Contractors join forces to slash material costs

Contractor super group to offer protection from soaring prices and lengthening lead times.

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By  Conrad Egbert Published  February 18, 2006

Dubai’s leading contractors have clubbed together to form a new company with the sole purpose of buying building materials. The UAE Contractors’ Association (UAECA) has taken the radical step of forming a new company, Global Resources Construction Material, which will use the collective buying power of its members to source materials. The move could reduce the potential for contractors to lose out as a result of price hikes and delivery delays. The volatile building materials market has been subject to major pricing swings in recent years, most notably in the structural steel, stainless steel and cement sectors. About 30 contracting companies have come together and have jointly invested around US $13.8 million (AED51 million) to establish the new venture. They were each asked to contribute between $272 000 and $544 000 to start the company, which is expected to become operational by July. “A lot of contractors in this market have to shell out money from their own pockets due to market fluctuations in building material prices. “Since the contracts are already drawn up, they end up losing out; so with the forming of this company that risk factor will be almost wiped out,” said UAECA general manager, Humaid Salem. “We haven’t yet decided if the company will be open to all [contractors], but if it will, priority and discounts will be given to our member contractors only.” Ahmed Bukhatir, treasurer for the UAECA added: “We are now in the process of looking for a general manager for the company. As soon as we finalise that, we will hand over the company to the general manager to run.” The UAE Contractors’ Association was established in 1985 under a decree from the UAE Ministry of Labour and Social Affairs. Its brief is to serve as the platform for the country’s building and civil engineering contractors.

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