challenges. Tao admits that he and his colleagues are feeling the pinch of the current slowdown.

“Contract awards are taking a bit longer than usual,” he laments. “Certain clients are slowing down payments, which affects our business. CSCEC ME depends on its clients. And unfortunately, there is not a great deal we can do to speed up payment.”

Nevertheless, Tao is quick to point out that his team has worked hard over many years to build solid relationships with a selection of the region’s largest developers. Even with cash flow-related challenges – which are affecting the market as a whole – CSCEC ME is not in a position wherein it has to chase work.

“We are not really looking for new projects or new clients at the moment,” he says. “We reap the rewards of our hard work; we have always received repeat orders from our clients.”

One of the largest projects in CSCEC ME’s current portfolio is the under-construction Dubai Water Canal, a key project for the Emirate’s long-term tourism strategy. Cutting through Sheikh Zayed Road near its second interchange, stretching along Al Safa Park, Al Wasl Road, and Jumeirah Beach Road, the development will connect the already-extended Dubai Creek with Business Bay, and on to the Jumeirah area.

Dubai Water Canal has been divided into three packages. The scope of works for Package 2 – the current phase of development – includes the elevation of Jumeirah Street, which will incorporate three lanes of traffic in both directions. Al Wasl Street will also be elevated, with two lanes of traffic in either direction and a 900m-long directional ramp bridge. Commenting on the project, Tao says: “Our target is to finish the work by the end of 2016. It’s a challenging job, since we are creating another world-class tourist attraction.”

In additional to the mammoth canal, CSCEC ME is supporting construction at Abu Dhabi International Airport’s Midfield Terminal Building (MTB). Tao’s team was awarded the $163m (AED600m) contract for the construction of steelworks.

“It is one of the most complex structures ever built in this region,” he notes. “Our target is to finish it this year.”

Meanwhile, Dubai-based developer Arenco Real Estate has awarded contracts to CSCEC ME for two hotels on Palm Jumeirah. The five-star resorts will be built on adjoining plots of around 10ha each. Both will feature basements, ground levels, 13 upper storeys, and roof areas.

In total, the hotels will house 592 standard rooms, 57 two- and three-bay suites, and a presidential suite. The contracts will take 940 days to complete; CSCEC ME’s packages include all civil, MEP, external works, and finishes.

Also in the hospitality segment, the contractor is already building – and investing in – the $1bn (AED3.67bn) Viceroy Palm Jumeirah Dubai on behalf of SKAI Holdings. It has also completed the Southern Sun Abu Dhabi for HH Sheikh Mansour bin Zayed Al Nahyan’s company, DAS Holding.

With so many projects either recently completed or under construction, it’s easy to forget that CSCEC ME’s operations are not limited to the Emirates. Outside the UAE, the contractor cemented its reputation with the Central Bank of Kuwait HQ, a building that Tao describes as “one of the most challenging projects to be built in [the country]”.

Other notable projects Kuwaiti projects for CSCEC ME include the National Bank of Kuwait HQ, academic facilities at Sabah Al-Salem University City, and a sizeable project for the Ministry of Defence.

This year, the firm will consolidate its GCC operations. Tao says the only way to overcome the challenges of today’s market with a customer-focused approach. “In this tough economic climate, clients are looking for contractors that can offer good prices, yet deliver high-quality projects on time.”

He argues that most regional contractors are still reeling from the 2008/09 financial crisis. “Many have signed contracts with low profit margins, and this has become a burden for them,” Tao points out. “CSCEC ME, however, has managed itself well during the lean period. It is now reaping the benefits.”

In terms of prospective projects, Tao ends by explaining that CSCEC ME will lean towards governmental clients, “because of the reliable payments”.

“In any case, we have a sufficient backlog that will keep our hands full for another two years,” he concludes.

In Focus: Kuwait Int’l Airport

Reports suggesting that a consortium has already been awarded the construction deal for Kuwait International Airport are unfounded, according to Tao.

“Some contractors claimed that they have already signed the contract for the airport’s new terminal, but it is otherwise,” he says. “The project’s contract award is still unclear; we are waiting for the official results from the tender committee.”

In August 2015, reports surfaced that the contract had been awarded to a consortium comprising Turkey’s Limak Holding and Kuwait’s Kharafi National for the second time, at a proposed cost of $4.35bn (KWD1.312bn). The contract was secured by the same consortium in November 2014, but the Kuwaiti government nullified this award without explanation.

However, Tao refutes claims that a final decision has been made in relation to the airport’s new terminal.

“There were rumours that CSCEC ME – or other Chinese contractors – were working with Kharafi and Limak on the airport,” he says. “[But] I believe we are competitors; there is no reason why we should be working together to secure the project.”

Tao declines to offer an opinion as to when the main contractor for the terminal will be confirmed.

“It is very difficult to say when the contract will be awarded,” the CSCEC ME chief concludes. “[This decision] is purely under the control of the client.”

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