Supply chain risks have led more contractors to form strategic partnerships.

With rising steel demand for major Middle East infrastructure projects, contracting giant Bechtel says it has formed a joint venture with Austria-based fabricator and contractor Unger Steel Group, a strategy the U.S. firm says will help it mitigate supply chain risk in a high-demand materials market.

The partnership, announced May 1, is called Unger Steel Fabrication FZE (Free Zone Establishment) and includes Unger’s steel fabrication facility in the Hamriyah Free Trade Zone of Sharjah, United Arab Emirates.

The companies did not disclose the size of Bechtel's share. Unger, which set up a steel fabrication unit in Sharjah in 2007, is the main supplier of fabricated steel for some of the contractor's international projects, it said in its announcement.

A recent surge in metal work needed to support Middle East infrastructure and industrial projects portends a "shift from oil dependency to manufacturing" that "is reshaping the Middle East economy," according to a November report by India-based Ken Research. 

Much of the surge is in structural steel fabrication, the report states.

Tarek Amine, Bechtel chief supply chain officer, says in a statement that the venture will help the firm secure "ability to provide a supply of high-quality steel on time to Bechtel projects across the globe.”

Similar to Bechtel, Unger Steel Group is a privately held company that started as a family business. Based in Oberwart, Austria, it offers steel fabrication, general contracting and real estate development services. In addition to operations in Austria and Germany, the company also has offices or work in Houston and in Bucharest, Romania.

Bechtel, which has worked in the Middle East for many decades, is currently involved in managing construction of Lines 1 and 2 of the Riyadh Metro rail megaproject in Saudi Arabia. It also is helping the nation's government agencies establish "Mashroat," which the firm describes as a national project management office "to deliver complex infrastructure projects."

Supply Chain Issues

Supply chain and material inflation issues have abated since the height of the pandemic but have not disappeared from U.S. construction projects, contractors report as they seek to manage the risk in different ways. 

Keller Group, the U.K.-based drilling and foundation contractor recently attributed its winning bid for a U.S. construction project partly to its ability to lock up in advance much of the future concrete supply needed.

Another contractor, Samet Corp., says it has established strategic partnerships with suppliers and subcontractors partly to secure materials and equipment in advance and to minimize delays.

The partnerships will help minimize disruptions in delivery of materials and equipment early in the preconstruction phase, according to Rick Davenport, Samet president and chief operating officer.