US firms invest billions as Saudi appeal grows

DoubleTree by Hilton

American businessmen first travelled to Saudi Arabia back in the 1930s to help develop the kingdom’s natural resources.

Fast forward 90 years and, with record foreign investment licences issued in Saudi Arabia in the first quarter of 2022 and the country’s gross domestic product (GDP) growing at its fastest rate in a decade, it’s little wonder that US-based companies want a piece of the action.

Over 300 joint ventures have been set up across a range of sectors, making US companies the largest group of foreign investors in the kingdom. They have also created around 70,000 jobs.

• Package: Biden in the Middle East

The likes of electric vehicle pioneer Lucid Group, hotel major Hilton and logistics giant Fedex have all announced big plans in the kingdom over the past few months.

Earlier this week Tyson Foods became the latest, revealing a “substantial” investment with Saudi-based Tanmiah Food Company to expand processing capacities of its subsidiary, Supreme Foods Processing Company.

Tyson Foods is one of the world’s leading food companies while Tanmiah is one of the biggest providers of fresh poultry and other meat products, with plans to produce more than one million birds per day by the end of 2025. 

Zulfiqar Hamadani, CEO of Tanmiah, said the transaction will “enable us to expand our global footprint”, while Chris Langholz, president of international business for Tyson Foods, remarked: “This investment will enable us to access poultry supplies in Saudi Arabia to meet the growing demand for protein in the Middle East and other markets.” 

For Lucid, which plans to build an electric vehicle (EV) production hub in Saudi Arabia, creating 4,500 jobs, the kingdom offers big opportunities.

With an annual capacity to build 155,000 EVs, agreements in place are estimated to provide financing and incentives to Lucid of up to $3.4 billion over the next 15 years.

Faisal Sultan, managing director, Middle East, for Lucid, told AGBI: “Lucid reviewed multiple opportunities before selecting King Abdullah Economic City in Saudi Arabia as the optimal location for the second of its global network of electric vehicle manufacturing facilities.

“Our first international manufacturing plant is a key milestone in our journey towards growing our brand and building a global presence.

“Establishing our presence here comes at a time where Saudi Arabia is opening a new chapter in its journey, a country which has long been known for its thriving oil industry, as it cements its commitment towards sustainable mobility and clean energy for cars – a key mission for Lucid – as part of Saudi Vision 2030.”

Saudi Arabia constitutes the second biggest market, in terms of pre-orders, outside of the United States.

Sultan said: “We expect to start delivering vehicles to customers in the kingdom first half of 2023, with approximately 5,000 orders annually, and increasing to 10,000+ starting in 2025.”

He added that Lucid is also examining other markets in the region, such as the UAE, where “we see promising EV adoption figures among consumers”.

Lucid

But Tyson and Lucid are by no means alone in building their presence in the kingdom.

FedEx Express, a subsidiary of Memphis-based FedEx Corp and the world’s largest express transportation company, is investing more than $400 million into the Saudi economy over the next 10 years through talent management and local operations and infrastructure. 

Taarek Hinedi, vice president of FedEx Express Middle East and Africa, said: “Thanks to the country’s diversification into non-oil exports, increasing foreign investment, and improvements in international competitiveness, Saudi Arabia is a growing economic powerhouse, and we’ve seen a tremendous change in the way businesses operate within the kingdom.

“The kingdom continues to improve its trade relations with some of the world’s largest economies like the US, which is Saudi’s second largest trading partner, and through other agreements such as the Belt and Road Initiative to further enhance commerce between countries like China and the rest of the world. 

“We are seeing the growing potential and opportunities that Saudi Arabia holds for the supply chain and logistics industry, and for the possibilities and avenues that are opening for all businesses including small and medium enterprises (SMEs), which is an area of key focus for us.”

Hilton Hotels and Resorts is another famous US brand which has recognised the importance of Saudi Arabia as a market for expansion.

Kamel Ajami, vice president of operations, Saudi Arabia, Egypt and Levant, Hilton, said: “Saudi Arabia represents a significant opportunity for Hilton to grow its portfolio as we expand our presence to more than 75 hotels in the coming years.

“Saudi has plenty to offer international visitors – and the recently introduced tourist visa scheme has made it easier than ever for people to experience its rich tourism offerings.”

Hilton has been operating in the kingdom since the debut of Makkah Hilton in 1995. Earlier in 2022, DoubleTree by Hilton Riyadh Financial District opened, bringing the number of operating properties to 16 under five brands. 

With the world’s largest hotel pipeline, Saudi Arabia is expecting a 67.1 percent increase in room supply over the next three years, according to a report from analysts STR. 

“At Hilton, the kingdom features our largest development pipeline in the Middle East as we look to expand on a number of our existing brands as well as introduce new brands that will offer different styles of hospitality to the market,” added Ajami.

By 2030, the hospitality giant expects to hire more than 10,000 people in Saudi Arabia with about half being locals.

Saudi Arabia has set itself lofty tourism targets as part of the country’s Vision 2030, including attracting 100 million international and domestic visits by the start of the next decade, boosting tourism’s contribution to GDP to 10 percent, and creating one million new jobs in the sector.

Parsons Corporation, which has its HQ in Virginia, is another making a big move in Saudi Arabia and has recently been picked to deliver a key element of the $500 billion Neom City.

It will provide project management support in building OXAGON – a reimagined industrial city along the coast of the Red Sea in northwest Saudi Arabia.

Martin Boson, general manager of Parsons in Saudi Arabia, said: “Saudi Arabia’s leadership is driving the future vision for NEOM, and we are honoured to support them in building the pioneering cognitive city of OXAGON, which will become home for some of the most forward thinking and visionary companies in the kingdom.

“Parsons’ long legacy of designing, building and delivering large infrastructure projects, especially in Saudi Arabia, underpins our partnership with NEOM on this visionary endeavour.” 

Under the agreement signed earlier this year, Parsons will deliver OXAGON, with the aim to have the city’s logistics solutions facilities in place by 2025.

Last month, Chicago-based Skidmore, Owings & Merrill (SOM) also won a design contract for an oceanarium and coral farm as part of the Jeddah Central Project. 

One of the world’s leading architecture firms, SOM brings over 85 years of experience to the new venture by Jeddah Central Development Company (JCDC), a Public Investment Fund (PIF) entity.