Construction Products in the Middle East

As a company that specializes in construction materials we have a great interest in Lebanon. We have been studying Lebanon with very close observation: the political stability, the security of the economy. The government has assured us that there will be a very healthy budget announced soon.

Interview with Dr. Faysal Alaquil, Director of Business Development & Administration Affairs of Construction Products Holding Company (CPC)

How would you describe the current climate in the Saudi construction market?

There is not a single country that has not been affected by the global economic crisis. Saudi Arabia has been quite strong in terms of the economy and that was demonstrated during the announced budget : the government allocated tremendous amounts of funds for the construction of universities, roads, hospitals, and schools as well as medical centers, tunnels, and water dams. They have implemented these so I have to disagree that they have suspended some projects, In reality they have not. Tremendous construction work has been done and Construction Products Company is very proud that it has participated in these projects. There is also a major project going on which is the Princess Noura bint Abdur-Rahman University which is a massive complex. Again, Construction Products Company is participating because the major contractor there is the Saudi BinLadin group. The activities of their first and second stage involves a tremendous requirement for concrete, following aluminum, glass, then the finishing, like marble and granite. If there were delays they have certainly not affected the major contracts. The government always evaluates their priorities in terms of what they should work on first. They are looking at the Jeddah Airport, more roads and tunnels. There is a major railroad contract that is going to link major cities in the Kingdom. Definitely there is a lot of increase in the availability of raw materials.

I think this is a very positive step that would definitely require a lot of funds. This is not speculation, these are real market demands and demonstrates the economical stability and financial strength of Saudi Arabia.

Is there cause for concern for you that they are so traditional?

There have been several reforms that started with the Ministry of Education. Education is extremely important and it is a very vital player in the role of reforms. Saudi Arabia has always been very conservative; it is the guardian of the two Holy Mosques and there’s a lot of Islamic tradition there that it always has to maintain and preserve. Any change that is linked to modernization and development has to be very well-studied in order for there not to Royal Clock Tower, Saudi Arabia be a drastic shift. I’m very proud of what Saudi Arabia has taken in terms of steps. The King has done a lot of achievements since becoming the ruler of the Kingdom five years ago, and the government has been very careful of importing suitable technology that will enrich the knowledge of the youth so that they would be able to handle this technology.

What are the prospects for the construction market in Lebanon and what are your plans ?

As a company that specializes in construction materials we have a great interest in Lebanon. Construction Products Company has been studying Lebanon with very close observation : the political stability, the security of the economy. The government has assured us that there will be a very healthy budget announced soon. They have also indicated that there are so many real estate projects going on, such as the recent completion of the Four Seasons Hotel. A lot has been considered in terms of political stability in the Lebanese government that will give comfort to investors to be able to come in without hesitation. The central bank has announced a large number of deposits. The cost of living needs to be controlled because there are a lot of consumable items that have really been a bit overpriced. Jobs need to be created for the young people. Educational costs need to be considered for the Lebanese people. Considering these factors carefully will lead to more stability and more encouragement, creating attraction for foreign investors to invest here as well as for Lebanese investors to come back and invest in Lebanon.

What is your ambition here?

Construction Products Company established themselves in Syria, and invested 110 million dollars in creating an industrial park close to Damascus. The purpose of this park is to have factories manufacturing construction materials for the Syrian market and also to allow for exportation. Syria has a very strategic location being close to Lebanon, Jordan and Turkey, and Iraq. When the situation in Iraq eventually becomes more stable, it will become a big market for construction materials as they rebuild a lot of their facilities. Additionally, the Syrian government was very encouraging and opened the door for Construction Products Company to invest in Syria. We then looked to opportunities in Lebanon. Through our own research Construction Products Company realized there are a good number of factories in Al Beqaa valley that are up for sale. We are looking into that. We are soon going to start in Qatar and Algeria. The purpose of Construction Products Company’s existence is based on the concept of the one-stop shop.

By doing that they could control the delivery and the price, and could communicate faster having one source. This experiment was very successful in Jeddah, so Construction Products Company went ahead and purchased another site in Riyadh. Again success was our partner. We felt very good about this so we bought a property in Dammam to do the same thing. Being so successful in Saudi Arabia gave us the courage to go outside, so the first stop after that was Syria. Construction Products Company is the industrial arm of Saudi BinLadin group, or SBG, which is a very well known contractor in Saudi Arabia and abroad. They have built so many facilities, like the Sharm Al Sheikh airport, and mosques, hospitals, and universities. Construction Products Company is currently contributing to the second tallest building in the world in the Mekkah region.

It should be finished before the end of this year. It is 591 meters and is very impressive. This success proves that our concept is very effective and is not just a slogan we use. We do implement it, especially for fast-track projects. Construction Products Company went one step further by partnering with a well-known fast-track company, and entered into partnerships with companies like Zahid Group and Electric House. The reason for these partnerships and joint ventures is that the market is big and you need strong partners to extend your services and finance all the expansion and increase in facilities. India has also been a very important market for us; we looked into Bangalore and Puna and Construction Products Company has opened a small office there to study the development of high-tech investors in India for call center facilities. There is a large number of Indian investors who want to enter that market, and we have the ability and we want to do it.

What is your greatest challenge?

It is to find the right people. It is difficult to find skilled people, so Construction Products Company has created training centers to train the people to use state-of-the-art equipment properly. We buy equipment, and then bring people who have manufactured the equipment to train the people. This is a challenge because not all the labor is geared to accepting modern technology. On the strategic level, finance is a very important element. Without having the financial capability, our expansion plans will not go as fast as expected so the partners in the companies are offering the proper cash required. We also need to find proper banking facilities. Construction Products Company might look at private placement or IPO down the road that would allow us to have more cash. When we expand we require management.

I am always traveling, so this is the challenge. We need to create a larger team that works for Construction Products Company Industrial Parks and we have to be very selective and good at training them. We are also very keen about the community. You can do a project that is profitable and you enjoy it, but is that it? That is not what doing business is all about. You need to be contributing to the community you are in. Construction Products Company has implemented a very important social responsibility program, starting by offering scholarships to students at universities, and we have offered to finance sign language programs for the hearing impaired. We have also taken students to our facilities to see the factories and see how the materials are made. This enriches their education and makes it more realistic to them, enhancing their creativity and their ability to produce. Additionally, we look at supporting some sport activities such as car rallies and football teams to be a part of the youth welfare. We started in 2005 so this is really a lot of activities in five years. The credit goes to the people who are behind all of this. The people have tremendous experience here.


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