Building a powerful presence

By Ben Thompson

Talk about being thrown in at the deep end. While most executives spent October 2009 struggling to get to grips with the worst recession in living memory, Laurie Voyer faced an additional challenge: finding his feet as head of one of the Middle East’s biggest construction and engineering firms. In many ways, his appointment as CEO of Al Habtoor Leighton Group couldn’t have come at a worse time for the 35-year industry veteran: the firm’s home market of the UAE had been hit hard by the financial crisis, with real estate prices in Dubai plunging some 60 percent from their peak in 2008 and billions of dollars worth of projects being put on hold. Credit markets had tightened significantly, making project financing much harder to come by. And the company itself had suffered heavy losses on its order book as a result of the downturn, mainly because it focused overwhelmingly on the commercial property sector. A major shock was the suspension of the US$1.6 billion Tameer Towers project in Abu Dhabi, and the suspension of the Trump Tower Project in Dubai.

“Many of the strategies that are helping us navigate through the current downturn are ones that will benefit us in the long-term.”

But negativity is not in the genial Aussie's nature. Indeed, while the one-year anniversary of the global financial crisis provided the backdrop to his accession to one of the region's most prominent business positions, Voyer was much more concerned with the next phase of the company's future development - regional expansion and the greater diversification of its service offerings - than he was with dwelling on the downturn. With much of its business located within the UAE (Al Habtoor currently generates around 80 percent of its revenues from within the country) it was time for a new strategy; as such, Voyer focused on building key partnerships across the Gulf in a bid to tap into the markets that proved most resilient to the global recession.

It's an approach that is starting to pay dividends. Key growth areas for Al Habtoor Leighton are Abu Dhabi, Qatar, Saudi Arabia and Kuwait, all of which weathered the financial maelstrom better than most, and with the possibility of further ventures into locations such as Libya and Iraq on the horizon, the future looks relatively bright for the company, despite the region's recent economic problems. Al Habtoor's total order book is expected to rise to around Dh30 billion over the next 12 months from around Dh22 billion, and Voyer believes the company will generate about 50 percent of its revenues over the next two to three years from outside the UAE. "I think the business over the next couple of years will change for us," he explains. "I expect in the next two or three years the surrounding Gulf countries will contribute about the same as what the UAE has done for us in the last couple of years."

Here, Voyer talks to MENA Infrastructure's Senior Editor Ben Thompson to discuss Al Habtoor Leighton Group's current areas of focus and what the next few years will hold for the construction giant.

You assumed your current role as CEO at a difficult time, one year into the global recession. How do you think your first year in charge has gone?

It's certainly been an interesting year, as you can well imagine, but I've also enjoyed what I've been doing here immensely. Of course, it's disappointing to read about all the things that are occurring in terms of project cancellations and postponements - and the negativity about the industry that goes along with that - but perhaps these events were just the natural result of a market that was overinflated anyway. The current downturn is just a matter of correction - that is what we anticipate it to be, anyway - and from our point of view we still have a fairly positive outlook for our business here in the UAE and the other gulf countries as well.

Where do you see the particular hotspots for growth in terms of Al Habtoor Leighton Group?

We think that the future is probably outside the UAE initially. But having said that, we are very confident we'll continue to have a strong, robust business in the UAE in the future, much the same as it is today. I don't think we'll see any deterioration or reduction in the business from a UAE perspective. But we're not here just to be UAE contractors - we are establishing ourselves in the other countries of the gulf, too. I expect in the next two or three years the surrounding Gulf countries will contribute about the same as what the UAE has done for us in the last couple of years. So we're in the process of registering our company in Kuwait, Saudi Arabia and Bahrain, and we're going to continue with that thrust. And I think by the end of the year, we'll have had all that groundwork pretty much established from a business development point of view. So that's the current challenge, I guess: to geographically diversify the business outside the UAE.

Expansion is key for any business. But it's not just diversifying the business geographically; it's also about diversifying your scope in terms of the skill sets and the services that you can offer, isn't it?

That's absolutely correct. We are well known here in the UAE as principally a building contractor - and a very good building contractor for that matter, particularly in terms of our work on high-rise developments. But we're now looking to clip on additional offerings, especially regarding the civil engineering aspect. The market here has much to offer in this regard, and we see significant growth coming from that add-on feature. As a result, we're shifting from a focus on high-rise residential and hotel projects to hospitals, educational facilities and road and civil infrastructure, and will continue to move towards a 50/50 split between the two.

What do you think have been the major highlights for you in your first year in charge and where did you face the biggest challenges?

We're still here; that's the big highlight. There are plenty of firms that have struggled through the recession - it's been a tough 18 months - but I think we've navigated through it pretty well. When the global financial crisis hit everyone automatically feared the worst, but I think we pretty much planned to be where we are right now. It sounds a bit corny, perhaps, but we took stock of ourselves and had a very outward-looking view of what would happen based on our experience of the industry and our knowledge of our own strengths and competencies. In terms of the economic situation, we are where we are. It's probably disappointing if you were to wind the clock back two or three years and look at the projects that were being planned and the profits that were being made back then, but these types of corrections do happen in our industry - and that's where the challenges lie.

You've weathered the storm better than most. What have been the key decisions that you've taken during that tough period to help set yourself up for the future? Because it's not just about weathering the downturn; it's also about positioning for growth when the upturn comes.

About four months ago, we undertook a very detailed review of our business. We looked at various scenarios and possible outcomes, both optimistic and more pessimistic, and decided where we should be at various stages over the next few years. And we feel we're pretty much on track. We tuned our business according to those expectations as well as the type of projects we want to be doing, the sort of conditions and the risks we'd like to undertake, and also the prices we're prepared to accept. At the end of the day, managing your business in tough times makes you think about the fundamentals more, and that's not necessarily a bad thing. It makes you consider key decisions more carefully. And hopefully, because of the in-depth analysis work we did to establish exactly what position the business was in, we'll prove to have taken the right decisions, both in the short term and over the longer term, too.

Of course, balancing those short-term needs against the long-term vision for the company goes to the heart of what it takes to be a successful manager. So how do you strike that balance, and what are your longer-term goals for Al Habtoor Leighton Group?

Well, many of the strategies that are helping us navigate through the current downturn are ones that will benefit us in the long-term, too. So we've been looking at a lot of performance-based issues such as cost control, programming and planning, productivity improvement, and getting closer to our workforce. We've been looking at all of those challenges as we go through this difficult period to better align the high-performance part of our business and retain all our high-performance individuals and subcontractors and workforce so that we are a much stronger business as we come out the other side.

So maybe you could tell us a little bit about the flagship projects you're currently working on in the Middle East. What are the big developments for you right now?

We're in the throes of handing over the final phase of the Sorbonne University in Abu Dhabi. We're also part of the Zayed University development project, also in Abu Dhabi. The Capital Gate Project is also on track, and is a flagship project for us. The Hyatt Group just announced they are going take the fit-out on that building and are hoping to have a hotel opening there early next year, which is good news. We handed over on the Saadiyat Island link project last year, but we still continue to work on that program as they still have parts that need be completed this year. We're looking at bidding on the Louvre project and also the Guggenheim Museum, and have prequalified for both of those projects. Meanwhile over in Qatar, we handed over about 30 percent of the Al Shaqab Equestrian Centre in the last month of July. So we've been extremely busy.

I know that Saudi Arabia is currently a big market for the construction and infrastructure industries. How do you see your company expanding into the Saudi market?

We're in a consortium over there with the Al Rajhi Group, and are working alongside them on the ITCC project just outside Riyadh. That's going pretty well now. We're still formalising our operations in Saudi Arabia at the moment, but I feel fairly confident that by the end of this year we should have established a couple of contracts on our own terms. We're just taking it cautiously; there is a lot of excitement about the potential in the Saudi Arabian market and lots of opportunities on offer, but we want to establish ourselves properly before we start beating the drums too hard over there.

Elsewhere in this issue, we're also looking at the process of rebuilding Iraq. Obviously, Iraq offers huge challenges as well opportunities. Is this something you feel that HLG might get involved with in the future?

Yes, absolutely we will, and we're considering our operations there at the moment. Having said that, we want to settle down on our Saudi and Kuwait operations first - which will probably take us another couple of months - and then we'll see where we are. But we've already started to look into Iraq. I can't make any more comments on that at this stage, but it's definitely on the radar, and probably in the medium term we would be keen to go to Iraq.

Your firm has worked on many of the Gulf's most pioneering projects. So what do you feel you're able to bring to these developments that makes you the contractor of choice for the region's landmark building projects?

I think first and foremost, Al Habtoor Leighton Group has a very strong understanding of both regional business ethics and international best practices, and that comes from the blend of skills and knowledge offered by the coming together of two companies. We're very well connected to the supply chain, and the international experience and project management skills of the Leighton Group, plus the local experience of the Al Habtoor Group in this area, offers a pretty unique combination. I feel pretty excited about the ability of those two groups to continue moving as one into these new areas. We have the best of both worlds, really, with the local expertise and the local knowledge on the one hand, along with the international expertise garnered through years of working on some of these huge landmark projects on the other.

A growing focus on safety has been one thing that's been common across the Gulf for contractors and developers alike. So what are you doing to improve safety operations at HLG?

This was a major part of our performance management campaign earlier this year, where we challenged ourselves to improve operations by making workers and line management more aware of the risks involved in the construction process. We had a safety summit this June where I got all the senior managers together, as well as our key suppliers and subcontractors and other joint venture partners, in order to take time to remind ourselves about the importance of safety. In my mind, safety is a key part of the performance of the business going forward, and it is critical that we put the right attention into safety because a safe site is generally a very productive site; likewise, a clean and well-managed site is likely to be a more productive site as well.

Safety is very much about good planning, and if I see good safety statistics at a particular site, generally speaking it's a reflection of the good management and planning that's gone into running the job. So safety is a very high focus area for our business - both from an operational standpoint, but also from a management perspective as well.

I guess it's as much a cultural thing as anything else: instilling that safety culture within the group as a whole, so that it becomes second nature.

People talk about culture, and I think you're right: there has been a shift in the way people approach their work here with regards to safety. But from my point of view, safety is just one of a number of accepted best practices that you need to embrace in order to be a sound manager. In our business, a professional manager manages costs and manages time and manages people to the best of their ability. And all of those things are extremely important. So it's not just about safety, not just about cost, not just about time. It should be about all three being combined to make sure we get the best out of our company and out of our projects and out of the people who work for us. And that's what tough times do: they force you to refocus more on the fundamentals of the business, and how you can achieve the best results by getting the basics right.

Something else that's been a huge area of focus in recent years in the construction industry is the idea of sustainable development. How is Al Habtoor Leighton building a greener focus into its design and development processes?

From our point of view, sustainability is a key requirement for any responsible company. Corporate governance and corporate responsibility are paramount, certainly from my experience in Australia with the Leighton Group; we embraced that very strongly in all of our construction and mining activities in Australia, not because we were forced to do it from a legislative point of view but because we identified it some years ago as a point of differentiation. It's certainly growing in interest here. We are both responsive and responsible in terms of what we do. But I guess at the end of the day, we need to make sure our clients and customers and the rest of the supply chain are keeping up with us in some of these new initiatives.

In terms of the design and construction responsibility, we're very much part of that. Design is not such a big part of our business here at the moment, because a lot of our clients still wish to retain control over design. But as we use our track record and reputation to convince more of our customers that we can be good, responsible designers, this will give us a chance to leverage some of the skills and knowledge that we have within our associated businesses to bring about a greener focus on the building process. For instance, our Thiess Services business recently opened a new specialised processing plant designed to manage construction and demolition debris. The plant allows construction waste to be processed and recycled for other uses such as road-base, general fill and aggregate for construction and infrastructure projects. Under a contract with the Abu Dhabi municipality, we're now recycling those building products and reusing them back into the Abu Dhabi market. It's a cleaner, greener way to manage construction waste.

In that respect, it's not just about construction companies showing a greener, more sustainable focus; it has to come from the client as well. Do you think there needs to be greater education as to the benefits and the advantages of sustainable construction?

I think there have been some great initiatives, but we're certainly not at the level we need to be just yet. When I was with the Leighton Group back in Australia, we were at the forefront of responding to clients' demands regarding sustainability in some of the building contracts we won, for which we were awarded six-star ratings for both design and construction, which was unheard of before then. So we set the benchmark pretty high and we attained it, which does show that it can be done. And I think the client enjoyed the process as well because they got all sorts of benefits from it, from energy savings to operational cost savings to great PR. However, that was a few years back and we're still talking about pushing the benefits of sustainability.

Nonetheless, I do think the tidal wave is about to happen, because in many cases, these kind of benefits can bring real tangible money-saving and cost-saving advantages as well. We have certainly found that. Our own focus on sustainability forced people to be far more diligent in looking around for products and materials and companies to work with. And as a result of that, I think it put some uniqueness in our product; sustainability became a point of differentiation. So in my mind there's no doubt that we should all be more responsible in terms of our consumption of energy and the way we approach sustainability. And we will be making sure we step up to the plate on that.

So what impact do you think sustainability will have on the Middle East's construction and development sector over the new few years? Do you think the Middle East has potential to become a pioneer in terms of sustainability?

We've certainly seen political statements to support that, and the fact that the Middle East has to import a fair amount of its product suggests that the concepts of sustainability and being more conscious about recycling and power consumption and energy usage have got a big future in the region. Sustainability is just good business. I can't understand why it should still be seen as a costly business proposition; that's just short-term thinking in my opinion. Over the longer term, it's got to be beneficial.

And so what's your outlook for the region's construction industry - and HLG within that sector - over the next 12-18 months?

The budget and the forecasting we've done suggests that 2010 has been a marginally better year than 2009, and that 2011 will probably show a similar increase on this year in terms of figures. So we're being cautiously optimistic in terms of what our expectations are for next year. To be honest, we're just looking at it as business-as-usual, with natural growth being bolstered by our overseas expansion. Hopefully, our investments in moving into other countries will pay off and give us that little bit of an uplift that we're looking for in terms of our results. It's consistent with what I said before - we want the UAE to hold itself up as it has done and continues to do; and then the uplift in our business will come from the investments we've made in other parts of the region, outside the UAE.

Do you see any external trends or developments influencing the construction sector in the Middle East over the next couple of years?

It would be great to see some of our international competitors retreat back to their countries of origin, so we could be left alone here to run the Middle East as we would like to.

Khalifa Port and Industrial Zone

Location: Abu Dhabi, UAE

Contract value: US$398 million

Client: Abu Dhabi Ports Company (ADPC)

Commencement: 2009

Completion: 2011

Al Habtoor Leighton Group's scope of work includes the onshore civil and building package for the Khalifa Port and Industrial Zone. As a design and construct project, the works include around 40 buildings ranging from single guardhouses to the 80,0000 square metre central facilities building, as well as civil engineering infrastructure works such as roads, utilities and services.

Also included are associated infrastructure works consisting of a series of road networks, bridges, utility installations, containment structures, reinforced earth embankments, patrol roads, an exterior maintenance system, MEP works, building detailing, signage, hard and soft landscaping, and maintenance.

Information Technology and Communication Complex

Location: Saudi Arabia

Contract value: US$685 million

Client: Rayadah Investment Company

Commencement: 2009

Completion: 2012

The scope of work on the ITCC project includes excavation and enabling works, construction of the structural frame, masonry works, complete architectural works including metal works, wood works, thermal and moisture protection, doors and windows, aluminium and curtain wall finishes, elevators, specialties, special construction electro-mechanical and external works.

Within the scope of this first phase of development is a central office complex comprised of four towers, each with five basement levels, a ground floor entry level and 19 upper floors. The ancillary buildings include a central services building, an e-library, health club, mosque, an R&D building, an incubator building and a central main plaza spine and facade. It covers a development area of about 800,000 square metres. The site is located in the Al Nakheel district, approximately 15 kilometres west of Riyadh city centre, at the junction of two major roads - King Abdullah Road and Prince Turki Ibn Abdul Aziz Street.

Doha City Centre Expansion

Location: Qatar

Contract value: US$325 million

Client: Al Rayyan Tourism Investment Company

Commencement: 2005

Completion: 2010

Doha City Centre Expansion The project involves the construction of five towers with a direct link to the existing Doha City Centre, one of the largest malls in the Gulf. The project is divided into three phases and has a total built-up area of around 330,000 square metres. The podium is 27,000 square metres and the towers are 10,000 square metres, narrowing to 700 square metres at the top.

The scope of work on the project includes an RCC structure, external cladding with a glazed curtain walling system, MEP services, a conveying system, and soft and hard landscaping. Phase one includes the construction of the 258-room, 50-storey Marriot Renaissance, the 204-room and 124 executive apartment 50-storey Marriot Courtyard, and a podium. Phase two includes the construction of the 200-room, 50-storey Shangri-La Tower, the 50-storey Rotana Tower and a podium. Phase three involves the construction of the 48-storey Merweb Tower and a podium.

RECORD BREAKER

Capital Gate in Abu Dhabi has been certified as the 'World's Furthest Leaning Manmade Tower' by Guinness World Records. Currently under construction by HLG, Capital Gate, owned and developed by the Abu Dhabi National Exhibitions Company (ADNEC), has been built to lean 18 degrees westwards - more than four times that of the world famous Leaning Tower of Pisa. Capital Gate earned the Guinness recognition after rigorous evaluation by the Awards Committee, following exterior completion of the 160-metre, 35-storey tower earlier this year.

Capital Gate's floor plates are stacked vertically to the 12th storey, after which they are staggered over each other by between 300 millimetres to 1400 millimetres, giving rise to the tower's dramatic lean. The tower features other innovative construction techniques including the world's first known use of a 'pre-cambered' core, which contains more than 15,000 cubic metres of concrete reinforced with 10,000 tons of steel. The core, deliberately built slightly off centre, has straightened as the building has risen, compressing the concrete and giving it strength, and moving into (vertical) position as the weight of the floors has been added.

"The Capital Gate structure has been a most challenging and enjoyable engineering project," said Senior Construction Manager for Al Habtoor Leighton Group, Leslie Fairchild. "Every day has brought new challenges for the team, requiring us to come up with some exceptional solutions. We have a very strong site team and excellent sub-contractors who worked closely together to ensure the project's success."

When fully complete by the end of this year, Capital Gate will house the five-star Hyatt Capital Gate hotel as well as approximately 20,000 square metres of premium office space.