Saudi Arabia is a key growth market, says Honeywell’s Phil Daniell

In an exclusive interview with Phil Daniell, vice president and general manager of Honeywell Building Automation for the Middle East, Turkey, and Africa, we delve into Honeywell’s ambitious expansion strategy in Saudi Arabia, including the opening of its new facility in Dhahran.

Daniell provides valuable insights into the company’s perspective on Saudi Arabia as a pivotal market within its global strategy, highlighting the company’s tailored approach to leverage local opportunities and governmental incentives.

He also sheds light on how Honeywell Building Automation is poised to capitalise on Saudi Arabia’s economic transformation under Vision 2030, emphasising the strategic importance of the region and the pivotal role of local partnerships in driving growth and innovation.

Why is Honeywell expanding so rapidly into the Saudi market?

It’s important to understand how the company views Saudi Arabia. It operates as a separate and independent region within the company’s broader high -growth regions, with its own leadership structure, strategy and approach.

Saudi Arabia is a key growth market for Honeywell and our rapid expansion here is driven by several key factors: Saudi Arabia’s Vision 2030 and related government initiatives aim to diversify the economy, creating opportunities in infrastructure, clean energy, and technology sectors where Honeywell is well-positioned.

The country’s growing demand in key industries like smart cities and energy efficiency matches Honeywell’s expertise, while local partnerships facilitate market entry and expansion, aligning our offerings with national development goals.

What makes the kingdom an attractive market to enter and invest in?

Saudi Arabia offers several compelling incentives for companies like Honeywell to invest, highlighted by three major initiatives:

1. The establishment of special economic zones (SEZs) providing reduced corporate income taxes, customs duty exemptions, and flexible foreign employment regulations.

2. Significant tax holidays for regional headquarters with up to 30 years of zero percent income tax and no withholding tax on outward payments.

3. Tailored financial and non-financial benefits arranged through the National Investment Committee, which include government fee discounts, relaxed Saudisation requirements, and support for low-interest financing.

These incentives are part of Saudi Arabia’s broader economic diversification efforts and aim to attract substantial foreign direct investment by creating an advantageous business environment.

Tell us more about the building automation sector in Saudi Arabia.

Saudi Arabia’s building automation system market size was valued at $1.5bn in 2022, which is expected to reach $3.3bn in 2030, with a CAGR of 10.2 per cent for the forecast period between 2023 and 2030. The growth projections for this market are underpinned by an increasing emphasis on energy efficiency, advancements in IoT and AI, and regulatory support.

The market is segmented into various components such as facility management systems, security and access controls, and energy management systems, each contributing to the overall expansion.

Does Saudi Arabia have a scalable production capacity? If yes, what are the main factors to its benefit?

Saudi Arabia’s capacity for scalable production is supported by several positive factors: Its strategic geographical location serves as a logistical hub for global trade, enhancing export efficiencies.

Government-led initiatives under Vision 2030, including substantial investments in infrastructure and economic diversification, alongside the development of SEZs, provide significant incentives for businesses.

The country’s abundant energy resources ensure low-cost operations for energy-intensive industries. Additionally, substantial investments in technology and infrastructure further bolster manufacturing capabilities and scalability, making Saudi Arabia an attractive destination for expanding production and industrial activities.

Is it easy to hire local talent?

To begin, there is no Honeywell without its people – they are our cornerstone and we have seen tremendous growth in both talent and results in our business in Saudi Arabia.

There is an exceptional amount of qualified, local talent. To put that in perspective, 50 per cent of Honeywell’s Saudi-led workforce in the kingdom are Saudi nationals and, of those, 25 per cent are women – many of whom are engineers directly supporting key Saudi Aramco projects.

We have been investing heavily in local talent to support the IKTVA Program by growing local industries and providing upskill training and jobs to Saudi Arabian citizens. We are also delighted to maintain close ties with academic institutions, such as KFUPM, and play a critical role in the development of Saudi engineering talent, which the company also supports through its Automation Colleges in Dhahran and Jubail.

Why was Dhahran picked as the location for the new facility?

Dhahran is an ideal location for Honeywell to establish an assembly line facility in Saudi Arabia due to its strategic proximity to major energy markets, including the headquarters of Saudi Aramco.

Located in the Eastern Province, the region has robust industrial and economic infrastructure with excellent connectivity and logistics support, critical for manufacturing operations.

Additionally, Dhahran offers access to a skilled workforce through local educational institutions like King Fahd University of Petroleum and Minerals, providing Honeywell with essential technical and engineering talent.

The supportive business environment, fostered by Saudi government incentives under Vision 2030, further enhances Dhahran’s appeal as a strategic site for our expansion in the Middle East.

How many products will be manufactured and assembled at the facility?

The 1,500 sqm Dhahran facility will be dedicated to the local assembly line for fire alarm and building management solutions, including fire detectors, fire alarm system modules and building management system actuators.

Future expansion plans offer a wider product portfolio serving the local and regional markets.

How many production and assembly facilities does Honeywell (as a group) already have in Saudi and how many more have been planned?

Last year, Honeywell announced the start of construction of its eighth site in Saudi Arabia – an advanced regional manufacturing centre at the King Salman Energy Park.

The facility will include engineering, manufacturing and assembly lines spanning Honeywell’s industrial automation and control equipment, field instruments, rugged mobile computers, gas detection equipment, fire safety systems and building management systems hardware.

This facility, once complete, will consolidate all of our manufacturing and assembly line capabilities in one huge location.