Accelerated growth of GCC manufacturing industries

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© Gulf Organization for Industrial Consulting (GOIC)

Accelerated growth of GCC manufacturing industries
06 October 2015

Industrial Report

380 billion USD worth of investments, Saudi Arabia and Qatar are in the lead

GOIC’s data revealed that the GCC industrial base has witnessed a major expansion over the last five years. The number of manufacturing factories increased from 13035 in 2010 to 16292 in 2014 (a 5-year CAGR (compound annual growth rate) of 5.7%). This means that 3257 factories were set up and became operational during this short period of time.

The Gulf Organization for Industrial Consulting (GOIC) stated that industrial development indicators in the GCC between 2010 and 2014 showed that GCC countries have focused on supporting and encouraging industrial development by all means. Thus, the Gulf industrial sector achieved a quantum leap, particularly in the number of factories, investments and labour force.

In a parallel development, invested capital jumped from approximately 222 billion USD in 2010 to about 380 billion USD in 2014 (a 5-year CAGR of 14.4%). Approximately 158 billion USD were invested in industrial ventures over the last five years and in expansion projects of existing industries.

Furthermore, the labour force increased from about 1129 thousand workers in 2010 to about 1529 thousand workers in 2014 (a CAGR of 8%). New factories have provided about 400 thousand new job opportunities.

IMI Plus data revealed that the GCC manufacturing industries have witnessed an accelerated growth and several developments, from the increase in the number of factories and size of investments to the growth of the industrial labour force. These developments took place in various industrial activities shaping the manufacturing sector, notably hydrocarbon industries that include refining, petrochemicals, gas liquefaction, production of chemical fertilizers, iron and steel, food industries and others. This was the direct result of GCC countries supporting this sector by providing necessary infrastructure, building industrial cities, creating industrial development funds and offering a series of industrial incentives. In fact, manufacturing industries play a critical role in achieving strategic and economic objectives of these countries.

The Distribution of Factories

Studying the sectoral structure of factories operating in GCC countries end of 2014 revealed that “structural metal products, transport and other industries” was ranked first compared to other sectors in terms of number of factories (4594 factories representing 28.2% of the total factories with a 5-year CAGR of 6%). The second sector was chemical and petrochemical products with 3365 factories representing 20.7% of the total operating factories (a 5-year CAGR of 6.2%). The third was the building materials manufacture sector with 2858 factories representing 17.5% of the total operating factories (a 5-year CAGR of 7.6%). The fourth sector was the food products, beverages and tobacco with 1965 factories representing 12.1% of the total operating factories (a 5-year CAGR of 5.2%), followed by the furniture manufacture sector with 1062 factories representing 6.5% of the total operating factories (a 5-year CAGR of 4.5%). The manufacture of paper and paper product, printing and reproduction of recorded media sector came in sixth with 969 factories representing 5.9% of the total operating factories (a 5-year CAGR of 3.5%), followed by the manufacture of textiles, wearing apparel, leather and related products with 730 factories representing 4.5% of the total operating factories (a 5-year CAGR of 1.1%). The eighth sector was the manufacture of wood and wood products – except furniture – with 437 factories representing 2.7% of the total operating factories (a 5-year CAGR of 3%), followed by the manufacture of basic metals with 312 factories representing 1.9% of the total operating factories (a 5-year CAGR of 12.8%).

Structure of the Manufacturing Industries in GCC Countries

The Distribution of Factories

Factories	2010	2011	2012	2013	2014	Growth Rate 5 years	2014 %
Manufacture of food products, beverages and tobacco products	1,606	1,772	1,905	1,857	1,965	5.2 %	%12.1
Manufacture of textiles, wearing apparel, leather and related products	700	702	749	758	730	%1.1	%4.5
Manufacture of wood and wood products except furniture	389	390	421	435	437	%3.0	%2.7
Manufacture of paper products, printing and reproduction of recorded media	844	872	919	938	969	%3.5	%5.9
Manufacture of chemical and petrochemical products	2,645	2,725	3,017	3,184	3,365	%6.2	20.7 %
Manufacture of building materials	2,129	2,258	2,567	2,741	2,858	%7.6	17.5 %
Manufacture of basic metals	193	268	298	307	312	%12.8	1.9 %
Manufacture of structural metal products, transport and others	3,640	3,867	4,279	4,428	4,594	%6.0	28.2 %
Manufacture of furniture	889	928	1,010	1,041	1,062	%4.5	%6.5
TOTAL Manufacturing Industries	13,035	13,782	15,165	15,689	16,292	%5.7	%100.0

Size of Investments… Chemical and Petrochemical Products in the Lead

The sectoral structure of the distribution of investments on factories operating in GCC countries end of 2014 revealed that the manufacture of chemical and petrochemical products was ranked first in terms of investments, with about 220.2 billion USD representing 57.9% of the total investments in operating factories (a 5-year CAGR of 14.8%). The second was the basic metals industry with about 52.5 billion USD representing 13.8% of the total investments in operating factories (a 5-year CAGR of 11.2%), followed by the building materials manufacture with approximately 37.3 billion USD representing 9.8% of the total investments in operating factories (a 5-year CAGR of 13.6%). The fourth sector was structural metal products, transport and other industries with about 35.7 billion USD representing 9.4% of the total investments in operating factories (a 5-year CAGR of 20.4%). The fifth was food products, beverages and tobacco with about 23.8 billion USD representing 6.2% of the total investments in operating factories (a 5-year CAGR of 14.8%). The sixth sector was the manufacture of paper, paper products, printing and reproduction of recorded media with 5.6 billion USD representing 1.5% of the total investments in operating factories (a 5-year CAGR of 8%), followed by the manufacture of textiles, wearing apparel, leather and related products with about 2.6 billion USD representing 0.7% of the total investments in operating factories (a 5-year CAGR of 5.3%). The eighth sector was the manufacture of furniture with approximately 1.8 billion USD representing 0.5% of the total investments in operating factories (a 5-year CAGR of 7%), followed by the manufacture of wood, wood products except furniture with about 0.7 billion USD representing 0.2% of the total investments in operating factories (a 5-year CAGR of 9.8%).

Structure of the Manufacturing Industries in GCC Countries

The Distribution of Investments

Investments Million USD	2010	2011	2012	2013	2014	Growth Rate 5 years	2014 %
Manufacture of food products, beverages and tobacco products	13,688	16,575	17,443	18,066	23,757	%14.8	6.2 %
Manufacture of textiles, wearing apparel, leather and related products	2,150	2,184	2,592	2,601	2,644	%5.3	0.7 %
Manufacture of wood and wood products except furniture	479	598	636	676	695	%9.8	0.2 %
Manufacture of paper products, printing and reproduction of recorded media	4,147	4,842	5,003	5,424	5,637	%8.0	1.5 %
Manufacture of chemical and petrochemical products	126,652	195,454	199,025	220,256	220,190	%14.8	57.9 %
Manufacture of building materials	22,359	30,886	32,695	34,448	37,272	13.6 %	9.8 %
Manufacture of basic metals	34,311	42,358	44,821	51,578	52,447	11.2 %	13.8 %
Manufacture of structural metal products, transport and others	17,026	29,004	32,324	34,583	35,739	20.4 %	%9.4
Manufacture of furniture	1,334	1,534	1,598	1,668	1,749	7.0 %	%0.5
TOTAL Manufacturing Industries	222,147	323,435	336,138	369,300	380,130	14.4 %	%100.0

Labour Force Distribution

The sectoral structure of labour distribution within factories operating in GCC countries end of 2014 revealed that the manufacture of structural metal products, transport and other industries came in first in terms of labour force (about 409 thousand workers representing 26.8% of the total labour force with a 5-year CAGR of 8%). The second sector was the manufacture of chemical and petrochemical products with approximately 300 thousand workers representing 19.6% of the total labour force (a 5-year CAGR of 7.8%). The third was the manufacture of building materials with approximately 260 thousand workers representing 17% of the total labour force (a 5-year CAGR of 8.7%), followed by the manufacture of food products, beverages and tobacco with approximately 239 thousand workers representing 15.6% of the total labour force (a 5-year CAGR of 10.65). The fifth sector was the manufacture of textiles, wearing apparel, leather and related products with approximately 89 thousand workers representing 5.8% of the total labour force (a 5-year CAGR of 0.6%), followed by the manufacture of paper, paper products, printing and reproduction of recorded media with approximately 74 thousand workers representing 4.9% of the total labour force (a 5-year CAGR of 5.1%). The seventh sector was the manufacture of basic metals with about 74 thousand workers representing 4.8% of the total labour force (a 5-year CAGR of 15.4%), followed by the manufacture of furniture with approximately 59.5 thousand workers representing 3.9% of the total labour force (a 5-year CAGR of 4.4%). The last sector was the manufacture of wood and wood products except furniture with approximately 26 thousand workers representing 1.7% of the total labour force (a 5-year CAGR of 4.8%).

Structure of the Manufacturing Industries in GCC Countries

The Distribution of Labour Force

Labour Force Distribution	2010	2011	2012	2013	2014	Growth Rate 5 years	2014 %
Manufacture of food products, beverages and tobacco products	159,613	188,234	196,765	195,673	238,825	10.6 %	15.6 %
Manufacture of textiles, wearing apparel, leather and related products	86,492	88,189	92,833	92,138	88,660	%0.6	%5.8
Manufacture of wood and wood products except furniture	21,746	22,063	23,629	24,048	26,270	4.8 %	1.7 %
Manufacture of paper products, printing and reproduction of recorded media	60,832	63,414	66,093	66,236	74,183	%5.1	%4.9
Manufacture of chemical and petrochemical products	222,023	256,254	260,808	270,876	299,273	%7.8	%19.6
Manufacture of building materials	185,774	204,711	222,924	234,046	259,407	%8.7	%17.0
Manufacture of basic metals	41,673	58,537	63,309	68,286	73,857	%15.4	%4.8
Manufacture of structural metal products, transport and others	300,493	327,402	358,028	371,224	409,054	%8.0	%26.8
Manufacture of furniture	50,132	52,086	55,625	56,730	59,483	%4.4	%3.9
TOTAL Manufacturing Industries	1,128,778	1,260,890	1,340,014	1,379,257	1,529,012	%8	%100

The 2014 Structure of Manufacturing Industries per Country

Factories in Saudi Arabia close to 41%

Saudi Arabia was ranked first in terms of number of factories (41.8%), the UAE second (34.5%), Oman third (9.6%), Bahrain fourth (4.8%), Qatar fifth (4.7%) and Kuwait sixth (4.6%).