CORRECTION - BUSINESS COMMUNITY TABLE-TALK

C O N F I D E N T I A L SECTION 01 OF 02 JEDDAH 000289

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E.O. 12958: DECL: 04/04/2015
TAGS: EAIR ECON KISL SA
SUBJECT: CORRECTION - BUSINESS COMMUNITY TABLE-TALK

REF: A. JEDDAH 284 B. JEDDAH 103

Classified By: Consul General Tatiana Gfoeller, for
reasons 1.4 (b) and (d).


1. This is a corrected copy of reftel A.


2. C) SUMMARY At a reception hosted by the American
Businessmen of Jeddah (ABJ) held at the Consul General's
Residence (CGR) on March 29, guests commented on a variety of
topics relating to local business and economic conditions.
In the wake of the recent public announcement that Saudi
Arabian Airline's (Saudia) privatization plan had been
approved by Saudi authorities, employees were already voicing
concern for their jobs. The recent sharp decline in the
Saudi stock exchange was described as personally painful by
some but heralded as an essential dose of reality by others.
A major construction company expressed satisfaction with the
economic outlook, and surprisingly, satisfaction with Saudi
college graduates. END SUMMARY.

SAUDIA EMPLOYEES ALREADY WORRYING


3. (C) During a reception sponsored by the American
Businessmen of Jeddah (ABJ) on March 29 at the CGR, Pol/Econ
Chief met Dr. Osama A. H. Zahran who is responsible for all
medical clearances for personnel at Saudi Arabian Airlines
(Saudia). When asked about employees' attitude toward the
recently announced privatization plan for the airline, he
indicated that employees were already anticipating job cuts.
He speculated that the cuts would first affect the office
staff, then the support staff, and finally the technical
(among which he included his medical department) and flight
personnel.

EXPATS HURT BY MARKET REVERSE; OPTIMISTIC ABOUT DIRECT
INVESTMENT


4. (C) Pol/Econ Chief spoke with an American employee of the
Bin Laden Group who had been enthusiastic about his earnings
in the stock market during an earlier meeting in late winter.
Now, he confessed, he had lost virtually all of his profits
in the declining market over the last month. He was
chagrined, but maintained his optimism, now that expatriates
would be allowed to invest directly. He attributed much of
his losses to the managers of the mutual funds, which had
been the only avenue through which foreigners had been
allowed to invest. He surmised that they had not had much of
an investment strategy and had just bought what was
available. He said he would feel better if he only had
himself to blame for any future losses.

MARKET DECLINE MAY TEACH SAUDIS A LESSON


5. (C) Another guest at the reception, Amcit Kamal M.
Quadir, a financial advisor to companies preparing for IPO's,
thought that the bear market could be beneficial because it
would force the Saudi investors to face reality. In his
opinion, the sooner the investing public learned that there
should be a sound financial basis for investment decisions
the better. He also felt that the market authorities and the
government should do a better job of teaching potential
investors about investing.


6. (C) He admitted that one of the greatest difficulties he
experienced in advising companies about preparation for
"going public" was the need for transparency and sound
corporate governance. He observed "it is difficult to
explain to these companies that in dealing with the global
financial environment, you can't just sit around the kitchen
table and make a decision, or tell them (banks and investors)
that grandfather made the decision and that's it." He
explains to them that decision-making must be
institutionalized and experts consulted. In his opinion, if
Saudi companies fail to make the organizational transition,
and adopt sound methods for corporate governance and
transparency, they will not prosper.

CONSTRUCTION COMPANY HAS DIFFICULTY HIRING ENOUGH ENGINEERS .
. .


7. (C) Several executives from Turner Construction Company
complained about the difficulty they face in hiring enough

JEDDAH 00000289 002 OF 002


experienced engineers and getting them into the country.
Husein H. Odeh, the General Manager for Saudi operations,
said that he simply could not find enough top engineers in
the U.S. to fill all of his open positions, because of the
restrictions on life in Saudi Arabia.

. . . BUT HAS SUCCESSFULLY HIRED SOME SAUDI ENGINEERS


8. (C) When asked about the employability of Saudi-educated
engineers, he said that they have been successful with a
number of hires, but, he cautioned, they only hire new
graduates who haven't "developed any bad habits yet." He
said the Saudi graduates are competent and if inculcated with
the proper attitude by senior staff, have proven good
employees.

OTHER EMPLOYERS NOT PLEASED WITH SAUDI GRADUATES


9. (C) This experience is sharply at odds with what Pol/Econ
Chief has heard from other senior corporate executives in
recent weeks. More typical were the comments of business
executives attending the Jeddah Economic Forum a few weeks
earlier. At a dinner hosted by the Juffali Family for the
Ambassador and Consul General, Pol/Econ Chief discussed the
employability of young Saudis with the head of a
pharmaceutical company. The executive brusquely complained
that Saudi youths were capable of doing the basic factory
manufacturing tasks, but could not reliably be permitted to
carry out product sales and support outside the factory. In
the executive's words: "Lock them in the factory with a
supervisor to watch their every step and anyone will do. But
we can't trust them to go out on the road and service the
product." Several other executives in the group chimed in
with similar comments.

ATTITUDE TOWARD TRAINING MAY BE THE DIFFERENCE


10. (C) COMMENT. Reconciling these contradictory opinions
may be explained by the willingness to train the employee.
Saudi companies seem to be unwilling or unable to provide the
practical training that instills discipline, flexibility and
initiative in workers. This deficiency in their training
system has at least been tacitly admitted by businessmen who
constantly lobby post and American businesses for advanced
training opportunities for Saudi workers (reftel).
Coincidentally, this was demonstrated only a day after the
pessimistic assessment at the Juffali dinner. After the
day's sessions at the Jeddah Economic Forum (JEF) the
Ambassador and Pol/Econ Chief were dining on the patio at the
Hilton Hotel with the Australian Ambassador and Commercial
Officer, when the group was joined by three Saudi
businessmen. In the ensuing discussion, after disparaging
the results of the Saudi educational system, the three
businessmen pleaded with the Ambassadors to persuade American
and Australian businesses to develop internships of a few
weeks or months for young Saudis in order to teach them
modern business practices and personal attitudes. END
COMMENT.

Gfoeller