Al Ain-based Strata aims for Dh1bn in sales and push into Africa

Strata aims to triple sales to Dh1 billion by 2020 as the Al Ain-based aeronautical manufacturer weighs up expansion into North Africa.

“North Africa seems to be a viable market,” said Badr Al Olama, the chief executive of Strata, which is part of the aerospace and defence group owned by Mubadala Development Group, the UAE’s strategic industrial development company.

“It opens up a gateway into southern Europe and into more the western side of the world.”

He was speaking on the sidelines of the World Economic Forum’s regional agenda meeting in Abu Dhabi.

Strata is a strategically important operation for the UAE as it seeks to build a manufacturing base in key industries. The rapid growth of the UAE’s national carriers and their huge airplane orders have helped the UAE to gain leverage with the world’s two dominant aircraft suppliers, Airbus and Boeing, to secure parts manufacturing facilities and jobs for the country.

The growth plans come as the rapidly expanding Strata, which makes airplane wing parts, aims to move to the second phase of its development.

“The past five years have been about establishing our credibility. The next five years are about competitiveness,” Mr Al Olama said.

“The focus on the supply chain over the next five years is critical to us – we have to be more competitive.”

The company was founded in 2010 and its revenue has soared from Dh6 million in that year to Dh60m the next and to Dh316m last year.

Mr Al Olama said he expects sales to top Dh400m this year and hit its target of Dh1bn in sales by 2020.

It expects to break even in 2017 on sales above Dh500m, with sharply rising profitability thereafter as fixed costs become a smaller proportion overall.

Sales last year accounted for about 10 per cent of Mubadala’s aerospace and defence group revenue.

As Strata moves into profit the focus shifts toward driving down costs via its supply chain.

“We’re exploring [North African plant operations] and trying to do a proper feasibility study – trying to understand what each geographical part of the world can offer so that my value chain is optimised,” Mr Al Olama said.

“The perfect situation to be in is that you buy your raw materials from east Asia, get them to the UAE to do the automated parts here, do the more manual parts in North Africa and then to Gibraltar and on to Toulouse”, where Airbus is located.

The physical manufacturing process is tightly controlled by the two airplane makers because of rigorous attention to detail on cost control, as well as quality in such a safety-driven industry.

“So you have to ask permission to move a stick from here to here,” said Mr Al Olama, and the client companies will therefore have a deciding say in any new factories.

Although parts of the small and medium sized enterprise (SME) sector in the UAE have been hit by the downturn in oil prices in the past 18 months, Mr Al Olama said that Strata’s contracts for local suppliers have continued to rise, hitting Dh136.8m in the latest period. Emirati SMEs account for about 30 per cent of Strata’s supply contract spending, and that proportion has been maintained, he said.

The other major goal for the company is to develop an Emirati skilled workforce.

The Strata labour force has grown from 50 in its first year – of which two were Emirati – to about 700 currently, of which 45 per cent are Emirati, close to the target of 50 per cent.

Mr Al Olama said it is notable that a high percentage of the local workforce is female – 84 per cent of the total Emirati workforce, including the two (out of eight) most senior shop floor supervisors.

That is extraordinarily high for the aerospace industry globally, and Mr Al Olama puts it down to the requirement for a combination of good communications and maths skills, plus the rigours of a 22-month training programme that includes intensive vocational training with Lockheed Martin, an American aerospace company.

Only those passing that training programme are employed by Strata, which whittles down an applicant pile of about 1,000 to about 45 during each of its recruitment drives. Mr Al Olama is a member of the WEF’s council on the future of industry, which germinated the idea for next year’s “manufacturing summit” in Abu Dhabi, backed by the government and the United Nations Industrial Development Organization.

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