Built to inform

Sign up for the daily newsletters

No, Thank you

UAE: Experts assess readymix and precast demand

RMAD and HPBS, two of the UAE’s leading concrete suppliers, discuss current levels of local demand for readymix and precast, and identify likely trends for 2017

RMAD supplied concrete for Hazza Bin Zayed Stadium.
RMAD supplied concrete for Hazza Bin Zayed Stadium.

The pre-2009 boom times attracted a raft of new players to the UAE’s concrete sector. All attempted to grab a slice of the action, albeit with varying degrees of quality and success. But economic setbacks – such as the 2008/09 global financial crisis, and the post-2014 oil price decline – have resulted in squeezed margins and a saturated market.

Because of this challenging business environment, the country’s more established concrete suppliers are having to innovate – both operationally and strategically – in order to retain their market positions.

As general manager of Readymix Abu Dhabi (RMAD), a firm that has been supplying concrete to its home emirate for more than 40 years, Robert G Hogan is no stranger to competition. He says that, by focussing on quality and targeting specific markets, RMAD has succeeded in protecting its profit margins.

“RMAD performed well in 2016,” Hogan explains. “The market is still tough, and I think it will remain so for the foreseeable future. Last year, our volume was lower, but we managed to increase our profit margins by targeting the correct jobs.”

The UAE’s precast market has also been buoyant of late, according to Bashar Abou Mayaleh, managing director of Hard Precast Building Systems (HPBS). Part of ASGC, the firm enjoyed healthy levels of demand in 2016.

Mayaleh elaborates: “2016 was one of the best years in HPBS’s history. We were successful in developing key partnerships with our clients which, in turn, resulted in securing contracts covering more than 75% of our total production capacity. We ended the year by growing our portfolio, and successfully handing over 27 projects.”

Despite a competitive market, both companies have won large-scale contracts during recent years. In the last 12 months, HPBS has provided precast elements for Etihad Museum, six GEMS schools, and Asian International Private School in Ruwais. The firm’s portfolio also includes a G+37 tower in Dubailand, the tallest building in the GCC to be constructed using a full precast system.

RMAD supported four projects with readymix requirements of more than 100,000m3 in 2016.

“Last year, we supplied concrete for infrastructure works at Abu Dhabi International Airport,” says Hogan. “We’ve completed more than 80% of a contract for Sheikh Zayed Mosque’s visitors’ centre, a job well in excess of 100,000m3. We’re also coming to the end of our contract on Hazza Bin Zayed Stadium.

“The fourth large-scale project, which we’re not even halfway through yet, is National Food Product Company’s (NFPC) production facility in Khalifa Industrial Zone (Kizad). We have a plant on site to ensure sufficient volume and security of supply,” he adds.

But Hogan expects to see fewer large-scale projects in Abu Dhabi in 2017. As such, he says RMAD’s strategy will be to bid on contracts that are beyond the capabilities of its rivals.

“We’re active in the Western Region; out in the desert among the oil and gas fields. It’s incredibly difficult to gain approval to work on these projects, and not everybody is willing to go through the process. But RMAD is; we have the experience and expertise necessary to take on the more technically demanding contracts.

“By pursuing smaller and more difficult jobs, and focussing on less saturated markets, we should be able to maintain our margins.”

This year, HPBS will be taking strategic measures to maintain the momentum it gained in 2016, and to position itself for further growth.

“Our priorities for 2017 will be to strike a strategic balance within our project portfolio, and to provide the best possible quality of service to our clients. We will also look to create alliances with companies working on mega developments, wherein the concept of mass production can be applied to optimise the mould-to-element ratio.”

Similarly, RMAD will work to identify ways to guard its profit margins against what is likely to be a lower-volume year. Hogan says: “We need to target projects that are going to be profitable for us. We’ve walked away from projects in the past, and we’ll continue to do so in 2017 if we don’t think we’re going to get paid.

“Finally, we must do everything we can to minimise waste. The government has increased the cost of utilities for the industrial sector, and the price of diesel is also recovering. We need to maximise efficiency through innovation and staff training,” he concludes.

Most popular

Awards

Construction industry conversations around digitisation must evolve
The Middle East construction industry’s approach to tech must evolve and focus on how can

Conferences

CW In Focus | Inside the Leaders in KSA Awards 2019 in Riyadh
Meet the winners in all 10 categories and learn more about Vision 2030 in this
CW In Focus | Leaders in Construction Summit UAE 2019
A roundup of Construction Week's annual summit that was held in Dubai this September

Latest Issue

Construction Week - Issue 752
Oct 30, 2019