| A new name in general contracting but with a history and wealth of experience.|
Several forward-looking contracting entities agreed to pool their experience and resources with a view to forming a general contracting company with the full resources to meet the present and future demands in the region for a strong locally based company. Thus was born GCC, having the benefit of local knowledge and experience together with a powerful history of industrial construction over the past 60 years or so, however the focus is strongly towards the future.
The constituent companies include Fouad Abdulla Fouad Co. Ltd. (FAFCO), Saudi Electro-Mechanical Construction Co. Ltd. (Petcon) and the construction arms of Abdullah H. Al-Shuwayer & Al-Tamimi plus Al-Jabr Trading Co. Collectively, this grouping has experience throughout the full spectrum of the industrial construction market to include all aspects of building, civil, structural, mechanical, electrical and instrumentation disciplines and also includes a strong background in the specialist pipeline and steel fabrication fields.
Since inception, GCC has experienced significant growth in turnover, buoyed by the development of the industrial construction sector in KSA and the financial, technical, and networking support of its reputable shareholding companies. GCC has served the industry’s key clients namely Saudi Aramco, SABIC, SEC and Maaden and has undertaken mandates on behalf of major international EPC contractors.
Today, GCC has more than SAR 2 billion worth of projects in hand and its flagship mandate includes a major EPC package for the SATORP (Saudi Aramco/Total) Jubail project.
The construction market in KSA has experienced significant growth in recent years, fueled by large government spending, growing population, financial inflows, and rising oil prices. The market is expected to continue growing at a rate of 21% over the next five years driven by a flood of projects estimated at SAR 2.5 trillion across all construction fields.
Against this background and in the medium term, GCC plans to evolve into a fully integrated EPC contractor by internally developing its engineering and procurement capabilities. As an interim solution, GCC is seeking to strategically partner with a reputable international engineering company.
Local companies occupy leading positions in the civil and infrastructure sectors of the Kingdom while international players dominate the oil & gas and petrochemical EPC sectors due to their underlying technical complexity. In terms of profitability, the oil & gas and petrochemical sectors are seen as the most profitable followed by the utilities sector and are targeted by GCC.
Looking ahead, players in the construction sector will face eight major challenges: Difficulty in securing external financing, dependence on government spending, shortage of qualified labour, declining margins, increased competition, cost-quality trade-off, volatility of raw material prices, choice of business model (integrated vs niche)
Success in the industry relies on achieving operational efficiency, developing performance measurement systems, achieving strong internal integration, securing liquidity, managing credit, managing manpower efficiently, developing partnerships with key stakeholders, establishing strategic partnerships and focusing on profitable clients.
Given the above, GCC’s array of strategic options includes a planned expansion incorporating three different dimensions: geography, business sectors, and value chain. Our analysis reveals that expanding into EPC contracting with specialization in the oil & gas, petrochemical, and utility sectors is the most attractive option and can be achieved in the short term by a striking a strategic alliance with a reputable engineering firm, moreover, restricting operations primarily to KSA is recommended in the short to medium term given the country’s immense scope and size of forthcoming opportunities.