It’s not just an urban revolution that’s underway in the UAE capital city of Abu Dhabi where the skyline is changing every day as the government pushes for more office and residential developments, but also an industrial revolution of sorts.

Manufacturing activity in the UAE, which in 2004 accounted for Dh49.5 billion ($13.4 billion), was rather evenly spread over the seven emirates with industrial activity largely concentrated in the emirates of Dubai and Sharjah. Not any more. The capital city has now seen a huge spurt in industrial development with investments pouring in higher-margin manufacturing sectors like shipbuilding and pharmaceuticals.
Despite the tag of being the oil-rich emirate of the UAE, Abu Dhabi today has got what it takes to make it a highly competitive manufacturing centre in the regional and global markets. With oil, a strategic location, world-class infrastructure, proximity to major Asian markets, a business-friendly legislative framework, cheap labour and inexpensive power, it even has an edge over India and China, say analysts.
According to the latest available figures for the UAE, investments in the industrial sector has seen a 140 per cent jump in the last five years, with cash inflow rising from Dh28.45 billion at the start of 2000 to a whopping Dh68.22billion in 2005.
New industrial firms are pitching camp here with over 3,294 new companies presently operating from the emirate. Abu Dhabi has seen its fair share of industrial growth in the same period having registered a 416.4 per cent increase in investment according to the latest Ministry of Finance and Industry guidebook.
The figures just out reveal that industrial investment in the capital city has risen from Dh7.45 billion in 2001 to Dh38.55 billion last year.
According to Salah Salem bin Omeir Al Shamsi, chairman of the Abu Dhabi Chamber of Commerce and Industry’s board, the emirate has been registering a steady growth of GDP for several years now. It, according to a report, stood at Dh208.4 billion in 2004, rising to Dh 301.7 billion last year and is “projected to increase to Dh341 billion in 2006.”
The report further states that Abu Dhabi is now planning on “setting up 30 industrial clusters in more than 300 sq km in the next seven years,” thereby diversifying the emirate’s economy further and drawing even more investment, developing local skills, creating jobs for nationals and transforming Abu Dhabi into a world class industrial, services and logistics hub.”
The emirate’s industrial base, though strong, is composed of individual companies in fragmented industries. The formation of clusters will help it transform the emirate into an industrial, services and logistics hub.
The capital is open for business and has gone that extra mile to create a business-friendly environment with special zones to accelerate business. New legislation is also being drawn up and will be introduced soon to ensure that the industrial momentum gained picks up speed and runs like a well-oiled machine. The government has already enacted a landmark law to attract foreign direct investment with ownership rights to foreign investors in the Industrial City of Abu Dhabi (ICAD), phase two of which is about to begin. The key project will cover 10 sq km and the cost of the infrastructure alone will be Dh400 million with the emirate expecting to attract investments worth more than Dh6 billion.
“We are interested in developing heavy industry, like aluminium, steel, petrochemicals and related industries like automobiles. The Middle East can play a better role in these industries because of its position midway between world markets, its low-cost energy and its tax-free environment,” says Shaikh Hamed bin Zayed Al Nahyan, chairman of the Abu Dhabi Economy and Planning Department in an interview in “Emerging Abu Dhabi 2006”, a business review of the emirate undertaken by the Oxford Business Group.
According to him, the emirate will use all its energy resources to diversify, privatise non-strategic industry sectors and complement Dubai by focusing on heavy industry.
“Diversification from oil revenue is a challenge we have been facing for decades,” he says. “But, at this time, I believe, the odds are stacked in our favour.” The time is now right for privatisation. For 35 years the government has overseen the transformation of this country from among the world’s lowest income groups to one of the highest. Developing the infrastructure and the economy has required a lot of attention. We now want to privatise all the services and industries that are not the core business of government,” he adds.
 Factories are the backbone of any industrial society and there are over 385 factories presently operating out of Abu Dhabi –- with more on the way –- and playing a key role in the diversification push.
 While around 122 of them are involved in the export business, 222 are in the industrial sector, 159 in trading and four in vocational.
 The factories manufacture apparel, leather, machines of all kinds and equipment handling with quite a few involved in the manufacture of chemicals, construction material, fibreglass, foodstuff and metal.
  The manufacture of plastics is another key area that has picked up. With the plastics sector becoming increasingly inseparable from the development of modern society as a whole – the industry is poised to become one of the key drivers of sustainable development.
 The worldwide demand for plastics, driven by strong consumer confidence, has never been higher.  In the Middle East more plastic material is needed to meet an explosion in demand across a huge range of applications – from the pipes that deliver precious drinking water to the cables that make global communication possible.
Abu Dhabi is ideally positioned to exploit this growth in demand. The emirate’s enormous technological advances in recent times have created an ideal environment for polyolefins production, and its world-class oil production infrastructure continues to be improved. Abu Dhabi’s downstream industry is growing at a rapid rate, and its economy generally is increasing in its depth and breadth.
Borouge, a leading provider of innovative plastics solutions, is headquartered in Abu Dhabi and is ideally positioned to build on the favourable circumstances afforded by the emirate. Combining the most advanced technologies with world-class production facilities, Borouge provides solutions that make a real difference to everyday life. The company’s state-of-the-art petrochemical complex is located in Ruwais, Abu Dhabi, serving customers throughout the Middle East, Asia-Pacific and Africa.
Borouge provides a range of differentiated products for high-value applications, from water, gas and industrial pipe systems, power and communication cables and advanced packaging, to medical devices and automotive components. In partnership with Borealis, Borouge employs unique Borstar technology in the production of their products. The advantages of Borstar are well known in the industry and are central to Borouge’s success – the technology facilitates the manufacture of high-performance, high-value plastic products that are vital to modern living.
To meet ever-increasing market demand, Borouge is now implementing a multi-billion-dollar expansion at Ruwais. The project, Borouge 2, is due to commence production in 2010. This world-scale project will triple existing production capacity to two million tonnes per annum, including, for the first time, polypropylene. 
The government of Abu Dhabi has given its unequivocal backing to Borouge 2 as part of its strategy to diversify the oil and gas-based economy and extend the emirate’s downstream industrial base.
The Borouge 2 expansion will see the construction alongside the existing facilities of one of the world’s largest ethane crackers, producing 1.4 million tonnes of ethylene per annum, the world’s largest olefins conversion unit, a 540 kilotonnes per annum Borstar polyethylene plant and two 400 kilotonnes per annum Borstar polypropylene plants.
The global demand for products made from polypropylene is growing dramatically, and the expanded production in Ruwais will open new markets to Borouge. The expansion will also be of great significance to the downstream industry in the region – the increase in production of polyethylene and introduction of polypropylene will present opportunities to local businesses, which will benefit from the proximity of the plant and the ability to source material locally. In time the regional economy as a whole and the local community stand to gain from Borouge’s expansion.
Borouge has invested in excess of $1.5 billion to date in the existing Ruwais facility. The complex, the first such development in the UAE, was completed on budget and on time and has become a benchmark for operational excellence in the region. It was the first bimodal polyethylene plant in the Middle East. Since inception, the Borouge operation has in a short time become synonymous with consistent, first-time-right products, reliability and the highest safety standards.
Steel is another area where the city has done itself proud. Before 2001 and the establishment of Emirates Iron and Steel Factory, Abu Dhabi had a number of smaller steel mills that, between them produced 40,000 to 100,000 tonnes of steel a year. But as demand soared it was imperative that a big player enter the picture and EISF was born. Today, the emirate’s most important non-petrochemical industrial enterprise accounts for almost 90 per cent of all rolled steels produced in the UAE. It currently produces around 600,000 tonnes of steel per annum.
The local steel major has now drawn up plans to further expand its production capacity to 800,000 tonnes per year to cope with the shortfall in steel triggered by the construction boom in the UAE and other GCC states. The demand for steel has been steadily shooting up, from 3 million tonnes in 2005 to 3.5 million tonnes this year.
EISF, the Abu Dhabi government-backed firm has recorded a remarkable growth since it was established in 2001. Within a year, the iron and steel major produced 165,000 tonnes of rebar and the following year delivered 348,000 tonnes. As demand for steel shot up so did EISF’s production and on-time delivery. In 2004, it offered the market 500,000 tonnes and last year, it produced and delivered a whopping 600,000 tonnes. Its projected expansion will ensure EISF is in a position to distribute both in the UAE and the GCC region as a whole.
“While most other companies sell reinforcement bars only in bulk, and their dimensions are fixed, EISF can sell according to client specifications, giving the firm a distinct advantage over its competitors. It does not, for the present, sell directly to a specific company or country,” says Mohammed Al Afari, sales and marketing manager.
Steel pipes and tube producer, Adpico, is another player in the capital’s manufacturing sector. At full capacity, Adpico produces 1.2 million tones per annum. The Abu Dhabi-based firm is the largest steel/tube producer in the UAE. “We will soon be the largest in the Middle East and by next year we will be the largest producer of pipes for the oil and gas industry,” says Feisal Hammude, Adpico’s director, international sales and marketing.
The capital city is serious about diversification and is going all out to use its energies and resources in developing and expanding its industrial base. But it is doing so carefully, with high priority areas defined. As Shaikh Hamad bin Zayed Al Nahyan, puts it: “We are interested in developing heavy industry like aluminium, steel petrochemicals and related industries like automobiles.”