Metalworking heats up in Middle East

Export figures show resilience
U.S. Exports to the GCC (Gulf Cooperation Council) accounted for only 2.5% of its total exports in 2010 but of that, machinery and transport equipment accounted for about two-thirds, with a total value of US$20.8 billion. The largest market for machinery products in the region remained to be Saudi Arabia, receiving 38 % of the total value, followed closely by United Arab Emirates with 33 %, Qatar with 12 %, Kuwait with 9%, Bahrain with 4% and Oman with 3%.

U.S. exports of general industrial machinery, equipment and parts to the GCC touched a total value of US$2.3 billion. Saudi Arabia (44%) and UAE (32%) were the primary recipients while power generating machinery and equipment were primarily destined for Saudi Arabia (35%) and Kuwait (32%). Meanwhile Saudi Arabia turned out to be the largest GCC export market of US chemicals and related products. Similarly, Japanese export figures to the GCC, UAE in particular rose due to strong growth in motor vehicle export, comprising 57.9% of total exports to the GCC, worth US$11.6 billion in 2010 (US$8 billion in 2009). A strong demand trend emerged in 2010 for vehicles, iron and steel, rubber, aluminium and chemicals, indicating a revival in the region's consumer and industrial profiles, vis-à-vis 2009.

Ben Jones, Commercial Manager, Brown McFarlane International FZE

The tourism and aviation industry in the region continues to grow vividly. With Saudi Arabia's latest announcement of opening its domestic skies to Gulf carriers and continuous investment in the region's aviation industry, it comes as no surprise that a certain portion of the import figures for the region comprise of aviation-related machinery and technology.

However, re-exports of machinery has generally slowed down in the MENA region due to the 2011 political unrest, leading to a slowdown in demand for machinery and mechanical appliances. According to a study, Dubai's exports and re-exports of such mechanical products to Egypt during the first four months of 2011 represent a decline of 14%.

"Without doubt, the current global economic situation and regional political uncertainty is dampening growth overall.  Exports to some of the local markets most affected by political upheaval have been affected dramatically, but once things settle again there will be increased investment as rebuilding begins," Mr. Ben Jones, Commercial Manager, Brown McFarlane International FZE.

M. Yogi, Managing Director, Amity Engineering, FZC

Similar views are shared by other stakeholders as well."The Middle Eastern region has a lot to offer but the financial situation does bring in a certain amount of skepticism. The local UAE industry is stable but Qatar, Saudi Arabia and Bahrain are booming" said Mr. M. Yogi, Managing Director, Amity Engineering, FZC.

Local demographics favours investment
"Saudi is expanding, Qatar is expanding, and Bahrain is proceeding. This is your golden chance, to join hands and build steel factories all over the MENA region. I am wondering why you are not doing this, why you are not building steel factories, in this region?" quizzed Dr. Hilal Hussain Al-Tuwairiqi, Chairman of the Arab Iron and Steel Union at a steel Business Briefing conference in Dubai.

According to Al-Tuwairiqi, the investors dealt with a mindset issue of putting funds in this region which, according to him, would post greater social implications. Instead of importing steel, iron and other manufacturing material, the focus should be on esNike