Siemens Dammam Energy Hub drives SME development in Saudi Arabia

Across the globe, small and medium enterprises (SMEs) are recognized as powerful drivers of economic activity. They tend to represent the vast majority of all companies in an economy – up to 99 percent in the European Union – and they provide as much as two thirds of all jobs. They also generally account for at least half of GDP, both in developing and in developed economies.

By Siva Krishnan

It’s no surprise, then, that support for SMEs is central to the Saudi Vision 2030 development plan. Saudi SMEs account for 90 percent of businesses and 60 percent of total employment – not so different from global averages – but when it comes to SME contribution to GDP, their share is only 20 percent. That creates an opportunity for SMEs to play a big role in Saudi Vision 2030’s growth and economic diversification goals.

Ultimately, Saudi Vision 2030 seeks to increase the economic contribution of SMEs to 35 percent of GDP.

There are many ways to support SMEs. Creating business opportunities for them is one of the best. That’s why the 2016 opening of the Siemens Dammam Energy Hub (SDEH) is directly relevant to the Saudi SME story. At SDEH, we are producing some of the most sophisticated high-performance, high-precision, 21st-century technology turbomachinery. The first “Made in Saudi Arabia” high efficiency gas turbine was built at this facility.

This gas turbine production line requires highly skilled Saudi engineers, technicians, and other employees, and in the years since its launch, 174 SPSP students were trained and took part in production of 11 high efficiency gas turbines besides 24 Saudi employees. What’s so exciting is that such large and complex pieces of equipment have long supply chains behind them, creating numerous opportunities for Saudi SMEs to provide both parts and services. It is worthy to note that so far 93 local suppliers have been utilized at SDEH.

In support of both Saudi Vision 2030 and Saudi Aramco’s In-Kingdom Total Value Add (IKTVA) program, Siemens has complemented the turbine manufacturing line at SDEH by establishing a one-stop shop for the packaging and servicing of compressor trains and power generation equipment. This compressor packaging facility is the first in Saudi Arabia to be approved by Saudi Aramco.

Compressor packages are commonly used in the oil &gas, and petrochemical industries and require drivers to run the compressor – usually electric motors or gas turbines. SDEH has packaged nine compressors so far, and four more compressor packages will be completed this year. Over the next two years more than 30 large compressor trains will be packaged at this facility.

This localization of compressor packaging in KSA, in addition to creating new customers for Saudi SMEs also create opportunities for SMEs to expand and upgrade their operations with the help of Siemens expertise.

We are continuing to draw more local suppliers into SDEH’s supply chain as part of our goal to add value additional local value y on our compressor packages. These efforts to achieve a highly ambitious target are tangible evidence of Siemens’ determination to develop the local Saudi supply chain, but equally, they highlight the high quality of work and capabilities of Saudi SMEs. These local suppliers to the compressor packages are delivering world-class quality, and in the manufacturing of key components such as seal gas panels, lube oil units, and coolers.

Every compressor package or gas turbine at SDEH that is loaded onto a truck for delivery not only reflects Siemens state-of-the-art technology, but also demonstrates the vibrancy and potential of Saudi Arabia’s SMEs that play a vital role in  driving the Kingdom’s economic growth and diversification that support of the Saudi Vision 2030. 

Jan 28, 2020

Siva Krishnan is Vice President at Siemens for Middle East & North Africa.

This article has originally been published on LinkedIn

Combined picture credits: Siemens AG