Consolidated Contractors Company, the 17th-biggest international contracting group globally by turnover, and largest in the Middle East, is sending up to 2,500 of its core staff on extended leave until the market for new projects picks up.
CCC, based in Athens but which carries out 65-70 per cent of its work in the Gulf, sent an email to employees stating that, due to the cyclical nature of the construction business, some of its staff would be sent on open leave.
The company remains “confident that they will rejoin the CCC family very soon, perhaps in a very different capacity than their current post”, it added.
Samer Khoury, CCC's co-president of engineering and construction, told The National, that while he remains confident about the market's long-term prospects, a lack of new contract awards regionally has forced the company to place between 2,000 and 2,500 of its staff on open leave.
"We have today 145,000 people. Out of these, there is about 13,000 core staff. I’m not talking about the labour — labour comes and goes. The core staff will drop by about 2,000 within the next six months," he said.
Mr Khoury said the company delayed its decision for as long as possible, and as a family company it would look to soften the blow to employees, but that action was necessary.
"This year our revenue is $4.2 billion (Dh15.41bn), next year it’s going to drop to $2.5bn. So it’s natural to downsize an organisation when things happen like that,” Mr Khoury said.
He said that staff who are being placed on open leave will receive payments for any leave accrued over their period of service and will then receive a reduced payment over a six-month period to cover items such as housing costs and childrens' school fees. The level of payment depends on a number of factors such as age, marital status, number of children and performance-related measures, among other factors, "because we know we are going to need them again in June [next year]".
"We are a family company. Some of these people have been with us for 30-40 years. I cannot just tell them go home," he said.
CCC was set up in 1952 by Said Khoury and his cousin Hasib Sabbagh, prominent Palestinian businessmen and philanthropists. They moved the company's headquarters to Greece from Beirut after Lebanon's civil war broke out in 1975.
CCC grew to become the region's biggest contracting group. Trade title Engineering News Record ranks the company as the 57th-biggest contracting group globally, and the 17th-biggest international contracting group by turnover generated by contractors outside of their home market.
In its MENA Annual Energy Investment Outlook report in April this year, development lender Apicorp said total planned and committed investments in the energy sector in the Middle East and North Africa will amount to $1 trillion over the next five years.
Mr Khoury, whose company relies on the oil and gas sector for about 70 per cent of its workload, said many of the company's major clients had significant projects on the drawing board but they were taking longer than anticipated to come to market.
“We are bidding, and rebidding and rebidding, but they [companies] are not committing to any major jobs,” he said.
The Middle East's contracting market witnessed a sharp decline in activity following the steep drop in oil prices in 2014. Figures from the US-Saudi Arabian Business Council show contract awards in the kingdom, which was the biggest Gulf market for the first half of this century, dropped to 100.9bn Saudi riyals (Dh99bn) last year from a high of 290.6bn riyals in 2013.
However, there have been signs of a pickup in recent months, with the 64.3bn riyals worth of awards in the three months to June the highest quarterly figure for four years.
Mr Khoury said CCC is hopeful of securing awards for a number of mega-projects soon, but that “even if we get the awards this year, we will not physically be on the ground until June next year”.
CCC has completed work on presidential palaces in the region, along with airports in and outside the Arab world, like a terminal extension at Reagan National Airport in Washington DC as well the Dubai Mall, the Dubai Opera and the Riyadh Metro. Alongside the core CCC business, it also owns a minority stake in Abu Dhabi contracting group NPCC and US construction group Morganti. Including its affiliates, the group collectively is set to turn over about $7 billion this year, Mr Khoury said.