JEDDAH: To capitalize on the construction boom in the Kingdom, a construction chemical plant will come up in Rabigh next year.
The plant will have an initial capacity of 50,000 tons of concrete-related compounds with an investment of over SR50 million and it will be built near the King Abdullah Economic City. The construction will begin in three to six months, and finish by the end of 2009, said Mark Hardaker, general manager, Sika Saudi Arabia (SSA).
“The Sika Saudi Arabia goal is to have around 25 percent of the market share in five years,” Hardaker said.
The main types of products that will be sold include admixtures for concrete, all forms of cementatious products — grouts and epoxy grouts, adhesives, flooring products, waterproofing products, sealing and bonding in the next few months. “We are selling now but only as a distributor,” he said.
“This is an exciting time for the construction industry. This is a boom that is driven obviously by high oil prices and reinvestment of those revenues into the infrastructure of the Kingdom,” he said.” It’s the right thing to do, and we will see tremendous returns for the Saudi Arabian population in terms of quality of life and higher opportunities for employment of Saudis and Sika is very proud to be a full part of that now after many years of being present here as a distributor Now it is very proud to be present as a company here in its own right,” he added.
He said that the company has been operating as Sumam Chemical Trading Co. Ltd. since 1995. “But now during this year we will form Sika Saudi Arabia and the intention is to dramatically grow our presence in all the regions of the Kingdom,” he said. “We will be making most of our range of products here in the Kingdom. Currently we are making our products for sale from Bahrain. We will continue to do that but we will also be manufacturing products in Rabigh,” he added.
Hardaker stressed that the plan is to be three times bigger within the next three to five years. “We are very serious about the India Middle East Africa region (IMEA), whose headquarter is based in Dubai, which started operation from April 2007 and is growing strongly with new companies being formed all across the region in the next three to five years,” he said.
He said that the Kingdom has building, construction projects on the go now of about $350 billion, of which the construction chemicals business is approximately 1 percent of the total spend, which is a very large market in Saudi Arabia.
“Our goal is to have around 25 percent of the market share by the end of five years,” Hardaker said, and added that though right now Sika is one of the world’s leading manufacturers of construction chemicals, in the Kingdom it is still in third position. “So we are strong in the Kingdom, but we are not yet market leaders. Our intent is to become one of the market leading supply companies — supplying contractors, applicators with the right product and the right price in a competitive way soon as we can do so,” he said.
Asked about Saudization, he said, “I am relatively new here. I am astonished to find how many good Saudis are available here. People who know how to think, how to work, and so we should have probably 15 percent to 20 percent of Saudis. Even with a small distributor network we already have 10 percent Saudis. As we grow, so will the percentage of Saudis. Right now we have 60 people. The plan is to double that by the end of next year.”
As per the Eighth Development Plan (2005 — 2009), one million units are planned to be completed, of which the private sector is estimated to self-finance the construction of 800,000 units. The government has encouraged banks and other financial institutions to provide housing loans and the tide has turned in the favor of the private sector to play an increasingly crucial role in driving the market forward.
Generally, construction activity was brisk starting 2000 and up to 2007, as reflected in the increased investments and projects especially within the residential segment. Moreover, government regulations and initiatives allowing foreign ownership, low to medium interest rates and high levels of liquidity coupled with rising demand due to expanding population along with the influx of expatriates have further fuelled the demand for real estate. This has led to rising construction activity in the recent past.
Population growth and surging oil revenues are the key dynamics stimulating both public and private sector investment in construction projects. The government now has more than sufficient resources to embark on long-planned improvements and a long awaited expansion of infrastructure, transport and municipal services.
The building boom is also being spurred by planned government investments to expand the country’s electricity network and water supplies. Just the construction element attached to power supply development is estimated at nearly $700 million.
