According to analysts the fall in oil prices is not an immediate threat to infrastructure financing in Saudi Arabia, given the country’s significant foreign reserves and centrality of infrastructure development to economic diversification plans. The global Middle East steel utility poles market size is expected to reach $5.02 billion by 2022. What would you attribute these strong improvements to?
Over the last few years, steel has successfully managed to displace wood as the preferred material used in poles due to several reasons such as longevity, sturdiness and ecological balance owing to the reduction in deforestation activities for procuring wood. Steel posts have grown in prominence for electricity transmission & distribution and telecommunication cables. Huge investment in countries across the Middle East on their economic and social infrastructure has driven the utility post market. Developments in power, telecommunications and transportation are expected to accelerate the demand for utility posts. Also rapid urbanization and industrialization in Middle Eastern countries have boosted the infrastructural growth across the region resulting in increasing demand for such pole installations.
Could you tell us about the inception of the company and how this family business became a leader in its sector?
When the mother company was established in 1955, its main function then was the contracting business and trading particularly electrical substations. In the early 80s we started to manufacture power poles instead of importing them from France as we were doing. Then we increased gradually our production lines up to seven, which are able to produce about 300,000 poles. In 1986 we decided to expand our business and we started our power tower factory and began its commercialization; we started with three machines and a 25,000-ton capacity, and we have increased those numbers to 80,000 tons nowadays produced in 23 lines.
We have now a global company, leading the GCC market and looking into expanding its operations. We are tackling the Russian market as well. The government is fostering the cooperation between the two countries and we are finding great business opportunities there. Russia will play an important role in our future development.
What new opportunities does Saudi’s growth offer to the Al-Babtain Power & Telecommunication Company?
Saudi is evolving and we have enough capacity to meet the country’s needs. We started another factory in Cairo, Egypt, similar to the one we have in Riyadh in 2000 with a high production capacity as well. We are able to cater not only to Saudi, but the whole MENA region. We see great potential for growth in the near future. Saudi’s expenditure in mega-projects and infrastructure upgrades will be the main drivers for growth.
Other competitors present in the market, such as Al-Yamamah Electric Power Towers Factory, are investing heavily in order to capitalize on the opportunities for the utility poles industry in the kingdom. How can Al-Babtain maintain its position as a leader in an increasingly competitive market?
We are the number one in the GCC market; we have the biggest market share and for bowl manufacturing we rank number two or three in the world. The decision in 2006 to turn the company from a limited liability company into a joint stock company ranked it among the top 100 Gulf companies at the time.
We have reached this position by investing in quality. Our products have a good reputation all around the world and all our business units are certified to the ISO 9001 quality management system.
The company has also established an effective Environmental Management System (ISO 14001) and Occupational Health & Safety Management System (OHSAS 18001) certified by the British Standard Institution (BSI).
Clients such as Saudi Electricity or STC trust our products; they see clearly the difference between them and other cheaper options from China or India. We are a “made in Saudi brand” and that means using the latest technology for our production and the higher standards of quality. We import the technology from Europe and our more than 50 years of experience allows us to do our product development in-house. We are experts.
The company aims to enter into joint venture agreements in the area of in-building solutions to develop this line of business. What are the results so far?
Yes, we started two years ago and we are succeeding in this new venture. The market is just beginning to offer complete solutions from infrastructure to power poles and telecom technology in Saudi. There are plenty of projects in maintenance and/or replacement to keep us busy. Through our Leblanc subsidiaries in Qatar, Egypt and Jordan we offer complete solutions for our clients.
What about real estate? Is this an area where Al-Babtain is thinking of investing in?
Yes, we have plans and interest to find investors to develop residential areas in the kingdom. We have land available and are more than happy to engage in partnerships to develop quality projects
What are your Saudization targets and is it hard to find skilled workforce for Al-Babtain?
We find enough skilled people for our production. We have 1,500 employees and our Saudization percentage is 28%, while the requirements for our industry is 20%, so we are ranking green; we are exceeding the minimum requirements by far. We have training programs for our employees. We recruit a lot of people from the eastern part of the country and give them the skills needed to do the assigned tasks.
In our future plans creating a ladies section in our companies is also present; we want to include them in the design of our new factory for street lighting, which will be more related to design, and with tasks where they can provide added value to our products. We changed our salary base in order to improve retention and our company is only behind SABIC and STC in terms of salary rates.
What is your vision for the company in the years to come?
We started with very small capital and we have become one of the leading companies in its field in the Saudi market. We are ambitious we want to become a truly global player and I have no doubts we will achieve it by building trust with our clients and adding value to our society and country. I see a bright future for the company as long us we keep developing smart ideas and identifying the market needs.