WITH Saudi Arabia’s commitment to build a stronger manufacturing base, the country continues to pump investment into industrial cities. This is despite the fact that oil and gas still drive the Saudi economy.
The Kingdom’s manufacturing industries recorded a growth of 8.6 percent in 2008, which is expected to remain steady in 2009 and further improve in 2010. “Although there is a manufacturing sector in the Kingdom, its contribution to the country’s GDP is below expectations,” said an official at the Saudi Ministry of Commerce and Industry. This is because industrial exports are low, as are employment levels in the sector. “It’s time to have another look as far as industry is concerned,” he added.
The Kingdom is pushing ahead with a number of industrial cities, all for housing manufacturing businesses. The plan is to ensure they have the latest communications technologies in place. Also, a favorable factor in the Kingdom is its attempts to make it easier to set up and do business all over.
Jubail and Yanbu industrial cities were among the first to be established as the Kingdom’s main industrial zones in 1976. There has since been substantial industrial expansion elsewhere in the Kingdom. Among the new developments are Jeddah-2, an industrial city, and Dammam-2, a 24-million square meter project.
The Kingdom’s ongoing programs of liberalization and forward-looking policies have resulted in international firms coming in. One of the recent ones is Cooper with a 100-percent US-owned facility.
Located less than 20 km from Saudi Aramco headquarters in Dhahran, the facility offers electrical products, components and engineering services for the region’s growing oil and gas market, according to the company. The 50,000-square foot facility has been delegated as an Aramco-approved one having gone through the Kingdom’s stringent quality management assessments and Saudization provisions, according to Cooper CEO Kirk Hachigian. “Not only does it have first-rate employment, training and technology opportunities to a region that continues to grow and prosper, but also consistently delivers high-quality, world-class manufacturing products to customers in Saudi Arabia and the entire Gulf.”
According to a survey by the Ministry of Commerce and Industry, Saudi Arabia’s manufacturing industry serves a wide variety of sectors. There are manufacturing hubs in various cities of Saudi Arabia for various industries that include iron casting, paper, paper boards, containers, machinery and spare parts, automotive parts, electric equipment and lightings, glassware, medical and surgical equipment, home appliances, food processing, ferro-alloys, furniture and many more. These industries produce finished products for consumption at home and for exports. The sectors offer employment opportunities for many talented Saudis and expatriates.
Already, a number of centers exist in Jeddah and elsewhere in the Kingdom for manufacturing automobile accessories such as batteries, oil filters and a host of other vehicle parts. Reports say some of them match international standards.
To support these and other industries, more than 180 vocational training centers are going to be added to a number of existing ones over the next 10 years. These will give workers key skills in various manufacturing sectors. In the technology sector, which is also seen as a growth market for the future, companies are also investing in skills. Cisco, for instance, has set up a networking university in the Kingdom.
The core centers in Jubail and Yanbu industrial cities remain the most important generators of investment. There are hundreds of industries operating in the cities, including primary, secondary and light manufacturing operations.
Looking at the IT sector, Nabil Kassem, VP and MD of a major IT firm in the region, says that while it is important to build a workforce that is Saudi, it will not happen without deliberate planning or investment. “We have to invest in talented people and train them.”
There is no dearth of liquidity in Saudi Arabia and elsewhere in the region. “But the region is thirsty for venture capital,” he said, adding that the venture capital culture has to be promoted, as it can feed ideas and bring those ideas into fruition.”
Manufacturing industry jobs in Saudi Arabia offer attractive compensation and other life comforts for skilled and talented employees. A concern expressed in industrial quarters is the lack of internal skills in the Kingdom and its reliance on importing them instead. In some areas, this is being tackled by setting quotas to ensure a set percentage of employees within a company are Saudi. Production engineering and managerial, steel fabrication and electronic engineering are among the jobs available in plenty, but due to the nonavailability of qualified and experienced Saudis they are offered to expatriates.