There’s work to be done in Africa, the Middle East and—following the lead it took in the movement that is being called Arab Spring—in Egypt itself. Eng Hisham el Kheshen, CEO of Samcrete Development, and Yahia Adly, business development director of Samcrete Investments, tell John O’Hanlon how the group is ready to do its part.
Bliss was it in that dawn to be alive, said the poet Wordsworth of another revolution. These are uncertain times in the region abbreviated as MENA; but in Egypt, the hub of the region, its most mature economy and historically its most stable, there’s no escaping a mood of expectancy—exhilaration even. The revolution of January 25 (happily the birthday of that other great revolutionary poet Robert Burns) put an immediate brake on business activity, admit Hisham el Kheshen, CEO of Samcrete Development, and Yahia Adly, business development director of Samcrete Investments. They work with partners from all over the world though, and have been gratified by the continued confidence in Egypt on the part of overseas investors.
Dating back to 1963, Samcrete Engineers & Contractors is the largest and oldest division in the Sonid (Société Nationale D'Investissement) group of companies founded by Sami Saad in 1963, with other interests in automotive, food and beverage and hospitality. Samcrete has been involved in the construction as well as contracting for some of Egypt’s most outstanding projects such as the American University’s 280-acre New Cairo campus, said to be the largest construction project of modern times. The $250 million project was completed in 2008 by Samcrete in joint venture with Samsung of Korea.
This megaproject exemplified the ease with which Samcrete operates in the international arena. “We are in partnership with many international companies including German, Portuguese, Korean, Spanish, Chinese and Italian; and within Egypt we have worked over the years with the military and public sectors on a multitude of projects,” says Adly, whose remit covers all three divisions of the holding company Samcrete Investments: Samcrete Engineers & Contractors, Samcrete Development and Samcrete Building Systems.
Samcrete’s most recent investments include two new projects in 6th October City: a new factory producing 50,000 concrete blocks a day, due to open in June 2011, says Adly, creating direct employment for 80 peoplewith potential to generate work opportunities for many others, and a factory, in partnership with an Italian firm, to manufacture precast slippers for the Egyptian National Railways.Samcrete’s Building Systems business manufactures building materials and products with two facilities equipped with German and American production lines for concrete blocks, landscaping products, pre-stressed/ pre-cast concrete structures and laminated, double glazed wooden windows.
Another major investment destined for 6th October Industrial Park (IDG) is a $10 million training centre for engineering and construction workers. The 35,000 square metre facility will qualify 500 Egyptian workers a year for employment locally and abroad. “Our aim is to qualify workers in the use of the latest technologies meeting international standards to fill the gap in both manpower and skills lacking in the region,” says Adly. Samcrete is working with consultants on the scheme, which he hopes will be partly funded by USAID as a social project.
While its medium term strategy includes EPC contracts in external markets, with the emphasis on infrastructure projects in the UAE, Southern Sudan and Kuwait, Samcrete is not neglecting the home market, where the company plans to bid for the urgently needed expansion work at Damietta Port.
Another strategic area of activity for Samcrete is PPPs (public-private partnerships). “There are strong indicators that PPPs will continue to play a major role in Egypt’s economy through megaprojects,” Adly is convinced. When they were first promoted by the government in 2008, Samcrete was an early participant, and is currently in the bidding for two projects for theMinistry of Housing Utilities and Urban Development (MHUUD): Abu Rawash Wastewater Treatment Plant in Giza Governorate with Acciona Agua of Spain, K-Water and GS of Korea and ICAT Egypt; and 6th of October Waste Water Treatment Plant with OHL Inima of Spain and ICAT Egypt. The winning consortia will run the plants for 20 years then transfer ownership back to the MHUUD.
Roads are something of a Samcrete speciality: it constructed part of Egypt’s only motorway betweenAin Sokhna and Cairo. It is now working to complete a $90 million regional roadbetween the cities of Belbeis and 10th of Ramadan: this is due to be handed over in 2012.
Meanwhile, Samcrete Development is the property arm of the group, holding a substantial land bank in Egypt itself and engaged in commercial, retail and industrial development. The revolution may have stalled new development, but it has its positive side, says Eng Hisham el Kheshen. “It has given us the ideal opportunity to upgrade our flagship business development, Pyramid Heights.” This 211,000 square metre business park was completed in 2001 and was the first international standard business district to be built in Egypt. It is close to the Pyramids of Giza, the new museum, and the principal road networks of greater Cairo. “Ten years is a long time for an office complex like Pyramid Heights: you lose some of your technology advantage and competition creeps up on you. This is an ideal time for us to put in the newest technology like fibre optic and WiFi. We are giving the business park a complete makeover that includes facades, landscaping and two new multi-storey car parks.”
The timing of the $25 million project—it started immediately after the revolution—turned out to have been impeccable says el Kheshen: “When the economy is down it is the best time to do a revamp, so that you are ready with your new look and your new package when it rebounds.” He has an adjacent 800,000 square metres of land up his sleeve, earmarked for upmarket residential development. “Within the next year I will have revamped my office park and by then will know if my housing project is still viable to go ahead with. I may need to alter my plan in line with the new market forces but then I can be sure I am introducing my next major project at the right time and with the right business card, so to speak.”
El Kheshen is looking at the best ways to develop Samcrete’s land bank: for example, a package in central Hurghada on the Red Sea and a 50,000 square metre site in central Cairo that looks right for a shopping mall. Beyond this, his vision is to make Samcrete Development’s expertise available to third parties. “We would manage the concept, design, construction and sales. I believe the world is moving away from insourcing and towards outsourcing: lean and flexible companies like ours are the perfect partner for people venturing into businesses they do not necessarily want to internalise.”
The operational unit within Samcrete Development—which among other tasks, manages Pyramid Heights and pressed for its revamp—has amassed a great deal of experience in facilities management. It’s a skill the Egyptian market lacks, and el Kheshen is encouraging this unit to look for outsourcing opportunities with the aim of spinning out an independent facilities management company when that business has gained enough traction.
