British engineering consultancies upbeat on Mideast despite Carillion collapse

British construction consultancies are encouraged by the increase in major infrastructure projects in the Kingdom such as the Riyadh Metro. (REUTERS)
Updated 31 January 2018
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British engineering consultancies upbeat on Mideast despite Carillion collapse

LONDON: UK consulting engineering firms have faced leaner times in the Middle East in recent years as the lower oil price has squeezed the funds available to governments for new development in the region.
The collapse of British builder Carillion, which had also ran into trouble on some of its regional contracts has also cast a pall over the industry.
But with global growth picking up and the ambitious Saudi National Transformation Plan taking shape, some of the larger UK advisory firms see brighter prospects for their businesses in the region.
“I think it’s an improving picture,” said Chris Seymour, Middle East managing director, of UK-based engineering consultancy Mott MacDonald which employs 1,300 in the region and has five offices including Abu Dhabi, Dubai and Jeddah.
He describes the market for engineering consultancy services in the region as competitive but stable and said it has adjusted to an oil price in the $40-60 range as a “new norm.”
The recently-released Saudi budget with a heavy emphasis on infrastructure spending is a particularly positive sign for a sector that was hit hard by the sharp decline of oil prices in 2014.
“They will need more technical advice and it should mean good opportunities as the plans materialize and we should see an increase in business,” he adds.
His firm is now at the early stages of working on public private partnerships which may result in more work later this year.
Mott Macdonald is currently looking at schemes in the energy, health care, water and transport sectors in Saudi Arabia.
Atkins, the UK-based consultancy which also operates worldwide, last week pointed to increasing activity in the Saudi Arabian market when it appointed Lee Morris as its new head of architecture in its Middle East & Africa region. The firm, which is now part of Montreal-based SNC-Lavalin, sees its international design and architectural offering as “more important than ever.”
Simon Moon, Atkins’ CEO for the Middle East and Africa, said: “During this time of change in the region, fresh and innovative approaches to design are essential.”
Atkins employs around 2,000 staff in the Gulf with offices in Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait and Oman and has masterplanned the King Abdul Aziz Road development in the Kingdom over the last eight years.
Last summer, Atkins was selected by the US Army Corps of Engineers Middle East District to support infrastructure improvement programs for the Gulf Cooperation Council coalition of countries. In September, Atkins also won an advisory services contract from the state-owned National Water Company as part of a consortium to provide sustainable sanitation services in Saudi Arabia.
One source of encouragement for consultancy firms seeking work in the region was the appointment early last year of the US contractor Bechtel Corp. to run a new oversight office to help the Saudi government set up and run its new National Project Management Organization.
The firm has worked on mega-projects in the Kingdom for 70 years and is currently developing two of six lines on the $20 billion (SR74.9 billion) Riyadh Metro project.
Nelson Ogunshakin, CEO of the UK industry body, the Association for Consultancy & Engineering, said his members have seen some pick-up in the market over the past year.
“There is more interest but people are cautiously optimistic,” he said. “We say please look but tread carefully and make sure you address some concerns — on areas such as procurement transparency, health & safety and payment terms — in your due diligence.”
Saudi Arabia’s ambitious plans for new cities, universities and hospitals as it seeks to reduce its dependency on petroleum revenue, make it the most promising market for UK firms.


BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 20 July 2019
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BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.