Al-Habtoor Leighton Group chairman Riad Sadik has seen the company grow from a start-up business with less than 100 employees into a con-tracting giant with a workforce of more than 30,000. But he says the best is still to come as it continues with its expansion plans.
MEED: With $3bn worth of new awards in 2007, Al-Habtoor Leighton enjoyed a good year. Do you expect similar results in 2008?
Riad Sadik: We are expecting an even better 2008. But delivery is the name of the game, not projects secured. I believe the size of a company is reflected by turnover and profitability, not contract awards. We are targeting turnover growth for the Al-Habtoor Leighton Group of 50-60 per cent for 2008, which will be AED11bn.
The company seemed to focus on securing billion dirham-plus contracts last year rather than smaller projects. Was this a deliberate strategy?
Our projects are in a different category. We no longer con-centrate on building villas because they are too labour-intensive. We prefer to use our labour where they can produce more turnover.
Al-Habtoor has enjoyed great success in Dubai over the past few years. Is Abu Dhabi becoming an important market for you?
Absolutely. In 2007, Gulf Leighton entered into an agreement with TDIC [Abu Dhabi’s Tourism Development & Investment Company] to form a joint venture to develop its major projects. Al-Habtoor is also picking up major projects in Abu Dhabi.
Do you have plans for a market overseas?
We are still looking at North Africa, and we are waiting to send our delegates there. We hope to follow our existing UAE-based clients such as Sama Dubai, Aldar Properties and Al-Qudra Real Estate.
What are the challenges for the construction industry in 2008?
It will be a very active year for the construction market, but there will be uncertainty. There will definitely be further rises in building material costs and this will chop mark-ups for companies that have not factored that risk into their tenders.
After a series of strikes in late 2007, do you think labour will be the main issue facing contractors this year?
Labour will definitely be an issue in 2008. At present, our labour force is in the region of 30,000. But the problem is not finding enough workers, it is finding people with skills.
To help deal with this issue, we opened our own training school to make our workers all-rounders. In fact, we have advised the Labour Ministry to do the same. Why have carpenters, formwork and steel fixers when, if you teach them to do everything, you will reduce your total labour requirements?
Another important issue is finding staff. With the addition of Leighton, we are able to use its inter-national network to help us get professional staff such as engineers and quantity surveyors.
In the past, we have relied on the Indian and Arab markets for our middle management, but we are finding it increasingly difficult to find staff in India as it starts to boom, so we have had to look for alternatives, such as the Philippines.
The group has several associated businesses. Do you intend to diversify and enter into any new business areas?
We are forming a facilities management company. It will start in Dubai and be a joint venture with an inter-national company from outside the region. We are also in talks with a major interiors company and hope to form a joint venture.