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Roundtable: Experts discuss the Middle East’s formwork sector

Construction Week invites experts from MFE Formwork Technology, RMD Kwikform, Meva KHK, and Trimble to explore the latest trends, challenges, opportunities, and innovations in the Middle East’s lucrative but competitive formwork market

SPECIAL REPORTS, Sectors, Construction, Formwork, Middle east, RMD Kwikform, Trimble

Although arguably not the most glamorous segment of the region’s construction sector, the formwork community has played a vital role in the development of the Gulf’s built environment.

From roads, bridges, and airports to malls, villa developments, and skyscrapers, GCC-based formwork professionals have helped to shape some of the most ambitious projects on the planet.

However, as is currently the case for most market segments, these are challenging times for the region’s formwork suppliers. Their products and services remain in high demand, but obstacles such as squeezed margins, low liquidity, and late payment are stymieing growth. Nevertheless, the most innovative firms are working to meet their customers’ changing requirements, pushing ahead with novel products and business practices that are allowing projects to be delivered in spite of financial constraints.

In a bid to find out how the Middle East’s formwork segment is currently performing, and what we should expect during the coming years, Construction Week invited a selection of the region’s foremost experts to participate in an industry roundtable. Panellists include Chris Jardine, managing director for the UAE at RMD Kwikform Middle East; Jim Robinson, group chief executive officer of the MFE Group of Companies; Joe Farina, general manager of Meva KHK Formwork Systems in the UAE and Oman; Paul Wallet, regional director for the Middle East and India at Trimble Buildings; and Steven Magowan Robinson, business development manager for the Middle East region at MFE Formwork Technology.

The majority of RMD Kwikform’s regional activities relate to large-scale horizontal infrastructure projects; MFE Formwork Technology’s main focusses are low- and high-rise residential developments; Meva KHK’s primary activities relate to construction projects, both vertical and horizontal; and Trimble provides building information modelling (BIM) tools that allow formwork systems to be overlaid directly onto 3D models. In short, the roundtable’s collective experience spans the entire spectrum of regional formwork activities.

When asked to comment on the current health of the market, Jardine notes that RMD Kwikform has enjoyed solid levels of UAE business of late. “Revenue is growing and we’re meeting our budgets on the back of some of the larger projects we’ve secured during the past year,” he explains. “We have supplied our Rapidshor support system for Dubai’s Al Wasl Road, which is being built by China State Construction Engineering Corporation Middle East (CSCEC ME). That contract followed on from bridges that we built at Abu Dhabi International Airport and Dubai Water Canal, also with CSCEC ME.

“In terms of building projects, we have supplied our aluminium shoring and Alshor systems for The Royal Atlantis & Residences, which is being built by Ssangyong and Besix in Dubai.”

Despite the high-profile nature of RMD Kwikform’s UAE portfolio, Jardine concedes that the local formwork segment is becoming increasingly competitive. He continues: “Contractors in the UAE seem to be picking up work with small profit margins, and I think that’s compounded by other regional markets – such as Saudi Arabia, Oman, and Kuwait – being down. This situation has created excess capacity in the formwork supply chain.

“I read somewhere that the Dubai property market has been a ‘shining light’ in the region, but I think it’s been more of a beacon, attracting regional suppliers into the market,” he adds, referring to the saturated formwork community. “Even during the last three to four years, there has been a massive increase in the number of formwork players in the UAE. When I first came here, there were three to four key players whereas, for today’s major projects, it’s not uncommon to have to compete with 15 or more companies to win work.”

MFE Formwork Technology’s Steven Robinson agrees with Jardine’s assessment, noting that – even for specialist outfits – competition is rife.

“There are now so many competitors in the market, even in our niche section [of residential developments,]” he comments. “When we’re pricing projects, we’re up against five or six aluminium formwork companies, which [wasn’t the case] in the past. But there’s really only Dubai in the UAE that is [pushing ahead with high volumes of] building work. The market is tight for us all. The days of big margins are long gone, and will probably never return.”

With this in mind, Robinson says that MFE Formwork Technology has had to adjust its approach in order to secure business, focussing on factors that, historically, have not represented priorities for its regional customers.

“We’re now focussing on the reusability of our products,” he explains. “Our formwork system can be [customised] from project to project, so we’re concentrating on that. Arabtec, for example, has a large stock of formwork, so we’re now trying to convince them – and, hopefully, we’ve already convinced them – to reuse the stock for their future projects and make savings (see ‘In focus: MFE Formwork Technology’, page 26).

“Contractors are trying to cut their overheads so that they can price to win projects. As such, we’re trying to help them to reduce their outgoings so that they can [succeed] and, in turn, give us work. This means working in a more consultative capacity than we have in the past. The sales focus has changed from quality and speed to reusability and long-term returns on investment (ROIs). That seems to be where [market requirements] have migrated over the last couple of years.”

Meva KHK’s Farina, an industry veteran of more than 35 years, echoes this sentiment, noting that formwork suppliers must now be experts as well as salespeople. “In the old days, you’d go out knocking on doors with brochures under your arm,” he recounts. “But today, you require more of a consultative approach. Essentially, you’re there as a consultant because you are dealing in a specialist product. In this respect, the face of our industry is changing, but companies with depth can prevail. The route from A to B is not a straight line in the Middle East; it never has been. But if you can navigate those twists and turns, you will survive. It’s as simple as that.”

Farina also identifies a collective urgency to complete UAE projects in time for Expo 2020 Dubai, even ones that are seemingly unrelated. “And that’s not a bad thing,” he continues, “because you get a concentration of work. The [caveat] is that you’ve got to be selective about the people with whom you do business. I’ve always thought of the UAE as a light bulb in the dark: it will attract all sorts but, if you get too close, you’ll get burnt.

“That’s if you’re not selective. If you take work for the sake of taking work, you will get caught out. Sometimes, you have to be brave enough as a company to say no.”

While he acknowledges that this is a challenging market, Trimble’s Wallett says that there are major opportunities for formwork providers operating in the UAE, providing they use technology to differentiate their service offerings.

“According to figures published by the American Concrete Institute (ACI), the cost of formwork [and concrete] can account for 35% to 60% of a project’s cost,” he says. “For Trimble, and for formwork suppliers in general, that represents a massive opportunity. Moreover, when you consider sustainability and onsite labour reduction targets, innovation really is the only way for contractors to make an impact.

“When it comes to the ability to schedule projects correctly in line with concrete pours, getting formwork to the site and removing used systems, and generally creating a more efficient construction workflow, innovation helps a great deal.”

To this end, Wallett and his colleagues have inked partnerships with formwork companies such as Doka and Peri, whose product catalogues have been uploaded to Trimble’s cloud-based BIM platform. He explains: “We have special tools that allow users to [integrate] formwork systems directly into construction models. These are very user-friendly applications that enable [everything to be simulated]. We’ve only dipped our toe into the formwork segment during the past year; we’re in the early stages of adoption. Certainly, when you’ve got a lot of players in the market, the companies that seek ways to be competitive and innovative are the ones that are going to attract interest.”

Wallett’s comments on the importance of innovation in facilitating the transition of formwork companies to the new norm resonates with his fellow roundtable participants. RMD Kwikform’s Jardine goes on to reveal details of his firm’s ongoing technological advancements.

“We’ve recently implemented a system called Locus Eye, which is software that allows completed 3D designs to be rendered immediately,” he explains. “These renderings can be viewed in a virtual environment, or transferred to [existing models]. We were awarded the falsework package for Dubai’s Museum of the Future following a demonstration of this software.

“RMD Kwikform has also been active in the fields of virtual reality (VR) and augmented reality (AR),” he continues. “These technologies work well as selling aids. They allow us to show customers [our systems] in 3D, rather than having to rely on traditional 2D drawings. The systems can be [manipulated] on tablet devices, allowing users to see what happens under this beam or next to that wall, for example. We can do the same using VR as well, but we feel that’s a bit gimmicky [at present]. Are you going to carry the VR headset to sales meetings? I don’t think we’re there yet. However, renderings can be uploaded to the cloud, and customers can view them in VR in their own time.”

Jardine also notes that RMD Kwikform’s use of technology is not limited to sales. The company is working to deliver innovative tools that cater to the sector’s ever-changing onsite requirements.

“We’ve developed estimating software, which is designed to help price projects more effectively,” he says. “Back in the day, we were able to [provide] a square-metre rate and leave the rest to the contractor. In today’s market, we’re increasingly focussed on helping contractors to be more competitive, and our estimating software allows customers to conduct accurate pricing at the tender stage.”

MFE Formwork Technology’s technological advancements have followed a similar trajectory, according to Jim Robinson. His team is also using innovation to secure involvement at the earlier stages of the development lifecycle.

“Like everyone else, MFE Formwork Technology has developed its own 3D design software, and this enables us to provide and show solutions at the tender stage,” he says. “We need to get involved from the foundations up, and we’ve been developing products to get to that position. In January 2018, we plan to launch our Quick Deck slab formwork, which can be used to construct basement and car park levels. This product is currently going through final testing in Malaysia, and we hope that it will prove quite advantageous.

“We’re also focussing on safety and manpower reduction,” he continues. “In markets like the UAE, the reduction of onsite labour forces is a big issue. With this in mind, we’ve introduced Premier Formwork, which features high-tech fixing devices. This product reduces the requirement for onsite labour by as much as 30%, which has been a major asset for us – particularly in developed markets.

“What’s more, we’ve developed an external safety platform that is performing well in India,” he notes, adding that his team plans to introduce this system to the UAE. “Perhaps it’s over-designed, but I’d rather that than some of the other products that I see in the marketplace right now, which can be really scary.”

Meva KHK’s Farina says that, as his company is a joint venture (JV) between Germany’s MEVA and UAE-based Taurani Group (see ‘In focus: Meva KHK’, page 29), his team is able to pursue region-specific innovations. “We tend to run autonomously,” he explains. “We have our own profit and loss (P&L) balance sheets, which means we’re able to make decisions here, not in Germany. This is important because if you design a system for Europe and try to bring it to the Middle East, it may not necessarily be the best fit.”

While Farina fully acknowledges the importance of technology, he also emphasises the importance of operational innovation in driving onsite efficiency.

“When it comes to innovation, we focus on areas like supply,” he reveals. “You can win an order in the UAE, but if you tell the customer that the system will be delivered in four months’ time, [you’ll lose the contract]. The span of attention in the UAE [tends to be short] so, in this respect, if you [fail to focus on delivery times,] you’ll walk away with nothing. For example, Meva KHK has three times more stock of its panel decking system in the Middle East than [MEVA has] in Europe. They’ve got a lot, but we’ve got even more. That sounds grand, but it’s solely due to local requirements. It’s as simple as that.”

Wallett highlights the progress of technical innovation within the UAE’s formwork sector by citing high-profile developments that are being developed with the support of systems from Tekla, Trimble’s BIM software division.

“In terms of adoption, Tekla itself has been in this market since the early 2000s,” he says. “We’ve launched flagship products and we’ve supported flagship projects. The most recent is Abu Dhabi International Airport’s Midfield Terminal, and I think one of the most auspicious, which will be visible to everybody, is Dubai’s Museum of the Future. These projects have been modelled on the Tekla Structures platform, in terms of both concrete reinforcement and their main structures.

“At the end of the day, construction represents the biggest cost for any project. So when developers and contractors execute on site, they need a high level of information to ensure that things fit properly and to reduce labour costs. As the panel has mentioned, this is an increasingly competitive market. People are looking towards innovation to [facilitate delivery,] so it’s certainly warming to hear that [the roundtable’s] formwork suppliers are adopting 3D technology and related design applications. This means that the market is moving in the right direction.”

The panellists conclude by turning their collective attention to future challenges, opportunities, and priorities. “I suppose we’d better start with the bad news,” Meva KHK’s Farina begins. “The [most significant challenge] is always going to be assured payment. The amount of work in the market is high; you can see that by the number of cranes on the skyline. It can be tempting to pursue work for turnover purposes, but [you will soon realise] that there’s nothing on the bone.”

Drawing an overarching conclusion from the discussion, Farina continues: “It’s great providing new services and innovations, but somebody has to pay for them. And the word ‘profit’ [isn’t mentioned] often enough; it’s almost like a dirty word, [but it shouldn’t be]. You need profit. You need to be profitable to invest in new technologies, and they are needed. There’s no question about that.”

RMD Kwikform’s Jardine agrees with Farina’s assessment, noting that challenges related to cash flow are particularly prevalent in the formwork market. He explains: “For me, the big challenge is to provide the level of service that we’ve become known for, while working in a market with [liquidity] constraints.

“In terms of opportunities, the latest market data suggests that Saudi Arabia’s construction sector will pick up in H1 2017. I genuinely believe that, if the [wider region] starts to improve, some of the focus will move away from the UAE and resources will [become more evenly spread]. That should take some pressure off pricing, and allow us to provide the [best possible service].

“RMD Kwikform also plans to enter some new segments in the region. The big product innovation for us at the moment is in ground shoring. We’ve developed a full range of ground-shoring systems, most of which have already been rolled out in the UK market. We plan to introduce this product range to the Middle East during the coming year. Finally, we expect to focus more on the high-rise construction [segment,] which is opening up new opportunities for us.”

Trimble, meanwhile, is working to provide its regional customers with bespoke packages for a challenging market. Wallett elaborates: “There’s a big echo in the room when it comes to liquidity. To overcome this challenge, we’ve partnered with a local finance company so, if there’s a cash flow problem, our customers have [the option of spreading] their payments over [longer periods]. When liquidity issues arise in the market, the first thing to go is innovation, but innovation helps to keep you ahead of the game. In a competitive market, you need to differentiate yourself.”

In keeping with his firm’s strategy to grow its UAE footprint, MFE Formwork Technology’s Jim Robinson comments: “Market share is our biggest problem and our biggest challenge. Globally, we have been pushing very hard in sectors that a Malaysian company, five years ago, would never have even thought about. [Now I think] we need to focus on bringing our solutions into the market at a quicker rate.”

MFE Formwork Technology’s Steven Robinson elaborates: “Dubai is a very innovative city at the top level. If you come in with a product that is high-tech and high-spec, it’s easy to sell to the higher end of a company. But when it gets to the guys on the ground [who] make the decisions, you need to convince them of your ability to do the things that you say you can do.”

He concludes: “The priority now is to get a project up and running [in the UAE], and to demonstrate to customers that we have the technology to solve their problems. Once we have one or two [local projects in place,] we foresee business picking up, not just in Dubai but across the region as a whole.”

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