Big construction activities in the GCC are back in focus with various mega milestone projects being lined up. The moot question is how the construction equipment sector is prepared for this upturn.
According to a bi-annual study recently conducted by Ventures ME, completed GCC construction projects are set to rise by 92 per cent in value over 2013, with projects reaching $ 66.89 billion across all building sectors. Out of the total $ 128.5-billion market, the combined medical, residential and hospitality sectors will account for over half of the market, the study reveals. The healthcare sector will account for 24.43 per cent of the projects, followed by residential and hospitality at 23.34 per cent and 22.64 per cent, respectively. As a result, the demand for construction equipment is on the rise across the GCC. The infographics on this page provides a list of major individual projects in the GCC.
Current market scenario
The last six months have witnessed a clear acceleration of projects awarded and the demand for cranes in this region has also increased. David Semple, Vice President of Sales Middle East and Africa, Manitowoc Cranes attributes this to the following three factors:
Talking about the regions shift in attitude and perception about crane features, safety and age, over the recent years, he adds, "Whereas in the late 1990s, the GCC was mainly a market for used - and sometimes quite old - cranes; today we are in a much more mature environment. Construction sites in the GCC region are extremely demanding (harsh climate, 24x7, 365 days working hours, high-profile or high-value projects) and most crane users today recognise the value of some premium crane products. It does remain a competitive market though and having a wide product offering, from low-cost to premium product ranges, is key to meeting customer expectations."
From the perspective of Gulf Earth Moving (GEM) in Qatar, and its sister company in Abu Dhabi, Earth Moving Worldwide (EMW), both are experiencing the regions demand firsthand for specialist earthmoving equipment such as long reach excavators, heavy weight excavators, ground improvement equipment, crushers and screens. According to Yves Aertssen, Director, Gulf Earth Moving, "The huge demand for these specialist plant items are required to support both current and prospective projects throughout the GCC region. The requirement for professional, trained and experienced personnel in earthmoving, as well as plant equipment are rising in demand."
Another distinct trend in the GCC market involves customers looking for overall solutions (both products and support wise) in lieu of one special feature. On this Christian Kassner, Senior Manager Sales & Customer Support, Terex Cranes, observes, "All our products are developed with customer requirements in mind. These provide easy transport, short rigging times and good uptime and therefore are built to increase our customers return on investment. When it comes to after sales service, we try to provide the best customer support possible. Local contacts for sales, technical support, spare parts, maintenance and repair are available 24x7 and we try to provide quick solutions to customer requests."
For Manitowoc, having a network of strong local distribution partners in the GCC for over 50 years, the order backlog remains quite strong with its cranes being present in most high-profile projects underway in this region. Semple adds, "You will see Potain, Grove and Manitowoc cranes working, for example, in Saudi Arabias new rail network (Haramain fast-speed train from Mekkah to Medina, Riyadh Metro project, etc) as well as the Qatar Metro. Besides, we are present in the most master-planned development projects in the region (City Walk in Dubai, King-Abdullah Financial District in Riyadh, etc), and most of the mobile crane rental companies would have some Grove cranes in their fleets."
In the run up to the major upcoming events in the GCC such as the Fifa World Cup 2022 (Qatar) and the World Expo 2020 (Dubai), and green-field and brown-filed expansions of oil refineries, an exponential growth is expected in the demand for large and well managed earthmoving equipment. Offering a perspective on his companys presence in the GCC, Aertssen avers, "Majority of our equipment are used in Qatar, with the project scope of works in the construction of a new harbour. GEM is working on this project since June 2012, with over 200 heavy equipment, for excavation, compaction, soil improvement and revetment works. The remainder of our equipment are working for EMW in Abu Dhabi, for the Barakah Nuclear Power Plant project and are being used for the installation of rocks on the revetment works for the breakwater construction. We have just finished a job in Dubai, where we have been working for SIXCO at the Dubai Creek project."
Terex has a large population of CC 2800 and CC 8800 crawler cranes in this region. With the Superlift 3800 launched in 2012, the company introduced a worthy successor of the CC 2800 with 650-tonne lifting capacity and - like its other crawler cranes - easy transportability and rigging. Kassner adds, "Taking always into consideration our customers requirements, we have lately developed the Boom Booster kit for the CC 8800 crawler crane. With this addition, the crane is able to double its capacity, while the kit is easy to transport and to assemble. When it comes to rough terrain cranes, we offer some new exciting products, which fit the Middle East markets perfectly. The Quadstar 1075L and Quadstar 1100 boast high lifting capacities combined with ruggedness and versatility."
The customer connect
While it is great to have a large product portfolio, it is important to deliver the goods in line with the shifting customer requirements. For Manitowoc, its strategy is to continue relying on third-party dealers for the sale and after-sales of its cranes in the GCC and Middle-East, in order to achieve the best market coverage and support capabilities of the industry. Semple further adds, "We need our dealers to be true crane experts, local, visible, and competent; so that anybody who requires a crane would know this is where he would get the best advice, support, and value-for-money."
Kassner offers his perspective. He observes, "For us, the overall customer satisfaction from sales to service and parts is utmost important. In early 2013, we started re-organising the distribution and support structure around geographical regions. In addition to the point of contact, the terms and conditions and invoicing will also be centralised and harmonised. It is all about being easy to do business with; it is the companys goal to be as responsive as we can be towards our customers."
The mega forthcoming events that will define the next course of direction for the construction activities in the GCC include the EXPO 2020 in Dubai, Fifa World Cup 2022 in Qatar, and Abu Dhabis very own 2030 project, among others. According to Kassner, "While the oil and gas sector remains very solid on a high level, we can now also see a good growth in the mining business. In addition, some exciting infrastructure projects, like the Riyadh Metro are at hand."
For Manitowoc, Semple observes, "We are seeing a clear increase in demand for tower cranes, reflecting that building construction is back in places like the UAE, Qatar and Saudi Arabia. On the mobile and crawler crane segments - which for us are businesses more linked to the oil and gas sector - the increase is strong too, although not quite as steep."
Most industry experts believe that the current demand uptake in construction equipment will continue to be high for the foreseeable future along with construction activity in the GCC.
As construction activities in the GCC scale new peaks, availability of the right technical workforce has become a major challenge. The biggest challenge, according to Aertssen lies in the delivery time of the requested earthmoving equipment. He adds, "As projects have to commence right from the start almost the moment they are awarded, it is important to foresee the purchase of special and huge earthmoving equipment in time."
For Semple, the climatic conditions, as well as very intense schedule of most construction sites, are probably their biggest challenges from a product standpoint. He observes, "More locally, the level of education and training of the people actually operating our cranes is a big challenge. A skilled crane operator can make a huge difference on the productivity, long-lastingness, and safety of the machine he operates; however unfortunately the local crane driver population often lacks the level of literacy and basic education to make optimal use of the crane."
Kassner observes, "With project schedules getting increasingly tight, we provide customers with products that help them to meet these challenges. Ease of transport, short rigging times and good uptime offer the best way to get the job done."
Whats more needed
It is important to have well-trained operators along with the right construction equipment. Aertssen concurs, "The purchasing of equipment in itself is not a difficult task, but for each piece of equipment we need to supply a minimum of three skilled operators. In order to facilitate the growth, it will be important that the rules and regulations for mobilising skilled operators into the GCC are made easier to fulfill the demand. With regard to logistics, it will be highly beneficial for the plant and equipment market, if the movement within the GCC is simplified."
Semple believes that there is a need for better enforcement of some safety regulations. He adds, "I would welcome, for example, some stricter regulations on checking the compliance of cranes to certain design standards, and the need for mandatory periodic inspections to weed out unsafe cranes from the market that are either too old or improperly maintained, or sub-standard very-low-cost products." Last but not the least, health and safety remains a significant aspect. "We, as the Terex family are highly committed towards health and safety and believe that the industry will benefit from certification standards for all heavy equipment," concludes Kassner.