The UAE’s growing trade with the United States is being driven by deep ties in the tech sector. But it is no longer simply give and take. The major players of the Emirates are also beginning to branch out, making big investments and creating jobs in America.
There is no shortage of American brands in the UAE. From the golden arches of McDonald’s to Nike’s swoosh, the Emirates are a hotbed for US brands with consumption at an all-time high.
One key area where the trade relationship continues to thrive is technology. In the past five years imports from the United States have more than doubled from about US$11 billion in 2007 to more than $22.5bn last year. Most of this was in the form of advanced technologies – computers, electronics, airplanes and cars, all of which accounted for $13bn of total imports.
Total bilateral trade was $24.8bn last year. That figure had already topped $15bn in the first six months of this year, $3bn more than in the same period of 2012.
The state of California, which is home to such firms as Apple and Hewlett-Packard, exported $1.8bn to the UAE last year, which the US government says sustained more than 23,000 job . Top exports during the past couple of years include computers and related equipment.
“The United States enjoys a robust trade and investment relationship with the United Arab Emirates, including a significant investment in the technology sector. Last year, the US exported more than $22.5bn worth of products to the UAE, more than any country in the Middle East and more than our export relationship with India,” says Michael Corbin, the US ambassador to the UAE. “In 2013, we fully expect to increase upon this already historic trade relationship. In terms of the technology sector, we expect another robust year of growth.”
There are more than 1,300 US companies with an office in the UAE, the latest of which is Delta Faucet, which has chosen Dubai as its headquarters to manage a business worth $1bn across the region.
“For us, we see that products from the US are very well positioned here in the region, so a US brand has a very positive connotation,” says Hans-Juergen Kalmbach, the vice-president of Delta Faucet International. “We opened our office in Dubai because it is much easier to establish a business unit here.”
The UAE is not just a lucrative destination for US goods. Many brands and their products have contributed to evolving and stimulating the nation’s entrepreneurial and technology ecosystem.
Microsoft has partnered with the Ministry of Education to provide tools for UAE classrooms and companies such as Qualcomm and Intel provide capital and mentorship programmes to help young entrepreneurs.
“The nature of this part of the world is we’ve had to import a lot of technology and capability, but it is well recognised by the Government and the rulers that there is a need to build local skills, so we are trying to be part of that process by building local capabilities,” says Nassir Nauthoa, Intel’s general manager for the GCC. “We are not here just to import and sell stuff here.”
Nor is this just a one-way relationship. Over the past few years, the UAE has been investing quite heavily in the US, particularly in advanced manufacturing.
Du announced plans to establish a $111 million multi-service node in Los Angeles to allow global carriers to interconnect to the du network for internet services. In 2010, the Dubai-based Rubenius established a research and development centre in San Diego with labs for smart grid products and services with a $17.4m investment.
But perhaps the most notable of UAE investments in the US is in Saratoga, New York. In what has been dubbed as New York’s Tech Valley, the Mubadala Development subsidiary Atic has built a GlobalFoundries semi-conductor fabrication facility worth some $8bn.
This plant, known as Fab 8, will be able to produce 60,000 semi-conductor wafers per month. Each 300mm wafer undergoes an extensive process to produce a number of 28 nanometre and 20nm silicon chips, valuing the wafer between $10,000 and $20,000 at the end of the process.
To date, Atic reports that Fab 8 has directly generated more than 2,000 jobs and helped to create more than 8,000 indirect positions. By next year, those numbers are expected to increase to 3,000 direct and 15,000 indirect jobs.
“All this development has a very real economic impact,” said Todd Shimkus, the president of the Saratoga County Chamber of Commerce. “When taken in the context of a global recession, these statistics are truly remarkable.”
In the two years after the construction of Fab 8 began, between 2010 and last year, manufacturing income in the county has risen by 60 per cent to $180m, private income has risen by 8.8 per cent, the population has grown by 2.4 per cent and housing sales have gone up by 17 per cent.
“GlobalFoundries is now the manufacturing nucleus for the entire region, but making an ecosystem where the fab could thrive has been a generational effort,” says David Rooney, the senior vice-president for business development and marketing at the Center for Economic Growth, which supports the area’s development.“A successful ecosystem requires the close proximity of research, education, manufacturing, suppliers and a host of other entities. Bringing these companies together takes time and true dedication.”
This is a dedication that Abu Dhabi is determined to see through in a bid to diversify its economy and strengthen its ties with the US.