Abu Dhabi’s largest contractor is developing divisions to provide basic materials and secure its supply chain.
Group turnover 2006: $1.2bn
The Al-Jaber Group has come a long way since its chairman, Obeid Al-Jaber, decided to form a construction company in 1970. At that time, Abu Dhabi had begun to spend its first oil revenues and develop the city into what it is today.
“In those days, there were a lot of projects,” says Fatima Al-Jaber, chief operating officer (COO). “Sheikh Zayed wanted to turn Abu Dhabi into a modern city and a lot of work was given to contractors then. After that, there were more roads and houses as new suburbs were developed around the city.”
The company has headquarters in the Mussafah industrial area and is wholly owned by Obeid al-Jaber, who this year bought out the firm’s partners as part of a restructuring. The company is financially strong and intends to remain family-controlled.
“We are not talking about an IPO [initial public offering],” says Al-Jaber. “It is not an issue now and is not on the table.”
Although there are many local construction companies, Al-Jaber claims to be the original Abu Dhabi contractor. “We are pioneers in the construction industry and this is due to the vision of our chairman,” says the COO. “He built the company around construction because he was convinced that it was the industry to grow with. Today, there are many companies growing like us, but we were the first.”
Although the company has diversified over the past 15 years, contracting remains its core business. It has traditionally specialised in road and infrastructure projects and low-rise construction, but this is changing.
In 1999, the company formed a joint venture with South African contractor Grinaker-LTA to focus on major projects in the rapidly growing building sector. It completed schemes such as the Mina al-Salam hotel and the Madinat souk before Al-Jaber bought out Grinaker’s stake in the company and turned it into a wholly owned subsidiary, Alec.
“We envisaged growth in that field [high-quality, large-scale buildings],” says Al-Jaber. “We are one of the leading contractors for horizontal construction, but it needed expertise for more complex projects.”
This expertise, provided through Alec, is now being used for several major projects in Dubai and Abu Dhabi, including Mirdif City Centre, Qasr al-Sarab and Marina Mall. It has become one of the largest building contractors in the emirate.
The firm has used a range of other joint ventures to deliver projects. For the runway package at Abu Dhabi International Airport, Al-Jaber is working with Brazil’s Odebrecht, and in 2006 it bid for the Saadiyat bridge contract in a joint venture with South Korea’s Samsung Corporation.
As one of the largest contractors in Abu Dhabi, the company is well placed to capitalise on the large number of megaprojects that are planned in the emirate over the next 10-15 years.
It was the first contractor to work on the $27.2bn Saadiyat Island project when it was awarded the earth-moving contract in 2006, and it is working on marine works for the $14.7bn Al-Raha Beach development.
Besides real estate, it has installed infrastructure for new industrial cities in Mussafah and Al-Ain, and was recently awarded the contract for the reconstruction of the Mafraq interchange. “We will definitely be busy for the next five years, simply because of the projects that are under way in Abu Dhabi,” says Al-Jaber. “This is great for the industry, but it puts you in a situation where you have to be careful who you work with because labour, materials and staff are limited.”
Like other contracting companies, Al-Jaber is trying to improve its supply chain by devel-oping vertical companies to provide the contracting division with basic materials. Concrete is the obvious place to start.
“We have established our own ready-mix concrete company called Extramix and it is growing well,” says Al-Jaber. “We are thinking of expanding into precast.”
Other products can be produced by the firm’s factories (see box), which include aluminium extrusion plants and steel fabrication yards.
Although there are opportunities overseas - the company has a strong presence in Qatar, for example - it will focus on the domestic market. “What is happening in the emirates means we need to focus on expanding internally,” says Al-Jaber.
The name Al-Jaber is synonymous with construction in Abu Dhabi. It has worked on almost all major projects in the emirate over the past 30 years, and with vast resources and a proven track record it will continue this trend.
Its roads and infrastructure business should benefit from opportunities with road projects such as the Abu Dhabi to Ghweifat Highway, the proposed Desert Highway linking Dubai and Abu Dhabi and, in the long term, the Abu Dhabi light-rail scheme and the inter-emirates rail network.
Through Alec, it should also play a leading role in the building sector. Currently, the majority of Alec’s work is in Dubai, but as development in Abu Dhabi moves to the next stage, it will expand further into the emirate.
Operationally, the main challenge is to secure enough resources, primarily labour, to allow it to maximise the opportunities available to it.
Another possible issue is Abu Dhabi’s growing reliance on all-encompassing partnering agreements for its projects. Local developer Aldar Properties has formed a joint venture with the UK’s Laing O’Rourke for Al-Raha Beach, and is in talks with Belgium’s Besix for a similar agreement for the Ferrari World theme park on Yas Island. Australia’s Gulf Leighton, meanwhile, has signed a partnership agreement with the Tourism Development & Investment Company for Saadiyat island.
Although Al-Jaber will be able to work as a sub-contractor on these projects, they could reduce the volume of opportunities available to local companies.
Al-Jaber in numbers: turnover 2006
Turnover of construction business: $804m
Turnover of other business divisions (industry, transport & logistics, real estate): $396m
Source: Al-Jaber Group
Mirdif city centre shopping mall, Dubai: $708m
Marina shopping maill, Dubai Marina: $385m
Runway construction, Abu Dhabi International Airport: $275m
Victory Heights, 579 villas at Dubai Sports City: $272m
Mafraq Interchange roadworks, Abu Dhabi: $205m
Diversifying a brand
At the Dubai Airshow in mid-November, Abu Dhabi-based Al-Jaber Group signed a letter of intent to buy two Airbus A380 aircraft and nine Embraer jets as part of its plans to launch an aviation company. The multi-million-dollar agreement is the latest example of Al-Jaber leveraging its strength in the construction sector to explore new business opportunities.
Diversification was not seriously considered until the 1990s. “The 1980s was a busy period for everyone and the company was careful not to diversify,” says Fatima Al-Jaber, chief operating officer. “Diversification began in the 1990s, and by then the company was well-established in the construction sector.”
One of the most successful alternative business divisions is Al-Jaber Energy Services (AJES). Its big break was in Kuwait, where it managed to secure transport and marine works following the withdrawal of Saddam Hussein’s Iraqi forces after the first Gulf War.
“It was the first exposure for Al-Jaber outside the UAE, and it gave the company the experience, confidence and strength to go overseas,” says Al-Jaber.
The company has become a major player across the region and is increasingly winning contracts with oil companies and major engineering, procurement and construction contractors such as US-based Bechtel and France’s Technip.
One of its largest contracts is the estimated $400m deal to carry out the Ras Laffan sulphur handling expansion project in a joint venture with US-based Washington Group International, for Qatar Liquefied Gas Company (Qatargas).
Industry is another growth sector. Al-Jaber has built factories for aluminium extrusion, aluminium fabrication, rebar coating, sign production and steel fabrication. Other ventures include a foundry plant and a filters factory.
In 2002, the group acquired 80 per cent of Global Process Systems, which works in the upstream oil and gas industry in Malaysia.
The trading business is synonymous with the construction plant business. Al-Jaber is one of the largest purchasers of Caterpillar machines. The firm also handles the local licences for several international companies, such as US equipment supplier Kenworth and the UK/Dutch Shell Group, and owns Abu Dhabi Asphalt & Lubricants Company and Middle East Equipment & Trading.
Transport and logistics is another sector that has developed in parallel with the construction business. Al-Jaber Heavy Lift & Transport has about 300 cranes in its fleet, including the world’s largest, which is capable of lifting 3,200 tonnes. The crane, produced by German firm Terex Demag and funded by Al-Jaber’s investment, took eight years to develop.
The company also has a marine division with 28 vessels available for charter. These include bitumen tankers, passenger barges and general cargo ships. Meanwhile, the new aviation company will serve the high-end market for private jet services.
Like many other UAE-based companies, Al-Jaber is also pursuing real estate opportunities. It recently completed the Between Two Bridges 300-room, five-star hotel in Abu Dhabi in a joint venture with the local Tourism Development & Investment Company, and is planning a second Abu Dhabi hotel on Reem island.
In Dubai, its Media One tower at Media City is approaching completion, and it is in the design stages for a mixed-use, high-rise development at Dubai International Financial Centre.
Outside the UAE, it plans to build a mixed-use development in Doha close to Sama Dubai’s Dubai Towers project on the corniche.
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