Al Ain looks to rival Seattle and Toulouse in aircraft fabrication

Continued globalisation of the aerospace supply chain could see Al Ain become a pre-eminent centre for manufacturing, training, maintenance and engineering.

Abu Dhabi is banking on the continued globalisation of the aerospace supply chain and the increasing use of composite aircraft parts to position Al Ain as a pre-eminent centre for manufacturing, training, maintenance and engineering.

Two firms, Abu Dhabi Airports Company and Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, are driving the project that is expected to generate 10,000 jobs for the community of Al Ain, plus 1 per cent of the emirate's GDP, by 2030.

Homaid al Shemmari, the executive director of Mubadala Aerospace, a wholly owned business unit of Mubadala Development, said the aerospace cluster in Al Ain would be developed over 60 to 80 years, with nine stages of development mapped out over an area of 25 square km adjacent to Al Ain International Airport.

"To build such a cluster, and at that volume, you need at least 50 years," Mr al Shemmari said. "I want people in the next three to five years, or maybe 10 years, when they think about aerospace, they think about Seattle, Toulouse and Al Ain. That is our aspiration."

The jewel in the crown for Al Ain is the components manufacturer Strata, with US$2.7 billion (Dh9.91bn) of work orders already secured from Airbus and other aircraft makers.

Strata, launched in June last year, is a 100 per cent Mubadala-owned plant making lightweight aero structures that will use advanced composites to produce aircraft parts. Phase one of Strata will cover 21,600 square km with first deliveries for its customers due next September. Parts for Airbus A330s, A340s and A380s, plus spoilers and ailerons for A330s and A340s, and complete tail sections for ATR of Italy will be made at the facility.

Ross Bradley, the chief executive of Strata, said that in older aeroplanes such as the Boeing 747, composites made up about 4 per cent of the aircraft. While Boeing's new 787 Dreamliner was about 45 per cent composites, in the next decade new versions of the Airbus A320 and Boeing 737 could be up to 80 per cent composites.

Because of the lack of taxes in the UAE and lower energy and labour expenses, Strata's costs are 20 per cent lower than those of competitors in Europe, Mr Bradley said.

Yesterday, Mubadala hosted a media tour of its Strata manufacturing plant, built in less than a year and already producing wing parts for the Airbus A330.

Other existing facilities include Horizon International Flight Academy, which is expected to expand and become another anchor tenant in the planned cluster. Nearby, training will also be carried out at Al Ain International Aviation Academy.

While plans for future phases of the cluster have not been revealed, it is expected to host facilities for the assembly of helicopters, unmanned aerial vehicles, aircraft interiors, and engineering research and development companies. "Whatever makes sense, we will get on it one by one," Mr al Shemmari said. "We are not getting ahead of ourselves."

The facility should benefit from the major defence purchases by the UAE Armed Forces, which often come with local content requirements or other offset obligations. Mubadala is one of several state-backed development companies that act as industrial partners to these defence contractors.

Alessandro Borgogna, a principal at the management consultancy Booz & Company, said European companies would look for offshore facilities to minimise currency risks and the UAE's dollar peg was attractive.

"They also want to establish strategic partnerships in this key region in order to have access to the local demand and to meet the offset agreements in place in some countries," he said.

In recent months, the area has been visited by aerospace delegations from the US and France, and next month a UK group will pay a visit.

Aerospace is a major focus for Abu Dhabi’s development plans because it has high barriers for entry and requires huge amounts of capital, energy and technical know-how, said Homaid al Shemmari, the executive director of Mubadala Aerospace.

“We are always asking how Abu Dhabi can be competitive and what edge it has,” he said. “With aerospace, anything that requires a lot of capital to compete with the rest of world and has high barriers to entry, we will get into. Also, anything that requires a lot of energy, we will get into because, comparatively for Abu Dhabi, energy is low-cost,” he said.

Mubadala, with US$23 billion (Dh84.48bn) of assets under management, has expanded its aerospace unit from virtually a standing start in 2006 to become one of the fastest-growing aerospace ventures worldwide, with several companies launched in the past two years.

This summer, an $800 million military aircraft maintenance business was created between Mubadala and Sikorsky of the US, with plans for a facility to open in Al Ain in about 2013.

This focus on military maintenance will complement Mubadala’s existing civil aviation businesses, Abu Dhabi Aircraft Technologies and SR Technics. Mubadala has also launched Sanad Aero Solutions as a financing partner for airlines purchasing expensive components.

Other major units include Strata, a manufacturer of lightweight wing components and aircraft tailparts, and Horizon International Flight Academy.

Mubadala also has a major stake in the business jet manufacturer Piaggio Aero. The Italian company is expected to become a major contributor to Mubadala’s plans to build a business jet in Abu Dhabi by 2018.

Mr al Shemmari said that all Mubadala’s projects were geared towards delivering a “double bottom line” of economic and social returns, including high-value jobs for UAE nationals.

This article has been altered. The original article incorrectly quoted Alessandro Borgogna of the management consultancy Booz & Company as saying Abu Dhabi would become an attractive low-cost manufacturing base for European aerospace firms.