Manufacturing sector is considered one of the main derivers of Dubai economy. In 2006, the sector contributed significantly to the economy’s non-oil GDP (16%).
In December 2007, Dubai chamber conducted a survey to study the manufacturing sector in Dubai. The survey covers all industries within the sector. For the purpose of this article, fabricated metal, machinery and equipment industries group has been selected for more in-depth analysis.
According to Dubai chamber membership database for the 2nd quarter of 2007, there were 1,088 active fabricated metal, machinery and equipment companies.
Table 1 below illustrated the fabricated metal, machinery and equipment industries by activity.
Table 1: Structure of fabricated metal, machinery & equipment industries
Industry %
Manufacture of fabricated metal products 47
Manufacture of machinery & equipment 6
Manufacture of office machinery 1
Manufacture of electrical machinery 12
Manufacture of radio and TV 0
Manufacture of scientific instruments 1
manufacture of motor vehicle trailers 3
Manufacture of other transport equipment 9
Manufacture of N.E.C 20
Dubai chamber membership database, 2nd quarter 2007
The number of companies that responded to the survey amounted to 248 companies of which fabricated metal, machinery and equipped industries accounted for 35 per cent.
Survey results
Majority of the companies involved in fabricated metal products, machinery and equipment are small and medium sized companies (77%), while only 23 per cent were large (figure 1).
Figure 1: Industries by size
Source: Dubai Chamber Survey on Dubai Manufacturing Sector 2007
The respondent companies collectively reported number of employees equal to 8,455 workers. The cost of those employees totaled AED 1,013 million (per worker cost equals AED 122 thousand).
Production value of fabricated metal, machinery & equipment industries totaled AED 6.9 billion accounting for half of the total manufacturing sector’s production. While on the other hand production cost totaled AED 3.6 billion (table 2). The higher production cost comes from the raw materials (96%). Fixed assets of these industries amounted to AED 1.2 billion. Value added of these industries amounted to AED 3.3 billion which accounted for 48 per cent of their production. This is considered high due to the high processes involved in the industry.
Table 2: major indicators
Indicator
Employment (worker) 8,455
Employment cost (AED million) 1,013.4
Production value (AED million) 6,907
Production cost (AED million)
- Raw materials
- Packaging materials
- Water, electricity, fuel and lubricants 3,626
96.3%
0.4%
3.3%
Fixed assets (AED million) 1,231
Value added (AED million) 3,281
Source: Dubai Chamber Survey on Dubai Manufacturing Sector 2007
Destination markets
Most of the fabricated metal, machinery & equipment companies (83%) identified the local market as a destination for their products, while only 17 per cent are targeting foreign markets.
Productivity
Productivity is considered one indicators of performance. Value added productivity is defined as per worker value added. Fabricated metal is equal to AED 388.1 thousand and ranked second after chemical and plastic industries.
Growth prospects
Majority of the companies, 41 per cent, expect the industry to grow by 20 per cent and more, a considerable 26 per cent determine the growth rate to be 10 to less than 20 per cent. Almost 30 per cent of the companies expect the industry to grow by 5 per cent to less than 10 per cent. Only 4 per cent of the companies expect the industry to grow by less than 5 per cent (figure 3). This is indicative of great future expectation by the manufacturers.
Figure 2: Growth prospects
Constraining factors
Majority of the fabricated metal companies (95%) reported they faced unfavorable conditions with regards to overhead costs. Only 3.6 per cent of them specify high cost of production inputs as constraint. The majority of respondents have no problems with factors such as the small size of the domestic market and the restrictive laws.
However, there are some issues that need to be addresed in order to improve the perfromance of the sector. These are namely: Quality improvements and this can be obtained by using advanced technology and innovation. Environmental polution issue and this can be attained by adopting the green environment concept. Furthermore, reaserch and dvelopment is required in order to get better products that can compete regionaly and globaly.
