While there are fewer SMEs in manufacturing than there are in other sectors, their contribution is significant – and so is their potential. Both these factors have been assessed extensively in Dubai, and to a lesser degree in Abu Dhabi – we’ve rounded up the latest insights and information.

Contribution to economy: In 2013, the sector accounted for 14% of GDP in Dubai, the largest non-oil contribution. (Source: Dubai Chamber of Commerce and Industry). In Abu Dhabi, while it only contributes 5%, half of this is in hi-tech industries. (Source: Abu Dhabi Department of Economic Development)

Proportion of SME market: Given the investment and scale manufacturing can require, plus the fact that the customer base is often specialised or small, manufacturing SMEs are outnumbered by those in other sectors. Nonetheless 8% of Dubai’s SME firms are in manufacturing, a figure that rises to 11% across the UAE as a whole. Overall, 16% of SME employees work in the sector. (Sources: Dubai Statistics Centre; Abu Dhabi Department of Economic Development)

Average company size: 54% of UAE manufacturing SMEs have between 1–10 employees, 20% have 11–25 employees, and the remaining 26% employ over 25 people. (Source: Dubai Statistics Centre)

Increasing contribution: In some countries manufacturing is in decline; in the UAE it’s growing. Between 2006–8, it contributed 12% of Dubai’s GDP, now it’s 14%. In Abu Dhabi, the 2103 contribution was 5.7%. (Sources: Dubai Chamber of Commerce and Industry; Statistics Centre Abu Dhabi)

Biggest sub-sectors: Between 2009–12, two areas of SME manufacturing saw strong growth in terms of the numbers of new firms launched in Dubai. The number of wood and wood product manufacturers rose by 14%, and that of food and beverage manufacturers by 12%. (Source: Dubai Statistics Centre)

R&D and innovation is relatively strong: In Dubai, 29% of manufacturing SMEs have implemented some level of innovation within their business, compared to services (16%) and trading SMEs (4%). (Source: Dubai Department of Economic Development)

Profitability: Manufacturing SMEs in Dubai typically have gross margin ratios in the range of 30–40% of their revenues. Operating and net margins range between 10–20% and 7–18% respectively. The small difference is because manufacturing SMEs often have low interest obligations, due to a low level of debt leverage on their books. (Source: Dunn & Bradstreet)

Cash conversion cycle: Often seen as a major stumbling block for SMEs, this is relatively healthy in manufacturing, especially compared to other sectors such as trading. On average, Dubai manufacturing SMEs have a cycle of between 30–60 days, compared to 40–85 days in trading. (Source: Dubai Department of Economic Development)

Export market: Over half (53%) of manufacturing SMEs earn revenue from exporting their goods outside the UAE. This is higher than the services sector (37%), but lower than the trading sector (68%). (Source: 2013 Dubai SME survey)

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