Localization of industrial parts to save cost, generate Saudi jobs

Localization of spare parts not only saves cost of 10 to 15% but also saves time which manufacturers take months

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Reverse engineering could solve the problem of most plants in Saudi Arabia who have approximately a third of their spare parts outdated and that are faced with high costs of replacing systems, according to Dr. Hashim Al-Zain, director of engineering at DarTec, a consultancy specialized in reverse engineering that held a workshop here recently.

Most plants in the Kingdom are over 25 years old with aging equipment and lack engineering drawings necessary to draw the spare parts locally.

With reverse engineering, 3-D laser scanning allows to localize spare parts.

Localization of spare parts not only saves cost of 10 to 15% but also saves time which manufacturers take months. It has the potential to generate jobs for Saudis as well.

“Localization by 30% of parts such as pumps, valves, and compressors could add SR1.9 Billion to the GDP and create between 5,700 to 7,250 direct jobs for the next 6-years,” said Al-Zain who recently held a workshop attended by representatives from various ministries, local manufacturers, services providers, and engineering procurement and construction companies.

“Other equipment categories including exports could add up to SR45 billion to the GDP by 2030,” he added.

After receiving the spare part, engineers at Dartech inspect the material followed by 3-D laser scanning and data processing.

The part is then manufactured and inspected to compare to the original model.

“Currently, less than 10% of the local demand for spare parts are manufactured in the Kingdom and the remaining 90% are imported,” said Al-Zain.

Most oil & gas, petrochemical, utility, desalination, mining, and cement plants in the Kingdom were built in the 1970s and 1980s, where around 30% of all spare parts have become out-of-warranty, obsolete, discontinued, or no longer offered by manufacturers.

The Kingdom is expected to spend more than SR1 trillion buying industrial equipment and spare parts by 2030, excluding military, where 75% of large contract value are spent overseas with limited value added to the local economy.

Localizing spare parts has caught the attention of several sectors that have set goals and KPIs to localize by 2030.

Asked about the challenges, Al-Zain cited awarding contracts to reverse engineering companies and lack of visibility toward SMEs in structuring local content due to outdated regulations that require only manufacturing companies to provide spare parts.

“Some of the laws and regulations are an obstacle because they have been since the 1960s where there was no laser scanning technology or engineering consultancies,” he said.

This article was first published by Saudi Gazette on January 3, 2017.

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