Industry

The industrial sector in the Kingdom of Bahrain witnessed significant development since early 1960s until the products of Bahrain factories reached most countries of the world due to their production quality and distinction.

In the past, the industrial sector was limited to some local handicraft industries, such as ships, textiles and sails, but in the present era the Kingdom of Bahrain has introduced heavy industries such as aluminum industry, "the aluminum smelting factory", petrochemicals, plastics, food and pharmaceutical industries, Arab Shipbuilding and Repair Co. and Steel pellets Co., in addition to many of the industrial zones that were set up in Bahrain. Many of the factories there have obtained the "ISO certificate", which is considered one of the best companies in quality and standards in the world.

Since has assumed His Highness Sheikh Khalifa Bin Salman Al Khalifa the executive power in the State of Bahrain in 1961, he worked on the non-total reliance on oil as the sole source of income due to the low reserves and consequently, the reduction of its contribution to the national economy. This is one of the reasons that led His Highness, since the beginning of the 1960s, to develop an intensive program of economic diversification and the exploitation of natural materials available in Bahrain, such as gas and turn it into a value-added product or use it as a source of energy. The geographical location of Bahrain as a medium between the major industrial markets in the world, in addition to the foreign investment promotion policy, played an important role in attracting foreign companies that have expressed an interest in establishing industries in Bahrain.

From the foregoing, we find that it is not possible to ignore the significant role undertaken by His Highness Sheikh Khalifa Bin Salman in this important sector in making Bahrain one of the advanced states in the heavy industries, after it had been importing more than 99% of its industrial needs, and even would reach 100% without exaggeration.

We will now go through the most important heavy industries that flourished in Bahrain recently, in addition to a brief overview of the old industries that were in Bahrain.

We will shed light on the prosperity and the remarkable steps that this sector has achieved since early 1960s when His Highness Sheikh Khalifa Bin Salman Al Khalifa assumed the executive power of the Kingdom of Bahrain.

An Overview of the Old Industries in Bahrain

The State of Bahrain has been famous for many old local and manual industries, which were prevailing in the past and which had disappeared from our lives today except for a very little, which has remained so far as a reminder of the past record of those industries. One of the most important industries was shipbuilding that Bahrain knew since ancient times; it is enough to note here that in 1903 / 1904 Bahrain built more than one hundred and thirty vessels of various types, sizes and shapes, a large number of which was sold outside Bahrain for an estimated value of 300 to 500 rupees for each vessel. No doubt, this figure can make us realize the extent of this profession before and at the beginning of the twentieth century, but it started to diminish day after day. On the other hand, Bahrain was also famous for the oldest textile, the sails, which was also exporting large quantities to Saudi Arabia, Basra and other neighboring regions. There were also local industries, "the kettles" which is the kettle used for the Arabian coffee;" this handcraft that once flourished on the old Arabian Majalis but has also disappeared with time.

Swords and daggers were some of the old industries in Bahrain , which also disappeared with time, because the manufacturers in this area got old and weak, and the demand for these industries was decreasing. Moreover, "pots" industry is one of the local industries that used to be manufactured in Ani village in addition to lime in the same village continued to exist. Another old handicraft in Bahrain is also basketry with its various forms, which is made of palm products.

The First Heavy Industries

Despite the Iranian allegations in Bahrain at that period and its negative impact on foreign investors at that stage.

Government Development Office, headed by Sheikh Khalifa, has managed to achieve great success in the revitalization of the economic situation in the country and breaking the imaginary barrier imposed by Iran 's allegation.

The announcement of the establishment of " Bahrain Aluminum Company – ALBA" project at an initial value of 20 million pounds Sterling came to mark a national, significant success for the Governmental Office for Development, which was founded in 1967 in order to achieve industrial and economic progress in the country. The previous agreement for the establishment of the aluminum smelter project was concluded on the 5th of June 1967. However, the outbreak of war between Israel and the Arabs on that day had created new situations in the Middle East in general and also brought further developments, such as the devaluation of the pound Sterling and Britain’s decision to cancel the defense treaties with the Gulf countries, which made the commencement of the implementation of the project a source of doubt.

In the midst of these circumstances, a suggestion was made that Bahrain should contribute in the financing of the aluminum smelter project in order to strengthen and accomplish it quickly. Sheikh Khalifa Bin Salman announced the consent of the government of Bahrain to this proposal. Thus it became a direct partner in the project and possessed the largest share therein. This came as a confirmation of its confidence in Bahrain’s economic future and has also had a positive impact on many parties who were concerned with exploring the future of the economy in Bahrain.

Upon the formation of Bahrain Aluminum Company "ALBA" were the founders: "the British Metals Company-25%", "Aktibo Legt Eleccrio Copar – 25%", "the Western Metal Company- 50.12%" "Aurora-10%" and "the government of Bahrain-5.27%". The representative of the government of Bahrain in the Board of Directors was Mr. Mahmoud Ahmed Al Alawi, the Director of Finance and Mr. Yusuf Ahmed Al Sherawi, the Office Manager of Oil Affairs. His Highness Shaikh Isa Bin Salman Al Khalifa, the Ruler of the country, has expressed Bahrain welcoming of the establishment of the company, and he said, "We welcome in particular our friends the shareholders in the project, who share our belief in the future of the Gulf. We sincerely hope that the future will show other exciting developments like ALBA in the Gulf. "

His Highness Sheikh Khalifa Bin Salman Al Khalifa, Chairman of the Board of Directors, Director of Finance and the person responsible for the interests of the government of Bahrain in the project welcomed the collaboration with Britain and Sweden in this respect.

After three days of the announcement of the establishment of Bahrain Aluminum Company, competent managers began to arrive in the country to start the implementation of this project: Mr. "Nick Ketring," Chairman of the Board of Directors and Mr. "Bruno" Chairman of the British Smelting Construction Ltd. in addition to a team of experts and technicians, and upon their arrival they immediately started preparation of the arrangements for the establishment. At 4:00 pm of Monday the 6th of October 1968, Sheikh Isa Bin Salman Al Khalifa, the Ruler of the country, in presence of His Highness Sheikh Khalifa and a large number of guests, has laid the cornerstone of the first heavy industry not only in Bahrain but in the entire Gulf region. On the celebration day, the chairman of the Board of Directors of Bahrain Aluminum Company announced new extensions to the project with an additional cost of ten million pounds Sterling.

After a careful and a persistent follow-up by His Highness Sheikh Khalifa Bin Salman of the developments of the progress of work of construction and operational processes of the project, came the moment that everybody waited for, at 11:30 am on Tuesday, the 11th of May 1971.

His Highness Sheikh Isa Bin Salman Al Khalifa, the Emir of the country, sponsored the pouring of the first aluminum alloy produced by Bahrain Aluminum Company. The words of His Highness the Emir at the celebration of this historic occasion expressed the joy that pervaded everyone; he said: "before one third of a century, and only a short distance from this place, the late Sheikh Hamad inaugurated the oil refinery. That event marked the beginning of an era of modern manufacturing, which contributed to building our national economy, and we are pleased to meet today to witness an important event and a great achievement, which is the first of its kind in the Arab world, and we consider it a source of pride and the pride of our children in this part of the world. "

The Beginning of the Aluminum Industry in the Kingdom of Bahrain

One of the key elements in the process of the aluminum smelter is energy, where the percentage of the cost of this component is estimated at 20% of the total cost, followed by raw materials, labor and equipments….etc.

Because of the availability of natural gas and in May 1968, a group of foreign investors has chosen Bahrain it as a site for the construction of a smelter to secure its needs of aluminum. Thus, Bahrain Aluminum Company "ALBA" was founded in the month of August 1968.

In January 1969, a contract had been signed for building the smelter, and the late Sheikh Isa Bin Salman Al-Khalifa, then Ruler of Bahrain, poured the first aluminum alloy for ALBA in May 1971 with an annual productive capacity of 120 thousand tons. Production doubled over the past years until it reached today 510 thousand metric tons annually, which makes Bahrain Aluminum factory one of the largest smelters in the world.

ALBA produces "molten" aluminum liquid with purity of 99.7% as well as rolling and cast molds and standard alloys for the local industries and wheel alloys; the remaining production is being exported to other markets.

An Overview of Major Aluminum Companies

In order to optimize the use of Bahrain smelter products, many transformation factories have been established, relying mainly on ALBA products as a major feedstock for its industry. In 1972 Bahrain International Metal Spray was established for the production of aluminum powder and pellets that are used in the manufacture of dyes, auto spare parts and iron industry, with a current productive capacity of seven thousand tons.

Bahrain Development Bank contributes by 51% of the company’s capital and the German company Eckart Werke also contributes by 49%, and the factory's products are being marketed in international markets.

This factory was followed by the establishment of Bahrain Aluminum "BALCCO" in 1977 with a productive capacity of six thousand tons that was increased to 21 thousand tons distributed according to the production units "aluminum section, metal coating, smelting and fabrication."

As a result of the establishment of this company, many businessmen in Bahrain tended to establish small and medium-size factories for aluminum manufacture and fabrication for producing doors, windows, kitchens and the various formations of aluminum sections produced by "BALCCO." The 20% of the company's products are marketed in the local market, and the rest of 80% is exported to other Gulf and world markets.

A Bahraini Saudi company was established in 1977 Medal named Cables Co. Limited with a 50% shareholding for each party. This company manufactures aluminum cables and electrical connections with an annual productive currently stands at 60 thousand tons. The company's products are marketed in the Middle East, Far East and European markets.

In 1986 the production started in the first rolling factory in the Gulf region: the Gulf Company for Rolling Aluminum "GARMCO."

This company is a Gulf joint-stock company in which the share of the Kingdom of Bahrain is 38%. The company produces rolled products and metal chips and bars, aluminum circuits and other materials. The company's production increased from 60 thousand tons per year to 125 thousand tons at the present time, following the completion of the enlargement process. The products are marketed in the countries of the Gulf Cooperation Council States , the Middle East, the Far East and Europe .

In 1993, production started in the Aluminum Wheels Company (ALOWEEL) specializing in the manufacture of the cars' wheels semi-finished and wheels alloy.

Investors from Bahrain entered into partnership with, a foreign factory by 51% and the foreign investment was 49% . The current productive capacity of the factory is 700 thousand wheels and 12 thousand tons of wheels alloy. The product is marketed to the suppliers of auto factories in Europe such as BMW and other companies, as well as the Far East markets.

Bahrain Metal Alloys Company "BAMCO" was established in 1996 for the production of aluminum alloys of different ratios of silicon for purpose of using in cast products, including auto spare parts … etc. Many Bahraini and foreign investors are shareholders in this factory, and the productive capacity of 12 thousand tons per annum is being marketed in Europe, the Far East and Asia .

Volume of Investment in the Aluminum Industry

The total volume of investment in this industry is almost 2.4 billion dollars. In this context, the cost of the fourth smelting line for ALBA reached 1.45 billion dollars, while the amount of $ 136 millions was invested to expand the third smelting line and 170 million dollars to modernize the cells.

The environment had a large share of the volume of investment; ALBA spent more than $ 300 million in the area of environmental systems; the rolling expansion costs increased from 60 thousand tons to 120 thousand tons of chips and the chips project reached 68 million dollars.

The cast company increased its investment in expansion by adding two presses, re-smelt unit and a painting line for 25 million dollars, while an amount of $10 million was invested to establish an aluminum wheels company, and about $10 million dollars were spent in the expansion and improvements for Medal Cables Company.

Role of the Aluminum Industry in the National Economy

The aluminum industry sector is considered of the most important and strategic sectors in the national economy of the Kingdom of Bahrain. This industry helps to diversify the sources of income and provide job opportunities for citizens. The total export of aluminum for various products was 468.426 tons with a value of approximately 776 million dollars for the year 2002.

In terms of the value added; it amounted to $ 335 million dollars in 2001 at 4% of the gross domestic product. The importance of this industry also arises from the fact that many companies and workshops depend on the existence of such industry to provide various services.

Employment in the Aluminum Industry

Statistics indicate that total employment exceeded five thousand workers, the major portion of it prevail at Bahrain Aluminum Factory "ALBA"; drilling and cast the percentage of Bahraini participation in the smelter is 87%, and the overall percentage of Bahraini participation in this sector is estimated at 65%.

Engineering Industries Sector

Tracking the growth of transformation industries in developed countries proves the fact that engineering industries are at the forefront of the emerging industries. It is not an exaggeration to say that if the level of industrial growth reflects the level of economic growth, then it is by no doubt that the degree of growth in the engineering industries is considered as an indicator of the degree of industrial growth.

Therefore, the Kingdom of Bahrain is paying considerable attention to the engineering industries sector because of its importance as a primary industry and a key to other industries.

Thus, a huge factory was established in October 1985 for the production of large iron pellets "iron oxide pellets" and with a design capacity of three million tons annually, and it is the only factory in the Gulf Cooperation Council States. Nowadays the productive capacity is 4.5 million tons annually after the expansion and modernization process of the factory. It is also hoped that the Gulf Arab Brazilian consortium, which bought the factory from its owner the Kuwaiti company, set up on a major new project for the production of sponge iron "HBI" with a capital of more than 400 million dollars.

Besides, the Arab Shipbuilding and Repair Company "ASRI", which was founded in November 1974 with a capital of 340 million dollars to receive giant ships with gross weight of no less than 500 thousand tons, and carry out building, repair and maintenance of supertankers. The large expansion was operated and enabled ASRI to accommodate the small and medium-size ships that berth for maintenance; these represent about 70% of the total vessels coming to anchor at the Company's docks.

This is in addition to other outstanding engineering projects like the SHU-NAS project for the design and production of prefabricated pipeline systems. The company was founded in March 1994 with a capital of 2.8 million Bahraini dinars and with a design capacity of 17 thousand tons annually.

These projects come side by side with the growth in the number of small and medium-size enterprises that are concentrated in wrought iron projects, in addition to air conditioning units industry, which is considered one of the distinguished industries in Bahrain. There are also other engineering projects like nails, screwdrivers, refrigerators and kitchen and hospitals equipments and other materials that are increasing day after day.

Food and Pharmaceutical Industry

Food industry sector is considered an important industrial sector in the Kingdom of Bahrain . As we know, the scientific concept of food industries is represented in the transformation processes such as drying, cooling, freezing and biological and chemical processing and packaging of agricultural, animal and water products to transform them into semi or finished products.

This sector includes about 112 factories engaged in different food production activities. The total capital invested in this sector is approximately 32.5 million Bahraini dinars, while the number of workers in this sector is approximately 2.582 workers including 45% Bahrainis.

During 2002 different food factories were licensed in the field of desserts, pickles, sea products and juices. However, The general concept of the pharmaceutical industries and medical supplies is represented in carrying out transformation processes of chemicals, medical herbs, plastic materials and other minerals to transform them into or semi-processed or finished products.

This sector is divided into two sections: medical supplies industry and chemical and herbs industry. There are two factories for the medical supplies, one factory for the manufacture of chemically compound medicines, and about 29 factories for the manufacture of national medicines such as vaccines, Al Marqad, Alzmoth, mint, and other herbs familiar in the Kingdom of Bahrain. The capital invested in this sector is about three million dinars, and the number of employees are approximately 245 workers including 68% Bahrainis.

Petrochemical and Plastics Sector

Petrochemical industry came on top of the priorities of the industrial development in Bahrain , and it still receives a lot of care and support from the Kingdom of Bahrain and its concerned agencies in order to develop this industry. In the light of this, Gulf Petrochemical Industry Company was established in 1979 for the production of ammonia and methanol at a cost of 159 million dollars. The company began actual production in 1985 with a productive capacity of 1000 metric tons per day. In 1987 the productive capacity was raised to 1200 metric tons per day of the two substances after completing all expansions.

I n 1998 the company performed a third expansion through the establishment of a urea production unit for the cost 136 million dollars and a production capacity of 1700 metric tons per day, which in turn will contribute to the establishment of new industries in the Kingdom.

One of the other projects, which depends on petroleum products, is the calcined Coke production project, as part of the expansion plan of Bahrain Aluminum Company "ALBA". This project depends on the use of verd coal and oil and started in January 2002 at a cost of 400 million dollars with a productive capacity of 450 thousand tons annually. It also includes other various projects, including water desalination plant and a terminal to receive large tonnage vessels. As for the transformation industries that depend on the basic petrochemical products as raw materials, the most important of which is the chemical materials, detergents, paints and medical and industrial gases industry, plastic materials, sponges, and industrial materials, fiberglass and insulation and other products; all these account for the lion's share of this industrial sector. Moreover, the private sector was interested in these industries due to the small amount of capital invested in it and that fact the it does not need high technology in manufacturing.

Small and Medium-Size Industries

The strategic dimensions created by the small and medium-size industries sector can be perceived through its direct contribution to exports, volume of investment, employment and number of establishments. The Bahraini exports of small and medium-size industries accounts for 8% of total exports of the Kingdom of Bahrain and created 21% of the total employment in the industrial sector, which amounted to about 22.000 employees. The investment volume is estimated at 10% of the total investment volume. The ratio of small and medium industrial enterprises was 76% on the basis of the employment number compared to the total number of 400 factories.

It was also found that the engineering, metallurgical, chemical and food industries accounted for about 70% of the total number of small and medium-size industries in the Kingdom. It is noted that the industry affairs had allocated an integrated unit for this industrial sector for the development and support of the existing small and medium-size industries, as well as for directing new businessmen towards investment and providing them with necessary expertise.

Readymade garment industry sector
These industries started in the Kingdom of Bahrain since 12 years to take advantage of the availability of export quotas to the American market, especially after exploiting these quotas in both India and Pakistan. The number of garment factories was 23 and there are four factories operating in the field of textiles. This industry is oriented to export to the United States and some of the products go to Europe and Canada.

The Governmental support includes customs exemption for equipment and raw materials. Also allocation of quotas to factories is considered a sort of governmental subsidy. The Ministry has also contributed to the establishment of a garment-training center at Bahrain Training Institute. Moreover, the readymade garment agreement is valid until the end of 2004 between the Bahraini and American governments.

Quotas are distributed at the beginning of the year to the factories, and the situation is re-assessed after six months according to the following principles: the productive capacity of the factory, the proportion of Bahraini imposed employees is and increases by 20%, 5% each year, although this percentage reached 40% in some factories and 35% in others, and the factory performance. The Ministry, after the approval of the Ministry of Finance and National Economy, for canceling the readymade garments export fees as of the year 2002, the Ministry is endeavoring, in cooperation with factories and the readymade garment committee at the chamber, to create new markets by conducting studies, adding new products with a high value added, and encouraging merger among small factories.

Bahrain Center for the Development of Emerging Industries
The concept of business incubators is considered a coordinated a plan to provide and develop technical and service assistance, for industrial service projects through programs designed to accelerate the projects and the emerging institutions through integrated inputs of activities and the confiscation of subsidy and services which have been developed, or devised by the business incubators. The idea of the business incubators dates back to the 1960s of the last century. These incubators have great importance to the economies of some countries like Bahrain, where infrastructure and the economic strategy are aimed at developing small and medium size industries.

The main task of the Center for the Development of Emerging Industries is concentrated on promoting and strengthening industrial progress and providing new job opportunities in the Kingdom of Bahrain.
The future vision of Bahrain Center for the Development of Emerging Industries:

This center aims at developing and supporting the growth of industrial projects and small and medium-size projects through a specialized work team that comprises elite of experts and local and international bodies, which will enhance the success of the existing projects and ensure continuity and the financial autonomy of these existing projects. As such, this will promote the growth of the Bahraini economy and subsequently strengthen the status of the Kingdom of Bahrain as an industrial power among the countries of the region.

Objectives: The main objective of the Center for the Development of Emerging Industries concentrates on achieving economic development and the creation of new opportunities in the Kingdom of Bahrain through:

Setting up of new projects.

Improving work performance in the small and medium-size projects.

Raising the spirit of innovation.

Encouraging industrial projects.

Creating a solid relationship between industrial enterprises and small projects.

Helping the new projects to grow more rapidly and thus creating more job opportunities.

The facilities and services offered by the Bahrain Center for Emerging Industries:

In view of the distinguished relations with many relevant local and international bodies, the Bahrain Center for Emerging Industries offers a range of comprehensive services and benefits for workers in the business sector.

The Bahrain Center for the Development of Emerging Industries began its activity in the mid-2003 through a qualified team, and the Center succeeded within a short period time to establish its position in the economic field as an important institution for the support and development of small and medium-size projects. It has also contributed to the establishment of about 14 small and medium scale projects concerned with various industrial and service activities that include highly technical projects executed in the Kingdom of Bahrain and the region for the first time. The operation of these projects realizes investments worth 725.000 Bahraini dinars and provides job opportunities for more than 70 Bahrainis. The Bahrain Center for Emerging Industries aims at enhancing its role and making the best use of its services by the end of 2003.