Saudi Readymix ... among the top four readymix concrete suppliers in Makkah.
Boom spells good news for readymix operators
Saudi Readymix, Saudi Arabia’s largest producer of readymix concrete and concrete-related products, takes a look at the construction market in Makkah and Madinah and compares the company’s growth with that of these two cities.
01 December 2007
Makkah and Madinah, which have long been linked to images of pilgrims moving en masse, are rarely seen as bustling construction sites, multi-billion-riyal developments and crane-dominated skylines.
Maybe it is time more people did.
Construction and development are nothing new to the two sacred cities which have received special attention from the government ever since the founding of the Kingdom more than 70 years ago. In light of the construction boom currently underway all across Saudi Arabia, the number and scale of the mega development and expansion projects that these cities unveil every year has multiplied greatly.
According to Saudi Readymix forecasts, this construction and development frenzy is set to continue for the foreseeable future. With time, hopes are high that the new projects will transform the two cities into major regional economic and knowledge hubs. Saudi Readymix’s presence in these two cities dates back 17 years when it opened its first commercial station in Makkah in 1991 and quickly followed that up with another station in Madinah. Since then, the company has opened a second plant in Makkah and grown its market share steadily to become one of the major concrete producers in the western region.
Makkah attracts millions of worshippers annually from all corners of the globe and to cope with the ever-increasing traffic, the city’s infrastructure constantly needs to be upgraded and expanded. This positions Makkah as one of the most consistently robust construction markets in the Kingdom – a very lucrative environment for readymix concrete companies to come and set up operations. Indeed as it stands today, there are 14 such companies competing for a slice of Makkah’s substantial construction pie. However, the top four companies in the market – of which Saudi Readymix is one – constitute over half the total market share (about 55 per cent) between them, according to Saudi Readymix’s market figures.
As with every other aspect of life and business, the construction environment in Makkah is directly controlled by the city’s unique position in the Muslim world. The first effect, a particularly unique one, is that is nearly all of the commercial projects in Makkah must be built at a fervent and frantic pace in order to work around the high season times of Hajj and Ramadan. Working under such tight schedules and strict limitations place tremendous demands on the contractors. As clearly evidenced by the market share distribution, the contractors thus seek out large concrete suppliers who are able to provide reliable and constant supplies of fresh concrete in order to ensure that the projects are completed on schedule. Otherwise, contractors have to slow down or even suspend work completely until the high season is over which results in millions of riyals worth of losses.
The second effect is the significant increase in the scale of the newer projects such as hotels and residential towers, which is to a large extent due to the high demand on making more efficient use of space to accommodate the multitudes of worshippers that converge upon the city. Structures of this scale naturally require the use of high-strength concrete because conventional concrete simply cannot handle the increased loads. However, pumping high-strength concrete to such heights is a process that requires advanced production and technical techniques. If done haphazardly, pumping high-strength concrete will cause numerous problems that will severely hinder the project’s progress and, again, end up costing millions.
While the two aforementioned factors place substantial hindrances in the face of most readymix concrete producers, they have proven to be a tremendous boon for the larger companies in the area such as Saudi Readymix. Contractors are drawn to the company’s ability to solve those problems successfully using its reliable network of suppliers, vast technical and production capabilities, and intimate technical know-how in high-strength concrete pumping techniques and advanced concreting solutions.
This growth in demand was amply demonstrated in July when the Makkah station hit a record-high monthly production of more than 41,000 cu m during that month alone. The company forecasts that this growth will continue due to a large number of mega-projects under construction or set to launch shortly.
Most of these multi-billion riyal projects are naturally geared towards the pilgrims such as the massive Jabal Al Khandamah and the Jabal Omar mega projects, and the mega developments planned to modernise the Al-Shamiyah area. When completed, these projects will add a host of new hotels, residential towers, restaurants, shops, malls, and other modern services and amenities to the visitors of the holy city. Some of the major projects Saudi Readymix has supplied concrete to include the Phase I of Abdullatif Jameel Jabal Al Kabah (59,600 cu m) and the Abdul-Samad Bagdadi Towers and Centre (40,000 cu m).
The medical facilities in Makkah are also set for a major upgrade with numerous projects under way, the largest of which is Makkah Al Mukarramah Medical City, a project to which Saudi Readymix has already supplied more than 90,000 sq m of concrete. The medical city contains a 500-bed main hospital, advanced kidney dialysis units, a medical research institute, 300-bed children’s hospital, a delivery and maternity ward, a large central mosque, and several staff support buildings. Other major projects in the medical sector include a special 300-bed hospital (25,000 cu m) for the Saudi Security Forces and the largest medical training hospital in the kingdom at Um Al Qura University (60,000 cu m).
Other major infrastructure works set for launch include the SR10 billion ($2.7 billion) Um Al Qura Economic City announced last year, and the SR7 billion ($1.9 billion) elevated monorail project in Makkah announced earlier this year. The monorail, due to be completed in four years, will link the city’s most sacred sites and will be able to transport some 20,000 pilgrims per hour.
Saudi Readymix is supplying concrete to the box culvert project east of Makkah (44,000 cu m) and a large water treatment plant in the Hada area (50,000 cu m).
The company, which looks well-set to take advantage of the boom, operates two stations in Makkah, one in the north and another in the south. The computerised batching plants at the two stations have a total production capacity of 310 cu m per hour and are serviced by 31 truck mixers and 10 mobile concrete pumps. More equipment will be added next year as the demand continues to rise.
As for Madinah, Makkah’s more laid back twin sister to the north, the overall market scenario echoes many of the patterns of Makkah. Madinah’s concrete market is similarly distributed among 13 readymix concrete producers conducting their business within the city. The top four companies dominate, taking 57 per cent of the city’s total market share. In terms of volume, Saudi Readymix’s figures show that the total monthly volume in Madinah ranges from 150,000 to 160,000 cu m of concrete and its market share in Madinah is evenly split between the public and private sectors.
For the past few years, the public sector has been demonstrating consistently strong growth, a trend Saudi Readymix expects to continue. A slew of massive infrastructure projects are slated to commence during the next one or two years, especially in the number of medical care institutions. Plans are in place for a network of new hospitals, clinics and public health dispensaries covering every district of the city. One of the landmark medical projects already under way which Saudi Readymix is supplying to is the new Psychiatric Health and Specialist Hospital (40,000 cu m).
Apart from the medical sector, the education sector and knowledge-based industries are also receiving a lot of attention. A large number of educational institutions such as new colleges and schools are either under way or in the planning phases, the biggest of which is the massive SR25 billion Knowledge Economic City (KEC), a mega-project that covers 4.8 million sq m of land. In addition, Madinah’s two universities, the Islamic University and Taiba University are currently receiving extensive facelifts with new college buildings, modern laboratories, classroom buildings, student residential complexes, and other ancillary buildings being erected.
The third aspect of the public sector’s projects in Madinah is focused on the transportation infrastructure. Probably the most highly anticipated of such projects is the complete overhaul of Prince Mohammad Bin Abdul-Aziz Airport from a small regional airport with one terminal into a fully-fledged modern international airport that can handle over three million passengers a year.
In addition, there are plans for Madinah to have an elevated monorail system of its own. As with Makkah’s system, the monorail will be able to transport up to 20,000 pilgrims an hour with ease in and around the city. The aging road network is also being upgraded with new roads, bridges, and underpasses to further alleviate the city’s woeful traffic congestion.
The water supply and sewage infrastructure systems are also being expanded and upgraded in order to keep pace with the anticipated growth of the city.
The private sector projects can also be divided into two distinct categories. The first comprises the local residents who are building private residences in increasing numbers. Currently, Saudi Readymix is supplying concrete to nearly 150 such private residences all over the city.
The second category includes the investors who, as in Makkah, are putting up high-rise hotels, residential towers, and shopping centres to accommodate the millions of visitors who descend upon the city each year. These developments are mostly centered in the vicinity of the Al-Haram area.
Saudi Readymix operates only one commercial station in Madinah with a monthly production capacity of 25,000 to 30,000 cu m of concrete. However, the station contains three computerised batching plants with a production capacity of 260 cu m of concrete per hour. The newest of the three batching plants, an advanced high-capacity Italian model, was recently added and has nearly doubled the total production capacity in order to keep up with the rising demands of the local market.
Other modern on-site facilities include a sand washing plant, a water-chiller plant, in addition to the standard Saudi Readymix facilities found in all its plants such as a fully-equipped testing laboratory and large shaded stock bays to store raw materials. The mobile fleet at the station includes 23 truck mixers and five mobile pumps with placing boom lengths ranging from 36 m to 58 m.
The company’s Madinah operation has supplied concrete to a large number of high-profile projects this year, including the Saudi-Aramco Madinah Bulk Plant project (10,000 cu m), Wakf Al Bashyrah (55,000 cu m), Aliat Al Madinah Mall (58,000 cu m), Al Rashed Mega Mall (20,000 cu m), Imara of Madinah (38,000 cu m), Madinah Technical College (20,000 cu m), new college buildings and student recreation centre in Taiba University (15,000 cu m), Yousef Al Otair Tower (25,000 cu m), new Shari’ah College building at the Islamic University (20,000 cu m), and Al Oafi Tower Building (12,000 cu m), in addition to the Psychiatric Health and Specialist Hospital (40,000 cu m).
In light of these multi-billion-riyal projects and the economic development that they will attract, Saudi Readymix plans to set up a new commercial station to cover the southeastern area of Madinah near KEC and the airport. The new station will have state-of-the-art facilities as is the case with the rest of the plants in the company’s network, and will bring the total number of commercial stations in the western region to eight.
The new plant will further bolster Saudi Readymix’s network of readymix concrete plants, the largest in Saudi Arabia. Soon entering into its 30th year of operation, the company currently owns 27 commercial and on-site plants strategically located to service all the major metropolitan hubs in the eastern, central and western regions. The network is serviced by the largest fleet of mobile concreting equipment in the kingdom including nearly 380 mixer trucks and 130 mobile pumps. The company plans to aggressively expand and further add to its leading production and technical capabilities in order to further fortify its number one position in Saudi Arabia next year.
