CONSTRUCTION SUPPLY CHAIN
With the construction market picking up gradually, activity is expected to rebound all around as suppliers of construction materials are developing more innovative, higher value products.
Jotun Saudi has been performing extremely well in the last few years despite the changes in market dynamics. We have been operating in Saudi for more than 30 years with three manufacture units, five hubs, and more than 500 dealer networks. As one of the leading paint manufacturers globally with solid foundations locally, Jotun will benefit from this market transformation, which will improve products, service quality levels, and overall market standards. Our company strategy in Saudi is long term, on which Vision 2030 will enable high-quality companies such as ours to compete fairly to provide the best products and service for the benefit of end users. Construction and industrial projects contribute a substantial amount to our revenues, while our retail segments still account for the major part. Since the projects sector has witnessed a slowdown in the past few years, the government has announced new megaprojects in addition to many new infrastructure and oil and gas projects. The market is picking up gradually, with more activity all around, which means more money in the economy.
Construction is one of the largest sectors here, and large construction projects are the fuel of the economy. The Saudi economy is heavily dependent on revenues from oil, and those revenues are redeployed into the economy in the shape of construction projects. The new government regulations have contributed positively, albeit indirectly, to the overall status of the sector. The whole value cycle of the supply chain leads to a high quality of work, controlled by high-quality equipment and tools. The pre-qualification of equipment is also important, since the government demands certain specifications and models. This has created great demand for new, top-of-the-line road equipment with specs that Bakheet is able to provide. We have various levels of innovation and technology; the most important are telematics, which are sensors that provide an overview of the condition of one's equipment. We can also install a simpler 1D or 2D system in excavators to save time or money. The third level of innovation has to do with sustainability, namely providing solutions that have greener applications.
For 2019, we have made the decision to diversify, and almost three years ago we negotiated new business lines with European and American companies, which will keep developing into a niche high-value market where we can be a leader of new technologies in our business. Tough competition on prices leads companies to develop either a broader export strategy or niche products with high value. As the Saudi government is making inroads in playing an active role in the reconstruction process of Iraq, we are targeting this market and looking for a local distributor, though the market still lacks some attractiveness, as construction projects are few. In East Africa, we are looking for opportunities in Kenya, Rwanda, and Ethiopia, which are growing faster than their neighbors. We also target West Africa. Later, we want to introduce our construction material to North Africa and possibly Morocco and Senegal. Our typical markets are the UAE, Oman, Jordan, Bahrain, and Yemen. In the long term, we are looking at Syria and Yemen. Our core market is the GCC, with Kuwait our top market today.
We produce 3,000 tons of white cement per day and 11,000 tons of gray cement. In July, we finished our latest project to transfer one production line from gray cement to white. We can produce 2,000 tons of white cement per day or as much as 5,500 tons of gray per day. It is a dual production, and to my knowledge, it is one of the largest lines producing white cement in the world. We expect to see growth in 4Q2019 or 1Q2020 as megaprojects are expected to start then, and we will see demand for gray and white cement as early as 2020; however, we are still importing white cement from abroad. Our plan is to satisfy all the local demand for white cement. As we currently have more than double the capacity for local demand for gray cement, we plan to also have almost double the capacity of local demand for white cement. For the latter, we hope to have at least 60-70% of market share after we localize our production. For gray cement, we are at 5.5% and hope to reach as much as 6%.
CONSTRUCTION SUPPLY CHAIN
TABLE OF CONTENTS
Interview
Mohammed A. Al-Mowkley , Deputy Minister of Water Services, Ministry of Environment, Water, and Agriculture & CEO, National Water Company (NWC)
NWC leads the Kingdom's efforts to preserve water as a non-renewable national resource and drastically reduce the average per capita water consumption.
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Majed H. Al Saadi , Managing Director, Priority Projects Office (PPO), Local Content and Government Procurement Authority
PPO and ECA act as an accelerator for the realization of Vision 2030 by bridging the gap between the private and public sectors and helping the government diversify the economy in the long run.
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HRH Princess Hala bint Khaled bin Sultan Al-Saud C, Chairman, Saudi Law Conference (SLC) organizing committee & Founder,, Burhan Almarifa
Burhan Almarifa is focused on maturing the legal sector, encouraging innovation, and enabling research and development in KSA through knowledge transfer and consultancy.
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Sahel N. Abduljauwad, Rector, King Fahd University oF Petroleum & Minerals (KFUPM)
The King Fahd University of Petroleum & Minerals has long been the backbone of Saudi Arabia's formidable drilling expertise. Today, it is working to train the next generation of renewable energy and water management scientists.
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Dr. Abdullah Al-Rubaish, Rector, Imam Abdulrahman bin Faisal University (IAU)
Dr. Abdullah Al-Rubaish was appointed vice president of KFU in 2007 and president in 2010. He combined his executive experience from serving in various deanships at KFU with academic practices to become associate professor of medicine and work as a medical consultant at the Department of Internal Medicine. He graduated from KFU's College of Medicine and completed his medical internship at KFHU, where he also pursued a fellowship program. He became a member of the UK Royal College of Physicians and the Arab Board after he completed his sub-subspecialty in Pulmonary Medicine at the University of Alberta, Canada.
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Rajaa Moumena, Founder & President, Future Institute of Higher Education and Training
Saudi Arabia is allowing women more privileges, including driving and becoming ambassadors. The Future Institute of Higher Education and Training is trying to help by providing courses they need to adapt to this new world.
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