United Arab Emirates - Industry

United Arab Emirates - Industry

Non-oil industries have had a checkered history. On the positive side, federal and local governments have initiated many industrial projects that have aided in the development of the UAE. Local and foreign private capital found numerous opportunities in the friendly business climate of the amirates, with the result that by 1987 manufacturing contributed 9 percent to GDP. However, because of the lack of a unified planning mechanism and outright competition among amirates, redundancy has been a recurring problem. For example, there are nine cement factories in the UAE with a total capacity of 8.5 million tons per year. Local demand was estimated in 1986 atonly 2 million tons. In addition, out of five steel rolling mills, three have had to close. Plastics and certain foods are overproduced. A 1988 study by the Ministry of Economy and Industry reported that local industry suffered from low wage levels, a lack of new technology, and a low level of value added in many industries. In 1983 the Emirates Industrial Bank was established; one of its roles is to assist ailing industries financially.

Dubayy, with its long history of entrepôt trading, has the most developed non-oil industrial sector. Abu Dhabi, however, has focused on using its oil resources in downstream facilities. Some of the northern amirates are developing their mineral resources. By 1990 total manufacturing output had a value of about US$2.6 billion, with 80 percent of the UAE's factories located in Abu Dhabi, Dubayy, and Sharjah.

Dubayy

The first major factory in the amirate was the aluminum smelter opened by Dubal at Mina Jabal Ali in 1979. It has a capacity of 135,000 tons of aluminum ingots per year, which was reached in 1982. In 1991, after expansion, it produced 290,030 tons of aluminum ingots. The five gas turbines that generate power for the plant are fueled by Dugas's neighboring gas treatment plant. A desalination plant associated with the turbines supplies 40 percent of Dubayy's drinking water requirements.

Dubayy became a strong magnet for industries, large and small, with the opening in 1985 of the Mina Jabal Ali Free Zone. Starting with about forty companies in the first year, the zone hosted 382 firms by 1992, including multinational giants Mitsubishi, Minnesota Mining and Manufacturing, Union Carbide, and Xerox, and scores of small Indian firms, many producing textiles. Local firms include National Flour Mills and the National Cement Company. Among the inducements to firms are a large pool of cheap labor, no taxes, no import or export duties, the right to 100 percent foreign ownership, and the right to repatriate profits and capital.

Another major facility in the free zone is the Dubai Dry Docks, owned by the Dubayy government. One of the largest and most modern in the world, the facility has three dry docks that can handle vessels up to 1 million deadweight tons. The dry docks have well-equipped workshops for plate and pipe, machinery, rigging, and electric repair, as well as a sophisticated laboratory. Completed in 1979, the docks lay idle, incurring substantial maintenance costs, until 1983 when a contract for an operator was signed. The delay was attributed in part to indecision and the amir's poor health.

By 1985, however, 111 ships with a total capacity of 10 million deadweight tons had been repaired. In 1988 the dock was fully occupied by vessels damaged in the Iran-Iraq War.

Abu Dhabi

The principal industrial facilities are located at Ar Ruways, 224 kilometers from the capital. The Ruways Fertilizer Industries plant came on-line in 1983 and uses natural gas as fuel and feedstock. ADNOC owns two-thirds of the plant, and TotalCompagnie Française des Pétroles owns the remainder. The plant was built with a capacity to produce 100 tons per day of ammonia and 1,500 tons per day of urea. Its customers have been mainly India and China. Sulfur extracted through oil and gas processing is exported from a special bulk terminal. A smaller industrial area exists at Al Musallah, just outside the city of Abu Dhabi.

The Northern Amirates

According to a 1987 study, Sharjah was the site of 35 percent of the UAE's industrial installations. The amirate has an industrial zone with factories producing a variety of items, including furniture and household utensils. A fodder factory at Mina Khalid run by the Gulf Company for Agricultural Development opened in 1982. Other plants in the amirate include a cement factory, a plastic pipe factory, and a rope factory.

The gulf's first explosives factory opened in Ras al Khaymah in 1980. A pharmaceutical plant opened the following year. The amirate has several factories that use local stone and minerals. In addition to three cement factories, there is an asphalt company, a lime kiln, and a thriving export business by the Ras al Khaymah Rock Company in aggregate, the stone used in making concrete.

Al Fujayrah and Ras al Khaymah have capitalized on resources from the Al Hajar al Gharbi Mountains, building plants that produce aggregate, marble, tile, asbestos insulation, and concrete blocks. Although lack of local energy sources has hindered industrial development, Al Fujayrah's development plans for the 1990s include provision for investment by other GCC states.

Umm al Qaywayn has relied on cement and related industries as a source of revenue but has suffered because of overproduction in the UAE. In 1987 it established a free zone modeled on that of Dubayy. Among Ajman's facilities are a dry dock, a ship repair yard, and a cement factory.

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