Saudi Arabia’s Al Rajhi Building Solutions lays out its ‘Vision 2020’
CEO Ahmed Al Bassam on expanding the firm’s Gulf business
Long established as one of Saudi Arabia’s best-known business entities, Al Rajhi Holding has come to occupy a dominant position in the GCC construction landscape. With interests and investments ranging from real estate development, industrial and construction ventures to mergers and acquisitions, the group has a considerable footprint across the region and is now expanding further into the Middle East, Africa and other international markets.
Al Rajhi Holding has four key business sectors or subgroups: Real Estate Development, Building Solutions, Industrial, and Contracting and Infrastructure.
Over the last three years, the Building Solutions group has enjoyed tremendous growth and success as it undergoes a revolution in terms of restructuring and focus. The group currently comprises nine independent companies that service both regional and international construction markets, covering all aspects of building solutions and more. These companies are: Mada Gypsum, Mabani Steel, Precast Technologies (PreTech), Saudi Waterproofing (TechnoBit), Romeo Interiors, Unipods, CladTech International, El Sewedy Cables (a joint venture) and Electroputere, a Romanian international power provider.
With more than 3,000 employees and an annual revenue that hits the 10-digit mark, the group is clearly no ordinary subsidiary. As such, it requires leadership with a particular set of skills, a clear vision and an innate sense of the GCC market to lead the way.
Step forward Ahmed Al Bassam, a Saudi Arabian with more than 22 years of extensive, cross-functional experience in a number of industries, including oil and gas, power generation, packaging, construction and speciality chemicals. Just the type of man required to lead a group with interests as diverse as Al Rajhi Building Solutions.
Having started his professional career with Schlumberger, a global technology services company for which he worked 11 years in Oilfield Services, supplying products, services and technical solutions to the oil and gas exploration and production (E&P) industry worldwide, Al Bassam soon established himself as an executive with a formidable array of skills and knowledge, allowing him to make invaluable contributions to the organisations he led over the years.
After more than a decade of globe-trotting, he decided to leave Schlumberger and return home to Saudi Arabia. There, Al Bassam took on the role of the head of a power-generation organisation. Barely a year into this new career, he moved to a Saudi-based group with eight regional companies under its umbrella, where he was asked to join with a clear mandate to lead the restructuring process of the group.
It was in this position that Al Bassam says he honed his skills further, as he revamped the whole group and more than doubled its revenue within five years. By 2010, he had established the group as one of the market leaders in both its business streams – packaging and construction chemicals.
Keen for a new challenge, when the opportunity arose to take over as Group CEO of Al Rajhi Building Solutions Group, Al Bassam was quick to take the chance, even though he freely admits that he had no idea of the scale of the challenge he was facing.
“Unfortunately, at the time, all the eight businesses were coming out of a tough and challenging period of 2008 to 2010. We started work in 2012, we restructured company by company. Unfortunately, restructuring also involves casualties, we had to rebuild the whole team,” he relates during an interview with Big Project ME at a hotel in Dubai.
“It was really tough, but at the end of the day, it was worth it. We were restructuring and at the same time, we were solving vital issues – while also planning and making sure that we were leading the company forwards. You need to make sure that the time you spend isn’t wasted, that you move forward to achieve your goals – that you have one eye here and one eye there. This style of management isn’t easy, but with time it becomes part of your personality.”
As the Group CEO of Al Rajhi Building Solutions, Al Bassam’s role doesn’t stop with just restructuring and leading the companies to growth and sustainable profit, despite this being his original mandate. Sensing the enormous potential of the group, he has decided to implement an initiative that he believes will take it to the next level of its evolution.
Called ‘Vision 2020’, the new initiative isn’t just a roadmap for the group’s future success, it’s more than that, he says. “By 2013, we started moving in the right direction. People wanted to take part in our story. By then, we had returned to profitability and we were really looking to progress in 2014. So that’s when we started looking at the bigger picture – Vision 2020. That initiative came about when we were trying to cope with what was happening in the area and also trying to envision how we were going to look at the end of the decade.
“No one should underestimate the power of having a vision. If you don’t have a vision – for the short term, the medium term and the long term – then you will never be ready for tomorrow. When we started restructuring in 2012, we set four years’ worth of visionary objectives for the group. They were very challenging targets – one of them was that every company was going to be in the top three in its industry.”
Stiff as these targets were, history proves that the firebrand CEO was right to challenge his team. As 2015 unfolds, most of the companies in Al Rajhi Building Solutions Group are firmly ensconced in the top three in their industries, while the likes of Mada Gypsum, Mabani Steel, CladTech International and Unipods are market leaders, with powerful solutions and regional market coverage.
The group ended 2014 with record volumes and significant material increases in revenue, profits and returns, according to figures released by the group to Big Project ME. There was a 30% increase in year-on-year revenue, while returns were equally significant.
With a project pool of more than $5 billion being pursued by the group’s companies, Al Bassam remains confident that growth will continue to be driven by GCC government investment. Over the course of the next decade, the GCC is expected to see huge investment in vital infrastructure sectors like education, healthcare and transport infrastructure like airports, railways and roads. In addition, the burgeoning population in the region is expected to see increased investment in affordable housing, with Saudi Arabia likely to see the bulk of that growth. All these infrastructure development projects are expected to total a staggering $80 billion, analysts predict.
Given the market conditions, it comes as no surprise that Al Bassam is already looking to set up Al Rajhi Building Solutions Group to take advantage of this potential bonanza. “We need to take the group to the next level, to get everyone thinking that we’re much bigger than what we’ve been talking about. For them to believe this, they have to be part of this vision, and that’s what we’ve started to do. When the announcement was made for Expo 2020, I thought that it was the perfect chance to get everyone thinking with me about Vision 2020.”
So what is Vision 2020? As Al Bassam puts it, it’s not so much his plan but rather a cooperative effort between the senior management of all the companies in the group. “I don’t have a ‘plan’, but I wanted us to all come together and put the plan together. So we started by putting together workshops about how we were going to do this, and what every business would look like by 2020. That’s when people started coming up with ideas, which was something I was really happy to see all come together.
“Our first workshop was actually a brainstorming session. We told each business to go into the international market and find the top two businesses from each continent, in their industry. And then they had to strip them down to see what kind of business they are, what kind of profit they’re making and how we can track how they reached excellence. It was a very deep analysis and every business in the group had to do it,” he explains, adding that this process of benchmarking and strategy mapping paid tremendous dividends.
“We ended up with a big pool of information, but the important thing was that all of these people completely altered their mind-set. Making them think this way was a big success and then, one after another, the workshops started delivering big ideas.”
As a result of this change in thinking, the market will see Al Rajhi Building Solutions Group adopt a change in its way of thinking. 2015 will see the group begin investing in a number of different fields within the building solutions spectrum.
A stronger presence in the Middle East is a major part of the strategy, as is expansion of services and products into Africa and Europe. The ultimate aim of the Vision 2020 initiative is for group revenue to double by 2020, to more than $2 billion, while generating exponential profit growth.
The group’s expansion plans are quite ambitious, with Al Bassam revealing that there will be continuous investment in Al Rajhi Building Solutions’ mega-manufacturing facilities in Saudi Arabia and the UAE. “We have created a culture that strives to gain a competitive edge along the supply chain. We focus on world-class standards and integrated product offerings. Our focus will be on market segmentations and cost control.
“Our footprints are particularly visible in construction techniques and in construction processes. We aim to challenge conventional methods and drive the construction industry towards more automation, while also focusing on those areas and requirements that will add genuine value to clients’ operations and proffer solutions that will infuse technology and assure quality, convenience and speed,” he asserts.
Al Bassam explains that by spending time and assets on understanding the different selling propositions in the market, and thereby the related market perceptions, his group’s companies are now able to create propositions that add value for their customers.
“At the market level, generally speaking, the region is witnessing rapid development, with no scarcity of contracts in any segment. From housing and utilities to transport infrastructure, the public spending is driving the contracting industry forwards.”
With infrastructure projects in the GCC expected to exceed $80 billion, and huge investments to be made in education, healthcare, transport infrastructure, airports and power and water, the market is ripe for investment and development. This rapidly evolving scenario has fostered a number of positive changes that Al Bassam is pleased to see happening, since it validates the work his group has already been doing.
“In terms of technologies, we’re pleased to see that 2014 was marked by a breakthrough in terms of the penetration levels of new construction concepts and technologies,” he points out. “We believe in investing in state-of-the-art technology and in research and development, and we consider our human resources as vital.”
This is a significant opportunity for Al Rajhi Building Solutions, a fact that the company clearly recognises, given the heavy investment in its subsidiary, Unipods, which is expanding on two fronts. First, it will increase its manufacturing capacity in Ras Al Khaimah by 50% in an effort to meet local and export demand. Following that, it will also open a new factory in Yanbu, Saudi Arabia to cater to the growing market in the Kingdom.
“This announcement reflects our expectation for continued exponential growth and expansion, and it highlights our commitment to the market and to our clients. The same goes for Mabani Steel, which is expanding its current facility in RAK by 40% and planning on developing a new plant capacity in KSA during 2015,” Al Bassam explains.
“In fact, there are a number of substantial expansions underway – Mada Gypsum, for instance, has recently announced a new $66.64 million environmentally friendly gypsum plant, which will employ around 200 employees. It will have an annual capacity of approximately 30 million square metres of gypsum plasterboards and related gypsum-based products and systems.
“The market today is very different, it’s much more demanding, competitive and open. However, there are significant building solution opportunities there, particularly in our core markets,” the CEO asserts.
Looking further ahead, Al Bassam says that there are a few markets he’d like Al Rajhi Building Solutions to target – namely the construction chemical market segment. “We are open to M&A opportunities in this segment. However, we believe that greenfield investment is a key option that we’re looking into as we speak.”
“An interesting trend that we are not only watching carefully, but playing a major role in shaping, is green and sustainable construction. Most of our solutions are green. Off-site construction by nature is material- and resource-efficient and allows for the green benefits at the wastage, productivity and logistic levels. Unipods, for example, won the UAE Ministry of Environment and Water’s Outstanding Performance Award in 2013.
“The UAE is considered to be the biggest renewables market in the GCC, with $1 billion worth of projects under execution or in operation,” Al Bassam points out, highlighting the importance he places on the issue.
When it comes to his philosophy for success, the CEO of Al Rajhi Building Solutions is quick to sum it up – analysis and insights. Information provided by his team, and his own observations of the market, allow him to execute change management strategies and accomplish a “total turnaround” in previously struggling organisations, transforming them into high-paced and well-structured profitable enterprises.
“My main mandate is to lead the group and build a vision and strategy, to transform it into a leading and sustainable business that adds value to the industry and maximises returns to the shareholders. To do this, we have to build a world-class organisation that is up to international benchmarks and invest heavily into human talents and research and development.
“We always have a long-term vision and strategic goals to ensure that we’re ahead of the market. We tend to think big, and we look to the long term in everything we do.”
