Diversification of the economy away from dependence on oil has led to rapid industrial development. First class facilities, low labor and energy costs, favorable tax laws and political stability have also contributed to the growth of manufacturing.. Major products include cement, building materials, aluminum, fertilisers, foodstuffs, garments, furniture, plastics, fiberglass and processed metals. The largest number of factories, mainly for light industry, is in Sharjah, followed by Dubai, Abu Dhabi and Ras Al Khaimah. Smaller units include numerous garment factories in Ajman. Cement production is one of the oldest industries, with Ras Al Khaimah being a major producer. Fertilizers are produced by Ruwais Fertilizer Industries, FERTIL, in Abu Dhabi and in the Jebel Ali Free Zone. The Ras al-Khaimah-based Gulf Pharmaceutical Company (Julphar) exports throughout the region. Projects established under the innovative UAE Offsets Programme, linked to purchases of military equipment, include a shipyard, agri-business projects and manufacture of air-conditioning units.

The discovery of oil ushered the UAE into the industrial age. This process of industrialization gathered momentum following the formation of the Federation. During the last two decades, with the Government’s increasing emphasis on diversification and basic components such as capital and energy readily available, the manufacturing sector has made significant progress in the UAE. Free zones have played an instrumental role in attracting manufacturing industries (see section on Business Environment) and today, hundreds of factories covering a wide range of manufacturing are distributed throughout the country. Cement, building materials, aluminum, chemical fertilizers and foodstuffs industries top the list, followed by garments, furniture, paper and carton, plastics, fiber glass and processed metals.

Cement Industry

The cement industry is one of the oldest manufacturing industries in the UAE. The first factory established was the Al Ittihad Cement Company of Ras a l-Khaimah. This was followed by the construction of several other factories in Al Ain, Sharjah, Dubai, Fujairah, Ajman and Umm al-Qaiwain. The total number of cement factories throughout the country had reached nine by the end of 1998. Eight of these produce Portland cement, and one factory in Ras al-Khaimah manufactures white cement. The total capacity of the eight Portland cement factories is estimated at 9 million tones. These factories employ 2,999 workers, representing a total investment of approximately Dh 1.8 billion. Ras al-Khaimah Company for White Cement and Construction Materials is expanding its production capacity to 450,000 tones per year.

Chemical Fertilizers Industry

Chemical fertilizer production began in the UAE with the establishment by the Abu Dhabi National Oil Company (ADNOC) of Ruwais Fertilizer Industries (FERTIL) which has a capacity of 1,050 metric tones of ammonia and 1,500 metric tones of urea per day. The complex, situated in the industrial zone at Ruwais in western Abu Dhabi, also comprises an integrated production unit, storage, packing and cargo units. Abu Dhabi Fertilizer Industries’ Dh 5 million chemical fertilizer plant was set up as a joint venture between the UAE-based International Technical Trading Company (I TTC, with a 64 per cent stake) and SQM of Chile (36 per cent). Annual production is 40,000 tones of fertilizer, mainly water soluble and granular compound products. The company, which has an annual capacity of 200,000 tones, also produces liquid and suspension fertilizers. Other fertilizer manufacturing projects are located in Jebel Ali Free Zone.

Pharmaceutical Industry

The UAE-based pharmaceutical industry is emerging as a major force in the local, Gulf and the Arab markets. Despite intense international competition many local companies are successfully marketing their products even in the highly competitive European arena. Local pharmacy companies such as the Ras al-Khaimah-based Gulf Pharmaceutical Company (Julphar) and the Jebel Ali-based Gulf Inject Company are at the fore front of the industry.

Julphar

With a capital of Dh 165 million and 855 workers, Gulf Pharmaceutical Company (Julphar), which has a production capacity of 1 billion units annually, manufactures 275 varieties of medicine, only 7 per cent of which are consumed locally. The rest is exported to 30 countries. The company’s new factory, Julphar 2 produces antibiotics and has five factories, three of which are in Ras al-Khaimah, one in Ecuador and one in Germany.

Gulf Inject

Specializing in the production of intravenous solutions, Gulf Inject has become a major regional player in this segment of the Middle East's pharmaceuticals industry. With a capital base of Dh 55.05 million (US $15 million), Gulf Inject was set up by a group of local and Gulf businessmen. High quality production standards are helping the company to market its products effectively in international markets. In the past three years it has produced and exported over 10 million bottles of solution to around 26 Arab, African, Asian, CIS and East European countries. Following a growing demand from the international market the company has raised its output in recent years.

Dubai Aluminum Company

Aluminium is the UAE's main non-oil heavy industry. The Dubai Aluminium Company (DUBAL) plant, at Jebel Ali, established in 1975, is one of the biggest stand alone smelting complexes outside the former USSR, with a hot metal capacity of around 530,000 tons a year. Imported alumina is used as raw material. UAE citizens occupy 45 per cent of the senior management posts. DUBAL, owned by the Dubai Government, provides 12 per cent of Dubai's Gross Domestic Product and 50 per cent of non-oil related revenues. The company is considering investment in another smelter in Oman.

Household Glass Equipment Industry

This new industry commenced in 1995 with the establishment in Jebel Ali Zone of Al Tajer Glass Factory, which is entirely financed by local investors, followed by two other factories in Dubai and Ras al-Khaimah. The Jebel Ali glass factory in the Jebel Ali Free Zone, a Gulf joint venture and one of the biggest projects, started production in 1997. Al Manal glass factory in Ras al-Khaimah commenced production in 1999 as a joint venture with 96 per cent of the capital being supplied by local investors. The capacity of the three factories is estimated at 900 million units, with investment of Dh 370 million and employing 425 workers.

Dubai Cable Company

Dubai Cable Company’s (DUCAB) has installed the most up-to-date computer-controlled extrusion line in the world in order to manufacture high-voltage cables. This allows them to move into the range of higher voltage cables to support and supply the utilities sector not only in the UAE but throughout the AGCC. DUCAB has also increased capacity for its low-voltage cables of up to 3.3kV and medium-voltage cables of up to 33kV. The new facility will increase DUCAB’s production capacity by 130 per cent from 20,000 tones. DUCAB is a joint venture between the Dubai and Abu Dhabi Governments (35 per cent each), and the UK-based BICC (30 per cent).

Abu Dhabi Flour and Fodder Mill

Production capacity is 400 tones of flour per day. Animal and poultry fodder production reached 20 tones per hour, while silo storage capacity is 60,000 tones of grain. The expansio of the plant involved a new mill with a capacity of 400 tones per day and construction of additional silos with a capacity of 90,000 tones, together with installation of new equipment for discharging grain at a capacity of 800 tones per hour. Studies are also under way to raise capacity of the fodder mill to meet increasing demand.

Reinforced Steel Factory

Work has begun on the construction of are inforced steel factory with a capacity of 500,000 tones of 10–32 mm diameter steel per annum at Mussafah Industrial Area. The factory is currently dependent on importing and processing of raw material. Expansion plans include the construction of a 205,000 tones per year smelter, a 351 megawatt power station and a desalination plant with a capacity of 2,000 cubic meters of fresh water per day. Gas will be supplied to the project through a newly constructed pipeline.

Firefighting Equipment

In April 1999 the UAE Offsets Group announced the formation of UTS - Burnstop LLC, a new venture between the local group United Technical Services (51 per cent), Burnstop Ltd from Finland (40 per cent) and Dassault Investments, a sister company of Dassault Aviation (9 per cent). The new company will be capitalized at Dh 5 million. UTS - Burnst op LLC, which will manufacture firefighting and prevention equipment will have its offices in Abu Dhabi and its manufacturing facility in Mussafah Industrial Zone. This venture will release the UAE fire - related industries from their current dependence on imported alternatives, as the establishment of the manufacturing facilities will be the first of its kind within the UAE. The unit will also export to the Middle East, Europe and Asia.

Cooling Plant

A Dh 45 million cooling plant room installed by National Central Cooling Company (TABREED) commenced operations in May 1999 at Zayed Military City in Sweihan. The energy efficient system comprises gas-driven chillers producing 3,000 tones of chilled water which is supplied to a number of buildings within a radius of 1.5 kilometers. Tabreed, another offset project, is also examining several similar projects in Sharjah, Al Ain and Ras al-Khaimah and is working on two major projects in Dubai. Working on an economy-of-scale basis, Ta b reed plans to build cooling systems with a capacity between 75,000 and 100,000 tones.

Magnesium Alloy Plant

Construction of a Dh 734 million magnesium alloy plant is planned for Sharjah's Hamriyyah Free Zone. The magnesium smelter project is being promoted by the Sahari Group of Abu Dhabi and Normans of Albania, both of which hold a 50 per cent stake in the project. The plant will have an initial capacity to produce 20,000 tones per year of magnesium products, to be increased to 60,000 tones upon completion. The market demand for magnesium is estimated to be increasing at a rate of 15 per cent a year. Raw material (magnesium) will come from mines in Albania which are estimated to have reserves of over 400 million tones. Magnesium products made at the Sharjah plant will be sold to buyers in Japan, the US and Europe.

Edible Oil Plant

Dubai Investments PJSC announced a US $50 million edible oil project in the Jebel Ali Free Trade Zone in partnership with the Swiss-based CAM Group. The seed-crushing plant for the production of edible oil and meals is the largest facility of its kind in the Middle East and is expected to go on stream at the end of the year 2000. Edible Oil (Dubai) LLC–Dubai Investments holds a 70 per cent equity stake with the remaining 30 per cent being held by the CAM Group, a world leader in the supply of agro - industrial processing lines. The crushing plant will have an initial capacity of 300,000 tones which could be expanded to 450,000 tones. With this new project, the total investment in some 19 projects initiated by Dubai Investment Company, which was established in 1996, has exceeded Dh 6 billion. Other projects at the planning stage include a Dh 370 million unit for manufacturing of aluminum sheets and a Dh 100 million unit for the manufacture of wood panels. The company will also take over four operating projects in the UAE.

Fructose Syrup

A Jebel Ali-based company has introduced new technology to produce fructose syrup – a key sweetening ingredient for food and beverage manufacturing industries – from dates. Concept Food Industries (CFI) FZE claims that it is the first company in the world to use this technology which also delivers a high protein animal feed as a by-product. The production of sweetener at Concept's facility in Jebel Ali Free Zone is expected to reduce reliance on imports and the product is also being marketed in the Middle East and worldwide. The facility has the capacity to extract high fructose syrup from dates at the rate of 35,000 tones a year. The new facility is expected to boost government sponsored efforts to improve palm date cultivation within the UAE.

Steel Wire And Rod Plant

The Abu Dhabi-based private company Abu Dhabi National Industrial Projects (ADNIP) is setting up a Dh 170 million plant to manufacture steel wire and rod with German collaboration. The project will be implemented in two phases. In the first phase 80,000 tones of steel wire, rod and reinforced mesh will be produced. These products will be used by 12 other industries to be set up in due course. ADNIP, established in 1997, has several other projects under construction including a medical equipment project, a carpet factory and a tissue paper plant in Dubai.