Building the Saudi Automotive Cluster

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description

Diversifying the Saudi Industrial Base, Building an Automotive Cluster Eng. Azzam Shalabi, President, National Industrial Clusters Development Program Event - Saudi Arabia: New Auto Market Hub for the Middle East, Africa and South Asia Presented June 26, 2013 www.ic.gov.sa

Transcript of Building the Saudi Automotive Cluster

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National Industrial Vision

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Industrial Clusters Program assigned by the Council of

Ministers to attract automotive industry investments

Objectives include:

1. Building a sustainable & globally competitive Cluster

2. Developing anchor OEM & key supplier projects

3. Facilitating start up of OEM, supplier & service businesses

4. Enabling environment for the Cluster to compete globally

A focal agency for automotive companies

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50,000 vehicles Phase I

Phase II

Phase III

Phase IV

150,000 vehicles

300,000 vehicles

400,000 vehicles

A sustainable automotive cluster competitively serving the needs of fast growing regions

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The Saudi Cluster has a unique value proposition

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

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Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

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Vehicle

Manufacturing,

Development

&

Engineering

Manufacture

Components &

parts

OEMs Suppliers

Industrial Clusters Program

Universities, training, services, utilities, logistics…

Forging “Development Partnerships” with companies

Basic

Materials

Metals &

Plastics MARKETS

IMPORTS

AutoZone Authority

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

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Projects benefit from attractive incentives

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

1. AutoZone with phase 1 infrastructure investments ~ $400 million

i. Industrial land & factory building lease at highly competitive terms

ii. Utilities at competitive terms

2. Public Private investment company “AutoCo” ~ $300 million capital

i. Invest in anchor projects in partnership with OEMs & qualified suppliers

3. Human Capital development incentives

i. Auto Academy investment ~ $70 million

ii. Wage & training financial incentives for Saudi employees

4. Financial & Fiscal incentives

i. Industrial loans at highly competitive terms

ii.Export finance & insurance at competitive terms

iii. Import duty exemption for machinery, material & components

iv. Flat corporate tax @ 20% with losses carry forward

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New Vehicle & Truck projects

• Isuzu 25,000 annually commercial vehicles - started 2012

• Jaguar Land Rover – LOI signed 2012

Auto Cluster is making steady progress

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

New Parts & Components projects

• PCC Small plastic parts - start operations 2013

• PCC Under the hood Nylon parts - start operations 2013

• Aluminum & steel stamping - LOI signed 2013

• Large Plastic parts - LOI signed 2013

• Aluminum casting - LOI signed 2013

• Seat and harness - LOI signed 2013

LOI – Letter of intent

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Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

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The AutoZone conceived with OEM input

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

AutoZone concept developed with Oliver Wyman consulting firm

Targets are significant reduction in investment & unit cost for companies

Concept was tested with 4 global OEMs in 2012

OEM feedback was incorporated in the latest AutoZone concept

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Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

OEMs

Zone Infrastructure Shared Facilities & Services

Suppliers & Services

• Developed plots

• Utilities hook up at the plot

• Roads and highway network

• Connectivity to ports & airport

• Auto Academy

• University

• Vocational training

• Bonded Zone

• Business park

• Civic & security services

• People & products transportation

• Housing & Recreation

• International & Saudi Schools

• Hospital and clinics

• Retail centers

• Hotels

• Alum & Steel Stamping

• Large Plastic parts

• Supplier “condo”

• Lease factory buildings

• Central Logistics

• Shared technical services

• Testing and test track

Community Living

• Body

• Painting

• General Assembly

• Quality

The AutoZone ~ 10 million square meters

Innovative AutoZone maximizing shared processes, facilities and services

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Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

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Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market Local key basic materials are a competitive advantage for the Cluster

Petrochemicals & Plastics Clusters

Jeddah

Riyadh

Arar

Tabuk

Sakakah

Hail

Buraydah

Madinah

Abha

Makkah

Najran

Ras al Khair Az Zabirah

Baha

Al Amar

Damman

Jubail

Rabigh

Jazan

Yanbu

Metals Clusters

Maaden Alcoa Aluminum Complex

• Mine to Auto sheet

• Aluminum sheet series 5 & 6

• Liquid Aluminum for Auto cast products

Sabic Hadeed Steel Complex

• Cold Sheet for automotive

Plastics & Chemicals (selected few)

• Polypropylene

• Elastomers

• ABS

• Polycarbonate

• Nylon 66

• Polyurethane

• Carbon Fiber

• Carbon black

• Adhesives

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Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

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The Land bridge Railway 2020

• passengers and cargo

GCC railway 2017

• passengers and cargo

North-South railway 2014

• passengers and cargo

Haramain high-speed rail 2014

• passengers

Haramain high speed rail

Land bridge railway Existing network

Dammam

Madinah Riyadh

Jazan

Hail

Jeddah

Yanbu

Rabigh

Korayat

Haditah Hazam Al-Jalamid

Raz Al Khair

Jubail

Makkah

Abu Dhabi

Dubai Fujairah

Sohar

Muscat

Duqm

OMAN

UAE

KUWAIT

North-south railway

GCC Railway

Yemen

Salalha

Abu Hadriyah

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market Major rail projects significantly improve logistics

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Jeddah

Yanbu

KAEC

King Fahed Industrial

Port, Yanbu

Jeddah Islamic Port

King Abdullah Economic City Port

Number of Berth by Type 7 including 2 container & 1 Ro-Ro

62 including 11 container &10 Ro-Ro

2 including Ro-Ro

Throughput, 2011 (tons m) 33.7 52.0 4.5 (20 target)

Containers 2011 (tons m) 0.4 41.2 0.0

Ro-Ro, 2011 (tons m) 0.0 1.3 0.0

West coast

SOP 2013

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market Sea Ports provide efficient & cost effective import export operations

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Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

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7.90

Saudi Labor

Force

4.70

Saudi Labor

Population

(age 15 and

over)

12.55

Saudi

Population

19.40

Saudi Labor

Force 2024

33%

7%

9%

52%

SAUDI POPULATION & NATIONAL LABOR FORCE, 2011, [million]

SAUDI LABOR FORCE FORECAST BY LEVEL OF EDUCATION, 2024, [%]

High-school Graduates

Diploma Graduates

University Graduates

Below High-school

2011 2024

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market A Well educated Labor Force is the source for the Cluster long term competitiveness

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• High Institute of Plastic Fabrication

• High Institute for Elastomer Industries

• High Institute for Metals Technology

• Auto Academy

Specialized training institutes preparing Saudi talent to work in Auto Cluster

• SABIC & SPDC of Japan

• Akron university

• Under development

• Under development

Operator

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

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Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market

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714 880 1005

1,543

1,962

2,292

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2012 2016 2021

652 771 844

1,407

1,718 1,923

2,059

2,490

2,767

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2012 2016 2021

Saudi (Minimum) MENA without Saudi (Minimum)

Saudi (Maximum) MENA without Saudi (Maximum)

3,298

2,840

2,257

MENA Market

• 2.8 - 3.3 million vehicles annually

• 67% dominance by Japanese &

Korean imports

• 41% C & D segments

• 20% SUVs

Auto Cluster

AutoZone

Materials

Infra-structure

Human capital

Market Robust growth in MENA region is a significant opportunity for Cluster companies

Thousand units per year

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Moving Forward

• Saudi Auto Cluster is a unique opportunity with a long term horizon

• Collaboration between Government and Companies in building the Cluster

• Companies can benefit from the advantages for early movers

• Industrial Clusters Program devoted to work with you to explore opportunities

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Download the Industrial Investor Guide www.ic.gov.sa

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The Kingdom of Saudi Arabia

Your Contact: Abdallah Al-Hazani

Mobile: +966 505284005

Email: [email protected]

Saudi Arabia, land of opportunities