Suppliers line up to woo construction contractors at Project Qatar

A truck crane on display at Project Qatar.

A record number of construction companies and suppliers have filled the Qatar National Convention Centre this week, attempting to grab a share of the more than US$200 billion worth of infrastructure work due to be completed here by 2030.

Project Qatar, one of the country’s largest industry trade shows, officially kicked off Monday afternoon with some 11,500 visitors. Displays ranged in size from massive earth-moving equipment to hand-held drills and assorted pipe fasteners.

Along with heavy industrial machinery such as power transformers and asphalt plants, companies were also marketing finishings such as stone mosaics and decorative lighting.

In total, some 2,100 vendors from 47 countries are exhibiting at the 11th edition of Project Qatar, which moved to the QNCC from the Doha Exhibition Center this year.

Many who spoke to Doha News said they had attended because government infrastructure spending is dramatically increasing demand for construction services and equipment. Bader Mustafawi, the group commercial manager for Qatar Building Co., said:

“Business in booming. There are lots of opportunities for local and international companies.”

His firm, which has heavy equipment, contracting and material production divisions, is currently part of a joint venture constructing the major Doha Metro stations at Msheireb and Education City.

While many of the lead public transportation contracts have already been awarded, including the recent $4.4 billion agreement to construct the Gold Line, several suppliers still cited railway projects as the most exciting work on the horizon as general contractors ramp up purchases of scaffolding, electrical equipment and other materials.

Speaking to Doha News, Hady El-Khoury, general manager of Tawrid Qatar, which distributes industrial machinery to produce and transport those materials, said:

“There’s a lot of money there. The project is huge and requires concrete and asphalt. I’ve been working here since 2003, including the beautiful years of 2006 to 2009. I’ve also lived the ugly years of 2010 to 2012 … things are heading up again and, starting in 2014, things will start to change.”

Underlying worries

While there’s no shortage of work up for grabs, representatives from some companies suggested that profits are not guaranteed.

The GCC is an expensive place to do business, El-Khoury said, pointing to its reliance on expat labor as an example. Many skilled foreign workers demand a premium to relocate from their home country, and must also be given an accommodation allowance and return airfare.

“It keeps me up at night,” he conceded, although he said the company has taken a conservative approach to expanding and hiring to keep its expenses in check.

Meanwhile, many attendees were still trying to figure out how this month’s hike in diesel prices would affect their business.

El-Khoury, who also sells generators, said many of his customers require an on-site power supply and will have to absorb the extra fuel costs.

“There is no alternative at the moment. They need generators.”

Tire dealer Vijay Nambiar – the general manager of United Cooperation General Trading – said his customers are concerned about the sudden hike in diesel prices, but are still trying to gauge the impact.

There’s a general sense that it will cause prices to increase throughout the construction industry, but the magnitude is still uncertain, he added.

As companies adjust to the new cost structure, Nambiar predicted the industry will simultaneously mature in other ways. In his industry, for example, he said most industrial consumers are focused on buying the lowest-cost products even if it means having to replace a truck’s set of tires twice as often and incurring higher expenses on a per-kilometer basis.

Nambiar said he is starting to see a shift towards buyers considering a tire’s quality and technical attributes, but is still frequently forced to initially slash his prices to make a sale to a new customer.

But with business doubling year over year, he said the company is still winning business in Qatar.