Few people would think of the UAE as a natural destination for wood products. However, the rapid pace of construction in the Emirates has driven huge demand for plywood, softwood and other wood-based panels over the past two decades or so. At the same time, the burgeoning construction sector has led to the establishment of a multitude of furniture and fit-out manufacturers and these have become significant consumers of hardwood lumber and veneers, as well as MDF and particleboard. In fact, over this time, the UAE has also developed into the Gulf region's main destination for wood products. Its easy-going business climate, established transport and communications infrastructure and the creation of Free Zones, has meant that the UAE and Dubai, in particular, has become the region's timber trading epicentre.
The latest estimates show that the UAE imported some USD 851 million worth of wood products in 2011, up from USD 831 million in the previous year. Of this total imported in 2011, over half of (est. USD 483 million) was accounted for by imports of plywood, MDF and OSB (oriented strand board). Of the remainder, USD 148 million was accounted for by softwood lumber, USD 104 million by hardwood lumber and USD 86 million by builder's joinery and carpentry, which includes doors and door sets, shuttering for concrete-forming and assembled parquet panels.
These values are very significant and, perhaps, seem rather high for a relatively small market, and one where construction is reported to have slowed in recent years. However, as a trading hub for the region, the UAE is also an exporter of wood products. In fact, on average, an estimated 20 to 30 percent of wood products imported are re-exported to neighboring Gulf markets, especially Oman, as well as to East and Central Africa, Iran, Central Asia and, more recently, India. Estimates for 2011, show that around USD 209 million worth of wood products were re-exported from the UAE and the main destinations were Iran, Somalia, Rwanda, Oman, India and Iraq. Dubai, clearly, acts as an essential gateway to many other markets. It offers suppliers entry into countries that may be difficult to export to directly, whilst also providing an easily accessible entrepôt for buyers who are not willing or able to commit to large or high value shipments.
Not only has the UAE become a timber trading hub, but it has also developed in to a centre for wood processing. According to a report by the Gulf Organization for Industrial Consulting (GOIC) based in Qatar, investments totaling some USD 121 million were made in the UAE's wood processing sector in 2010. Moreover, of the 389 wood processing factories in the GCC (furniture and joinery), 208, or more than half, are located in the Emirates. In addition, of the 21,746 workers employed in wood processing in the GCC, 12,350 work in the UAE. Once again, location, infrastructure and business climate have all played a part in making this possible. However, in addition, the UAE enjoys ready access to low-cost, skilled labor from South Asia, notably India. The combination of all these factors, plus the ready supply of work for these factories, due to high levels of construction, has meant that the wood processing sector has been able to enjoy steady growth since the early 1990s.
Just as the UAE has become a focal point for wood trading in the region and beyond, the Emirates is now home to some of the region's most successful joinery and interior fit-out companies. Furthermore, some of these have a truly global reach, being able to offer experience, quality and timely delivery and all at a lower cost than can be achieved in many western markets. Currently, some of the world's largest interior fit-out companies are based in the UAE and a number of Dubai-based joinery factories are almost totally focused on production for countries outside the UAE and even the Middle East all together. Today, there are examples of joinery works being carried out in Dubai factories for hotel projects in the UK, France and West Africa, as well as in Central Asia and even India. At the same time, most UAE joinery factories are also involved in projects all across the GCC, often stepping in to complete work where the local manufacturers do not have the necessary capacity.
The pace of construction across the Gulf region is forecast to pick up in the coming years and this will translate into an even greater need for wood products and wood processing in the future. With its well-established situation for the region as a while, the UAE is likely to become even more important in the future as a hub for both trading timber and for wood processing. As such, the wood sector in the Emirates is likely to see significant growth in the coming years, attracting both higher levels of imports and increased investment in furniture and joinery manufacturing.
About the author
Roderick Wiles has been analyzing the Middle East's markets for wood products for the past 13 years. He has traveled extensively throughout the MENA region, developing a wealth of contacts and experience and providing consultancy services to a range of government and industry clients on a long term or one-off basis. For more information, see www.broadleafconsulting.com.
© Timber Design & Technology 2012
