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The Era of New Manufacturing in Saudi Arabia


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Eng. Azzam Shalabi, President, Saudi Arabia’s National Industrial Cluster Development Program's presentation at the 2010 U.S.-Saudi Business Opportunities Forum in Chicago, IL.

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The Era of New Manufacturing in Saudi Arabia

  1. 1. The Era of New Manufacturing in Saudi Arabia Presented to: US – Saudi Business Opportunities Forum Chicago, Illinois April 28, 2010
  2. 2. Saudi Arabia is investing in value added manufacturing serving 400 million consumers <ul><ul><li>A center serving over 400 million consumers </li></ul></ul><ul><ul><li>Vast oil, Petrochemicals and Mineral resources </li></ul></ul><ul><ul><li>Competitive power cost (3.2 cents/KWH) </li></ul></ul><ul><ul><li>Rapid growth of young educated Saudi’s </li></ul></ul><ul><ul><li>1 st economy in the MENA & 23 rd globally </li></ul></ul><ul><ul><li>7 th globally in rewarding Tax system (20% flat tax) </li></ul></ul><ul><ul><li>13 th globally in ease of doing business </li></ul></ul><ul><ul><li>Largest free market in MENA region </li></ul></ul>MENA- Middle East and North Africa Turkey Iran Syria Egypt Sudan Oman Qatar Kuwait UAE Bahrain Iraq Pakistan
  3. 3. A multitude of specialized Government and Private agencies committed to make you successful <ul><li>1. Ministry of Commerce & Industry </li></ul><ul><ul><li>Industrial Clusters Program </li></ul></ul><ul><li>2. Saudi General Investment Authority </li></ul><ul><li>3. Saudi Industrial Development Fund </li></ul><ul><ul><li>Industrial loans annual charges </li></ul></ul><ul><li>4. Industrial Land leasing (per sqm/year): </li></ul><ul><ul><li>MODON (government) </li></ul></ul><ul><ul><li>Royal Commission (government) </li></ul></ul><ul><ul><li>PetroRabigh park (private) </li></ul></ul><ul><ul><li>Economic Cities (private) </li></ul></ul><ul><li>5. Human Resource Development Fund </li></ul><ul><li>6. Saudi Export Program </li></ul><ul><li>7. Chambers of Commerce </li></ul><ul><ul><li>Industrial strategy </li></ul></ul><ul><ul><li>Window for Manufacturing </li></ul></ul><ul><ul><li>One Step Shop </li></ul></ul><ul><ul><li>2.5% </li></ul></ul><ul><ul><li>$0.26-0.53 </li></ul></ul><ul><ul><li>$1.06 </li></ul></ul><ul><ul><li>$1.6 </li></ul></ul><ul><ul><li>Commercial rates </li></ul></ul><ul><ul><li>Training & wage support </li></ul></ul><ul><ul><li>Export credit & insurance </li></ul></ul><ul><ul><li>Window for business </li></ul></ul>
  4. 4. The chosen sectors are export oriented & being developed as clusters that are globally competitive Oil & Gas Offshore* Energy Goods & Services* * Initiative championed by Saudi Aramco Home Appliances Automotive Metals Processing Plastics & Packaging Solar Energy
  5. 5. The Metals Cluster will produce material & products to serve the new industries and the export markets <ul><li>Anchor Projects </li></ul><ul><li>Aluminum flat rolling mill – 400 k tons </li></ul><ul><li>Steel flat rolling mill – 1.75 million tons </li></ul><ul><li>Aluminum casting </li></ul><ul><li>Steel casting & forging </li></ul><ul><li>Aluminum cable & wire </li></ul>Supporting businesses and services s and services Cluster services Industry Association Research & training Metals Products Intermediates Basic materials
  6. 6. The Automotive cluster to capture a significant portion of the fast growing $75 billion market in the region <ul><li>Anchor Projects </li></ul><ul><ul><li>120 k unit Car assembly plants </li></ul></ul><ul><ul><li>25 k unit Truck assembly plants </li></ul></ul><ul><ul><li>8 million Tire plant </li></ul></ul><ul><ul><li>600 k unit Powertrain plant </li></ul></ul>Tier N Tier 2 Tier 0.5/1 Auto Companies Supporting businesses and services Research & Training Industry Association Cluster Services Import
  7. 7. Home appliances cluster targets products that are efficient and essential for the quality of life in the MENA <ul><li>Anchor Projects </li></ul><ul><ul><li>Air Conditioning Expansions: 1.5 million units annually </li></ul></ul><ul><ul><li>Home Appliances: 2.3 million units annually </li></ul></ul><ul><ul><li>Compressors: 5 million units annually </li></ul></ul><ul><ul><li>Appliances Motors: 3 million units annually </li></ul></ul>
  8. 8. A major player in the Solar industry from R&D through manufacturing of products and ultimately export of power Module System Module Substrate (e.g. glass) System Ingot Poly Silicon Wafer Cell The crystalline PV value chain The thin-film PV value chain
  9. 9. Plastic and Packaging is increasing value by becoming a consumer products goods center for the region and beyond Note : In the right-hand chart, “Others” represent a number of new products such as : SBR, EPR, PBR, Carbon Black, EPDM, PPMA, PA, EVOH, PACN, POM, Carbon Fibers, etc… SAUDI ARABIA POLYMER CAPACITY FORECAST (2008, thousand tons per year) SAUDI ARABIA POLYMER FORECAST (thousand tons per year)
  10. 10. Energy Goods Cluster targeting 30 “Anchor Projects” worth $5 billion investments increasing local sourcing to 70% Current Locally manufactured Highly Engineered Immediate target projects 28% 22% 50% <ul><li>Pipe </li></ul><ul><li>OCTG </li></ul><ul><li>Valves </li></ul><ul><li>Pumps </li></ul><ul><li>Specialty Chemicals </li></ul><ul><li>Heat Exchangers </li></ul><ul><li>Vessels </li></ul><ul><li>Compressors </li></ul><ul><li>Mechanical Seals </li></ul><ul><li>Drill Bits </li></ul><ul><li>Well Heads </li></ul><ul><li>Subsea Cables </li></ul>
  11. 11. The Oil & Gas Offshore Cluster’s targeting platform fabrication and specialized services capabilities <ul><li>Offshore Exploration & Drilling </li></ul><ul><li>Offshore Platform Fabrication </li></ul><ul><li>Offshore Submersible Pumps </li></ul><ul><li>Subsea Valves & Cables </li></ul><ul><li>Surveying </li></ul><ul><li>Industrial Marine Services </li></ul><ul><li>Pipeline Scrapping & Laying </li></ul><ul><li>Environmental Services </li></ul>
  12. 12. Summary <ul><ul><li>Leadership committed to industrializing the nation. </li></ul></ul><ul><ul><li>Significant resources directed to support manufacturing. </li></ul></ul><ul><ul><li>Focus is on value added manufacturing & services. </li></ul></ul><ul><ul><li>We welcome American companies as strategic partners. </li></ul></ul><ul><ul><li>We are reliable, fair, & long term partners. </li></ul></ul>
  13. 13. “ To live well, a nation must produce well.” Source: Made in America , Regaining the Productive Edge Contact us Council of Saudi Chambers Building in Riyadh Phone: +966 (1) 218-8999 Fax: + 966 (1) 218-8911 Email: