Diversity the route to Abu Dhabi success

Mubadala has interests in energy, telecommunications, healthcare and real estate but central to its development and the future of Abu Dhabi is its aerospace division.

The word Mubadala means ‘exchange’ in Arabic, and as the investment arm of the emirate’s government it has a clear task – to move Abu Dhabi away from reliance on income from energy and to develop opportunities for Emiratis with careers not jobs.

For Hommaid Al Shemmari, the executive director of the aerospace unit, it is this sector that will enable Abu Dhabi to become a world-class centre.

“In 20 years I believe people will be talking about Al Ain in the same breath as Toulouse or Seattle,” he said.

Shemmari sees the Mubadala family of businesses – which stretch across MRO, manufacturing, spares and finance as well as training – helping to deliver a diversified economy to Abu Dhabi along with high potential jobs for the country’s nationals. “We are a long-term investor in the industries we have identified. Aerospace was seen as a key one when we built the strategy in 2006  and we knew then that this is a highly cyclical industry,” Shemmari said.

“We recognised that we had to have a business that was capable of weathering such circumstances as we have seen in recent years with the financial distress. In the past year we have restructured our businesses to be agile, flexible and more capable of weathering the conditions.

“We are building diversification. We had been dependent on MRO but are now adjusting with some initiatives such as Sanad, and we are ready for the next cycle to be more adaptive to circumstance.”

MRO is still at the heart of the Mubadala story through its ownership of ADAC and SR Technic. “We are positioning ourselves as a global player. Deals with GE and Hamilton Sundstrand, our relationship with Boeing and Airbus and bringing Sanad solutions into the pack of MRO companies to provide financing linked with MRO revenue, has made us become a bigger and more influential global player,” Shemmari said.

“We are not a traditional MRO provider. That is a recipe for failure in our minds. We are a differentiating player, a total solutions provider. Bring us your plane and I’ll do your airframes, your engines, your components and I’ll also finance it for you.

“I will work with other partners. The customer just focuses on aviation; on their passenger operations. That has been a great value proposition for us. We had great successes. Swiss Air, EasyJet, Etihad, Virgin Blue – you can look at each of our deals and see how it is changing. Two years ago SR Technics was doing its deals, ADAT was doing its own too. But now we are doing it as a single team.”

While looking at the whole branding issue, Mubadala can see advantages for a single name but recognises that with different certification and registration there are also advantages for continuing with different brands for different markets.

This also helps with developing new markets. Mubadala still has the US and Asia on its radar. “The US is very mature market,” Shemmari said. “Any entry for us into that market has to be with a partner, not just  a straight acquisition. We have to have a partner that understands that market and how to navigate the terrain of that market. But that is down the line. My prime focus is on Asia at the moment. We have managed some relatively small deals in India and Australia but we have our foot in and we are building from that.”

Success in the different international markets has changed the perception about future careers for UAE nationals. “It is becoming easier and easier to prove to UAE nationals that this is the way forward,” Shemmari said. “Now we have the strategy and a global presence we are building Abu Dhabi Inc with the universities. With the different players in the aviation sector in the UAE, we have more specific programmes so people have a career. We have sent individuals to NASA, to Airbus. We sent eight to Airbus recently and a UAE national female finished top of the group.”

“We want to develop leaders. From NASA we had feedback about how good the UAE people had been. This is about change and it is happening.”

Mubadala has seen success this year with the delivery of the first work programmes to Airbus by its aero systems manufacturers Strata.

“The Strata team did us proud,” Shemmari said. “It delivered two work packages to Airbus and will deliver the first to ATR by the end of the year. It proves to the world how serious Abu Dhabi is about aerospace. We have proven to our partners like GE and Airbus that this is not a one deal agreement. EADS leadership visited recently and told us they want us to become a tier one supplier. We are also hoping to do a similar sort of deal with Boeing by the Dubai Airshow.

“But we are also having discussions about composite manufacturing with other players like Lockheed Martin. We are not just Boeing and Airbus. We will look to diversify the risk.”

The company is also going one stage further and finalising plans for how to realise its ambitions to develop a new business jet.

At the Dubai Airshow two years ago Shemmari told a cynical audience that the company’s goal was to bring the new aircraft to market around 2018. There are few cynics around any more. “It is most definitely going to happen; why would you doubt it?”

Shemmari continued: “We will deliver on time. Since 2006 we have been building blocks to get to this – building indigenous businesses and tapping into partnerships.”

A cornerstone of these ambitions was the acquisition of a third of the Italian business aircraft builder Piaggio, which it shares with India’s Tata Group and Italy’s Ferrari family.

Shemmari has been reported as looking for more partnerships. “I feel we still need someone of stature to help us out to make sure we can deliver a successful programme,” he said.

Dassault is a favourite to be working with Mubadala but this could be a two-way relationship. “The links between Abu Dhabi and Dassault go back a long way,” Shemmari said. “They sold us our first fighter aircraft almost 40 years ago. That is a great relationship.”

Shemmari sees the future as being a lot more than just one business jet. “There will be other programmes. Who makes the whole plane these days? It’s about supply chain management. We will develop the partnership. We want to move to other aviation sectors. UAVs are the trend now. Unmanned autonomous systems are the future.

“Boeing EADS and GE are all doing it. Look, we won’t be building an A320 or B737 in my lifetime but we want to be risk sharing partners and Tier 1 suppliers in the next  programme that comes out of Boeing or Airbus.”