Saudi aluminum plant attractive to British luxury auto maker

Updated 08 January 2013

Saudi aluminum plant attractive to British luxury auto maker

LONDON: At a time when manufacturing is increasingly moving away from its traditional bases in the US and Europe and toward emerging markets, the news that British automotive giant Jaguar Land Rover is eyeing a plant in Saudi Arabia came as little surprise.
As Ralf Speth, chief executive of Jaguar Land Rover, pointed out last month, the letter of intent signed between the company and the Saudi National Industrial Clusters Development Program (NICDP) comes after an assembly plant project was announced in Shanghai, China, while a facility in Pune, India, will also be expanded.
Although talks are at an early stage, it is likely that aluminum production will be an area of interest for JLR – the automaker, like Audi, is one of few mainstream motoring brands to have adopted aluminum for its road cars. It is no coincidence that the announcement follows the development of the world’s largest integrated aluminum complex in Ras Al-Khair, which is due to begin production in 2014.
It is also no secret that Saudi Arabia and its GCC neighbors are incredibly lucrative markets for automakers as Europe and the US still struggles with the impact of the global recession. Consultancy Frost & Sullivan estimates that MENA is the fifth largest market for Jaguar and sixth largest market for Land Rover. Between April and September last year JLR sales grew by 21 percent and Land Rover by 33 percent. Jaguar XF sales grew 38 percent. “This is an exciting project that could enable Jaguar Land Rover to establish a joint venture partnership in a part of the world where luxury vehicle sales are expected to rise,” said Speth, quickly re-assuring those at home in the UK that a push into Saudi Arabia does not mean a pull-out of Britain. “If we proceed, it will complement our existing expansion in the UK and elsewhere,” he said.
Recent research by Euro Monitor International revealed that 94 percent of households in Saudi Arabia have an annual disposable income in excess of $10,000, while 86 percent earn more than $15,000. Car registrations are now significantly outpacing population growth in the Gulf state, spurned on by low petrol prices. As a result, Subhash Joshi, program manager at Frost & Sullivan’s automotive and transportation practice expects the luxury car market in the region to grow by a 20 percent minimum year-on-year
“Setting up a local assembly plant is expected to aid JLR to capitalize the available opportunities in the region, and it would also allow free movement of vehicles within the GCC – meaning no tax,” he said. “KSA allows imports of most of the raw materials and components with the nominal import duty of 5 percent.”
But pitfalls could remain. The recent drive to push greater numbers of Saudis into jobs in the kingdom – by introducing the controversial “expatriate tax” as well as quotas on companies for the number of nationals they employ – could hit specialist industries such as auto manufacturing, where the need for experienced manpower is paramount. Questions also remain about the availability of components other than aluminum in Saudi Arabia, and the costs associated with the mass import of them.
That said, JLR is not the first company to set up a manufacturing plant in Saudi Arabia, and the recent experience of Japan’s Isuzu Motors bodes well. Isuzu announced its intention to set up a plant with a capacity of 25,000 commercial vehicles in June 2011 and the Damman-based facility opened in December 2012 – a rapid turnaround for a project of its scale. With regard to components, commercial vehicle manufacturers have operated in the kingdom for decades, so a supply chain does exist.
“The development of large scale local vehicle assembling facilities would attract component manufacturers to set up production unit in the region to remain competitive,” Joshi said, adding that subsidised electricity and an availability of land – outside of city centers – were further benefits.
Given all this, it is possible that other major manufacturers, while perhaps not going as far as manufacturing in the kingdom, may seek to push themselves further into the Gulf to capitalize on growth still lacking in their traditional markets.
“We expect key vehicle manufacturers like Ford, General Motors and Hyundai who have realigned their global strategies to support their regional presence in the MENA. The luxury car makers like Lexus, BMW, Range Rover, and Porsche also have started focusing on the MENA region,” Joshi said.

— Exclusive to Arab News

Saudi Arabia has lion’s share of regional philanthropy

Updated 27 April 2018

Saudi Arabia has lion’s share of regional philanthropy

  • Kingdom is home to three quarters of region's foundations
  • Combined asets of global foundations is $1.5 trillion

Nearly three quarters of philanthropic foundations in the Middle East are concentrated in Saudi Arabia, according to a new report.

The study, conducted by researchers at Harvard Kennedy School’s Hauser Institute with funding from Swiss bank UBS, also found that resources were highly concentrated in certain areas with education the most popular area for investment globally.

That trend was best illustrated in the Kingdom, where education ranked first among the target areas of local foundations.

While the combined assets of the world’s foundations are estimated at close to $1.5 trillion, half have no paid staff and small budgets of under $1 million. In fact, 90 percent of identified foundations have assets of less than $10 million, according to the Global Philanthropy Report. 

Developed over three years with inputs from twenty research teams across nineteen countries and Hong Kong, the report highlights the magnitude of global philanthropic investment.

A rapidly growing number of philanthropists are establishing foundations and institutions to focus, practice, and amplify these investments, said the report.
In recent years, philanthropy has witnessed a major shift. Wealthy individuals, families, and corporations are looking to give more, to give more strategically, and to increase the impact of their social investments.

Organizations such as the Bill and Melinda Gates Foundation have become increasingly high profile — but at the same time, some governments, including India and China, have sought to limit the spread of cross-border philanthropy in certain sectors.

As the world is falling well short of raising the $ 5-7 trillion of annual investment needed to achieve the UN’s Sustainable Development Goals, UBS sees the report findings as a call for philanthropists to work together to scale their impact.

Understanding this need for collaboration, UBS has established a global community where philanthropists can work together to drive sustainable impact.

Established in 2015 and with over 400 members, the Global Philanthropists Community hosted by UBS is the world’s largest private network exclusively for philanthropists and social investors, facilitating collaboration and sharing of best practices.

Josef Stadler, head of ultra high net worth wealth, UBS Global Management, said: “This report takes a much-needed step toward understanding global philanthropy so that, collectively, we might shape a more strategic and collaborative future, with philanthropists leading the way toward solving the great challenges of our time.”

This week Saudi Arabia said it would provide an additional $100 million of humanitarian aid in Syria, through the King Salman Humanitarian Aid and Relief Center.

The UAE also this week said it had contributed $192 million to a housing project in Afghanistan through the Abu Dhabi Fund for Development.