Charting Dubai World's new course

When Dubai World appointed Jamal bin Thaniah as its first group chief executive, they chose an experienced insider who has shunned the spotlight while helping to write key chapters in Dubai's commercial history. As a 28-year veteran of its ports and maritime business, Mr bin Thaniah presided over Dubai's first merger in 1991, its first overseas expansion in 1999, and its first major leveraged buyout in 2006 with the purchase of the UK's Peninsular and Oriental Steam Navigation Company (P&O).

"He has played pivotal roles but keeps a very low profile," says Mohammed Sharaf, who as chief executive of DP World, the ports operator, reports directly to Mr bin Thaniah. Mr Sharaf calls him the type of manager who will "sit with his team and patiently listen to everyone, and then guide you to make a decision so that you feel the decision is yours". The job ahead for the new chief executive is restructuring Dubai World, a giant holding company with 80 subsidiaries in ports, tourism, mining and real estate.

The stakes have never been higher for Mr bin Thaniah or Dubai World. After years of aggressive expansion supported by a heavy dose of debt, Dubai World has been forced into a dramatic volte-face by the sudden onset of the credit crunch and the ensuing downturn in the global economy. This has hit many aspects of its business, from portfolio investments held by Istithmar World, to property under Nakheel and Limitless, and to the ports business, which has suffered from a drop in global trade flows.

"The crisis has hit the business plan badly," Mr bin Thaniah says. Being a government-owned company, Dubai World does not have to disclose all its debts. Last month, the company revealed that it had consolidated liabilities of US$59 billion (Dh216.53bn), but this includes many obligations such as outstanding bills and land grants which are not direct debt. Asked to discuss his plans to address the debt issue, Mr bin Thaniah declined, with a smile.

"Debt is a common issue within the big conglomerates," he says. A spokeswoman said the company was in a particularly sensitive period, but hoped to "share details soon". Analysts have managed to compile an approximate list. Dubai World, for its part, owes $5.5bn; Nakheel owes $7bn; DP World owes $4.75bn; Dubai Drydocks owes $2.2bn; Jafza, the freezone operator, owes $2bn; and Limitless owes $1.2bn. In many cases, short term debts have been used to support long term infrastructure projects which have been hit by the downturn.

Dubai has responded to the debt crunch by launching a $20bn bond programme, bought by the Central Bank. Nakheel, which has to come up with $4bn in December to pay off an Islamic bond, has already benefited from cash from the Government. But it is becoming increasingly clear that the Government will demand drastic restructuring at companies that hope to benefit from more bailout funds. "This crisis is so severe that you need to restructure yourself, because it is no good to believe that a business assumption pre-October 2008 is fine for after that," Mr bin Thaniah says.

Dubai World has hired AlixPartners, a restructuring consultancy based in Detroit that is advising on the General Motors bankruptcy. Last month, it also announced it was shifting assets and staff from Nakheel, to its portfolio management arm, Istithmar World. Mr bin Thaniah says Dubai World's ports and maritime business has slowed but is still sound. He is eager for Dubai's mortgage businesses to resume lending, namely Tamweel and Amlak, which should stimulate demand for properties again.

He says he aims for "zero politics" within his companies and tries to bring out the best in his employees, including implementing a performance management scheme that involves workers getting retrained in areas of improvement, such as effective presentations and public speaking. "You have to focus on the positive aspects of your employees, and call any inefficiencies 'areas of improvement'." Since the beginning of the year, Mr bin Thaniah has split his time between Dubai World's offices in the Dubai International Financial Centre and DP World's Jebel Ali headquarters, where he is executive vice chairman. Since the global crisis struck, he says he has not had any spare time for his two great hobbies, camping and slide photography, in which he enjoys focusing on the people, landscape and castles of Oman.

Mr bin Thaniah rose through the ranks of Port Rashid's human resources and administration department in the 1980s, climbing the executive ladder as Dubai enjoyed success with its local ports industry and then expanded abroad, first in the region and then through a series of large acquisitions. Today, DP World is the fourth-largest ports operator in the world, taking in $3.28bn in revenues last year alone.

Shipping is in Mr bin Thaniah's blood; as a boy, he would ride with his father on small transport craft, called Al Mahmals, to offload cargo from ships berthed offshore. As he grew up in a neighbourhood near the Creek, he watched the construction of Port Rashid, which was officially opened by Queen Elizabeth in 1971 and ushered in a modern era in Dubai's ports industry. He joined Port Rashid in 1981 because it offered extensive training, and spent the next four years learning about the trade and general business practices in Dubai and in the UK, including a six-month programme with General Electric in Coventry. During this time he learnt about trade unions, negotiations, human resources management, and in the UK sat in on tribunals and negotiations on pay and strikes.

Robert Woods, the manager of P&O's Middle East shipping business based in Dubai in the early 1980s, recalls Mr bin Thaniah as "polite; a good man who knew his facts". The pair sat across from each other at the negotiating table to agree on shipping rates, and Mr Woods still has a picture, published in a local paper, of the two shaking hands after a successful encounter in 1983. "He was quite tough," recalls Mr Woods, who is now the chairman of P&O Ferries, a Dubai World company. "But I reckon it was always fair."

In the early 1990s, as assistant managing director of Dubai Ports Authority - a precursor to DP World - Mr bin Thaniah faced one of his greatest challenges when he helped to merge the Port Rashid and Jebel Ali organisations, which were then being managed by two different foreign operators. "Everybody started to pull," he says. Port Rashid wanted to keep their business with them, as did Jebel Ali. Mr bin Thaniah had to adopt different strategies to break the deadlock and shift the two mentalities. "We shifted Port Rashid personnel to Jebel Ali and vice versa. It was a technique," he says.

In the late 1990s, Mr bin Thaniah helped to define a strategy for Dubai to expand its ports business abroad with Sultan bin Sulayem, the chairman of Dubai World. The two have known each other since the 1980s, when Mr bin Thaniah worked at Port Rashid and Mr bin Sulayem at Jebel Ali. Their first step was winning a ports concession in Jeddah in 1999, and just six years later Dubai's ports company vaulted into the top four ports operators worldwide after it bought CSX Terminals for $1.15bn in 2005, and a year later P&O for £3.3bn (Dh19.37bn).

The experience gave Mr bin Thaniah a new role, replacing his job as port operation manager with one of a port business manager. "It was a totally different mindset," he says. That hard work is now before him again as he grapples with the world crisis in Dubai's recent history. igale@thenational.ae