Capitals of Industry
By Ian Munroe • Jul 21st, 2009Governments from Riyadh to Abu Dhabi are stepping up efforts to become
heavy-industry titans. But do they have the wherewithal to succeed?
In June, Abu Dhabi Polymers Park should begin in earnest to churn out the constituent materials from which plastic goods are made. Armed with a mission to create skilled jobs and attract investment, the 4.5-square-kilometer project, 20 minutes by car from the UAE’s capital city, hopes to attract 60 companies and enough capacity to make a million tons of pliable polymers annually.
Compared to the Gulf’s once booming service sectors like finance and tourism, making money by turning oil into plastic is by no stretch the region’s most glamorous economic project. But if local governments have their way, ventures like the multibillion-dollar polymers complex could arguably play an even more important role in the Gulf’s diversification drive.
Regional plastics production will double to more than 30 million tons per year by 2012, according to the park’s senior vice president - part of a broad push to boost manufacturing along the Gulf. Aside from petrochemicals (like plastics), which are the region’s second-largest export behind oil and gas, local steel and aluminum industries are also heating up.
“We’ve had an explosion in domestic manufacturing in the region,” says Raja Kiwan, energy analyst at consulting firm PFC Energy. “Industrialization forms a huge part of their economic development strategies,” he adds, citing governments in Saudi Arabia, Bahrain, Kuwait and the UAE.
King Abdullah Economic City (KAEC), an expansive $80 billion industrial hub being built on Saudi Arabia’s west coast, is the most ambitious among a host of heavy-industry projects that Riyadh is pursuing. Bahrain, home to the Gulf’s most diversified economy, is trying to expand one of the world’s largest aluminum smelters. And UAE-based Emirates Steel Industries recently announced plans to triple production within five years, through an investment of some $7.2 billion.
The list goes on, and experts say such plans make perfect economic sense. But a handful of persisting strategic problems have them asking whether the region’s industrial-strength ambitions are achievable.
