Competition within the fabrication market

Kuwait

Karol Mathias, executive vice-president and partner at Khalil Bahman & Partners, talks to The Energy Year about the company’s footprint in the manufacturing market in Kuwait and the competitiveness of Kuwait’s fabrication market. Khalil Bahman & Partners is a heavy steel fabrication company with a wide range of products and services.

How has Khalil Bahman & Partners’ footprint evolved in Kuwait’s manufacturing market in recent years?
We started the organisation on a small scale in 1983, catering exclusively to fabrication. From working with just one Japanese contractor initially, we grew to reach several contractors, all from Japan. However, during the 1991 Iraqi invasion of Kuwait, 90% of our machinery was stolen, and the company was on the brink. Nevertheless, not only were we able to stay afloat, but we also recovered through a contract with an international EPC contractor. Ever since, our business has been growing, along with our employees, to greater heights.
We have four sections: fabrication, machining, blasting and painting, and galvanising. We have around 10,000 square metres of sheltered fabrication workshops and an 11,000-square-metre warehouse for storage. In Julaia’a, we have a 21,000-square-metre facility where we carry out fabrication, blasting and painting, and heat treatment. We have highly skilled, qualified personnel, and our fabrication activities focus on pressure vessels, pipeline pig launchers and receivers, storage tanks and more. We focus on all types of structural steel work and maintenance work.
Our strength is to deliver quality products on time and for a competitive price. That has translated into trust from our clients. As an example, in recent times, we supplied a stainless-steel pressure vessel to a reputed contractor in a project for KOC well before the scheduled time, despite the pandemic situation.

How competitive is the Kuwaiti fabrication market?
The Kuwaiti market is very competitive, with several companies aiming for a greater market share. The market is mainly banking on the oil and gas and infrastructure sectors. To achieve success, the quality of the product is crucial. Therefore, we always source our raw materials from well-reputed vendors, mainly from India, Europe and the GCC. As a result, we are consistently increasing our market share.
Pressure vessel manufacturing is especially competitive, with only a few companies having the potential in Kuwait. Khalil Bahman is reputed and authorised as a pressure vessel manufacturer, having various approvals from clients, including KOC, KNPC and various government ministries. We also have certifications from the ASME [American Society of Mechanical Engineers] and the NBIC [National Board Inspection Code].

What are your main projects currently?
Currently, we are working on a project in the maintenance sector for KOC. We are associated with JPF-4 and JPF-5 [Jurassic Production Facilities 4 and 5] for the supply of various products and services. We also supply communication towers and structural steel for the new airport project. As our regular business, we are providing services to various Kuwait ministries like the Ministry of Public Works, Ministry of Communications, Public Authority for Roads & Transportation, Ministry of Electricity & Water & Renewable Energy, Public Authority for Housing Welfare and Ministry of Defense. We are also supplying various products and services to the KNPC’s Clean fuel project, KIPIC’s [Kuwait Integrated Petroleum Industries Company] new refinery project and the Wafra Joint Operations (WJO) gas mitigation project.

What are your operational objectives for 2023?
In fabrication, machining and blasting and painting, we intend to increase our annual production tonnage by 120%. To achieve this, we are aggressively improving our sales and marketing strategy and business focus areas. In 2023, we are anticipating major projects in this sector.
Hot dip galvanising is a tough, competitive market, but we strive to increase our market share by another 10% before the end of 2023. Due to international political and economic issues, the cost of raw materials used for galvanisation is drastically fluctuating, which in turn is affecting our market strategy. To overcome this, we are closely monitoring the market and assessing our sourcing strategy to provide competitive prices.
The adoption of new technologies and process automation are also key objective for us. We are upgrading our existing machinery with the latest CNC technologies for machining, cutting, built-up section processing and welding operations. We plan to rehabilitate our press brakes and shearing machines and introduce the latest generation of semi-automatic ones to our equipment portfolio. For blasting operations, we plan to upgrade to more efficient and non-hazardous, eco-friendly materials to have a safe environment.
The aforementioned initiatives will help us reduce our carbon footprint and operating costs. Finally, we want to upgrade our facilities to have better production. The following year, we plan to invest at least 100,000 dinars [about USD 325,000]. Part of this investment is for machinery and erection, which we want to include in our portfolio.
Furthermore, the government has already granted a large amount of land near the airport for operational expansion, which we intend to take charge of by the end of 2023.

What is your export market expansion strategy?
The current challenge is that the GCC market is very competitive for several reasons, such as the amount of companies participating in tendering and bidding activities, the availability of raw materials, logistic operations and more.
Our strategy to compete in such a market is to start exporting our products to neighbouring countries like Saudi Arabia and Iraq and further expanding to other GCC countries like Bahrain, Qatar, the UAE and Oman.
With regard to Saudi Arabia, we are planning to expand our operational activities and make our presence felt there. This market has huge business potential in the coming future.

What is your vision for the future?
We aim to be the market leader in Kuwait for our business areas, and we would like to enhance our productivity by diversifying our business model and introducing new, innovative ideas and competitive technologies.

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