A temporary bump in the road

How has the Covid-19 crisis shaken up the construction industry in the UAE and how has it impacted your company’s operations?
We are an upstream, mid-range EPC contractor. From the client side, there are no immediate major stoppages or changes. From the health point of view, we have been asked to take care of all of our employees. We check them all routinely and if we identify any cases, we isolate them according to local regulations issued by health authorities from time to time. In this regard, yes, there is a slowdown, but otherwise we don’t see a major impact.
Given this situation, we prefer to give more attention to health on site. The people there are doing their best and sites are moving. ADNOC is also supporting us, so it is just a “wait and see” situation for a couple of weeks more. Fortunately, they are not stopping, just slowing down. If someone tests positive for the virus, the whole group needs to be isolated and retested after 14 days, then they are permitted to work only if they test negative.

How is the supply chain being affected by the pandemic?
We thankfully had all the materials delivered to our projects before the crisis kicked in. Yes, we have some materials from Italy and the US that are stuck and we are not able to transport. When it comes to inspections, ADNOC is quite practical and does an electronic approval based on the manufacturer’s test reports. Our regular vendors are quite co-operative and they do not increase the prices, keeping the long-term relationship in mind.

How do you foresee the challenges around the expatriate workforce evolving going forward?
Regarding expatriates, the UAE government has taken care of immediate visa/validity issues, etc. From an operations point of view, quite a good number of skilled technicians and young graduates are getting employed, and as the years pass the present ratios may change at all levels.

Are you seeing a trend of rate reductions across the construction industry?
We have not experienced any compelling requests to reduce our rates for the time being, as we do mid-range work which is not directly affected. Our type of work helps them increase their operations directly with less cost, unlike a new field development.

Do you see opportunities for M&As in the post-crisis environment?
Not in a big way within our peer groups. Oil and gas is not very seriously affected, unlike direct customer-related industries such as hospitality, tourism, etc. If contractors manage to win a decent share of orders, sustainability is not an issue. There will definitely be a lot of value engineering and cost-effective methods to be implemented in the future.