Halliburton and Dubai: Betting on Growth

Halliburton Corporation’s headquarters move to Dubai should make Minnesotans curious about what prompted their decision.  Newly returned from a business trip there, I discovered that Dubai has developed an explicit strategy to attract corporate headquarters.  Dubai’s success in building a world-class city and image should prompt a new conversation in the Upper Midwest about what we will offer the global economy.

Though smaller in size than the Minneapolis-St. Paul metro at 1.2 million people, Dubai grows 10% annually.  Passenger traffic in Dubai’s airport grew 15% in the first nine months of 2006.  In Houston, Halliburton’s former headquarters city, annual traffic grew 7% in 2006; Minneapolis/St. Paul’s airport traffic declined 4%.  A map helps explain why Dubai will surpass MSP’s passenger traffic in 2008.  The countries hosting 16 of the 20 fastest growing economies in the world are less than 3600 air miles from Dubai; in the time it takes to fly from Dubai to the edge of this circle, you could reach two of these countries from Houston, and none from Minneapolis. Dubai’s circle includes Beijing, Hong Kong, Singapore, Mumbai, Nairobi, London, and Moscow, all closer than Minneapolis is to Amsterdam.  Dubai’s airline Emirates connects Dubai to many of these cities, along with daily service to JFK.

My colleagues and I were in Dubai to facilitate an international marketing conference for a leading technology company’s emerging markets division; sales opportunities within this circle of development make it their fastest growing business unit.  Dubai provides a central location for executives to bring far-flung people together; for senior business leaders who travel constantly, this advantage has attracted regional headquarters of other global companies like Microsoft, Cisco, and Intel.  These companies have located in one of Dubai’s free enterprise zones, where there are no corporate or personal income taxes.  Halliburton’s core business of oil field services benefits from Dubai’s location more than most. Dubai is centrally located between the giant oil and gas fields being explored in West Africa and in the Caspian Sea, and it sits at the front door of enormous oil and gas reserves along the Persian Gulf.  With Houston 10 time zones away and on a different work week (Muslim countries take off Friday and Saturday) a new corporate headquarters in Dubai offers Halliburton the option of 7x24 “always on” monitoring of global operations and markets.

These advantages fuel Dubai’s boom in tourism, real estate, and construction.  A local business leader told us that 20% of the building cranes in the world are in Dubai. The skyline is filled with modern buildings designed by leading architects like Rem Koolhaasand Paul Andreu.  At the hotel where I stayed, the young Columbian desk clerk on a six month rotation from hotel school in Orlando told me the hotel had employees from 56 countries; cable TV included international channels in at least 8 languages.  Dubai has invested in telecommunications infrastructure to build a digital city rivaling its physical skyline.  Its growing finance center of banks and investors is a haven for capital from more volatile countries in the Middle East.  The “Mall of the Emirates” features an indoor ski slope and the retailers you would expect in an international city. Its opportunities have attracted a workforce of well educated, multi-lingual (although business in Dubai is done in English) expatriates with the kinds of experience that would attract an employer like Halliburton.

Dubai is not alone in crafting a strategy to improve its niche in the world’s economy.  90 miles away, Abu Dhabi has a similar vision of an economy independent of oil.  Their plans include new hotels, an expanded long-haul airline to compete with Emirates, land reform that allows purchases by citizens and 99 year leases by foreigners, and the instant prestige of a twenty year cultural exchange with the Louvre.  Le Monde recently reported that Abu Dhabi will pay $260-$520 million to use the famous museum’s name, and a new French agency will lend art and sponsor four shows each year.  In Singapore, the government-led economy is building on its success in exports and electronics manufacturing to develop expertise in design, engineering, and research.  The overseas Chinese who predominate in Singapore have capital, proximity, and unique cultural advantages to establish trade ties with developing economies like China and Vietnam.  Non-oil exports are expected to maintain 7-9% annual growth as Singapore transitions from dependence on manufacturing to higher value trade in pharmaceuticals and petrochemicals.

The Singapore government and the royal families in Dubai and Abu Dhabi will continue bold investments and promotions that will attract other leading enterprises.  Minneapolis St. Paul is not at the crossroads of the emerging global economy; the strategies of these cities would not work for us.  We need a different strategy, just as explicit, and widely communicated in our business and professional communities as well as in the image we project to the world.  We live in a vibrant, innovative democracy, and we have a superb quality of life in Minnesota.  Halliburton’s move to Dubai may be a wake-up call to make the most of those advantages and to become more globally competitive.