Industrial machinery might not be the most glamorous sector, but it can have a powerful impact on a country’s economy. Equipment such as pipes and pumps is essential to many companies, including in key industries such as oil and gas and water distribution. In addition, the manufacturing of industrial machinery can fuel economic growth, contributing 1 to 3 percent of the jobs and GDP in mature, diverse economies.

We were asked to identify the industrial machinery that is crucial to a leading GCC country’s economy and pinpoint opportunities to manufacture products locally, reducing the country’s reliance on imports. This meant looking for gaps along the value chain and gaining a detailed understanding of local manufacturing capabilities and players—including their profit and loss structure, future demand for imports and exports, and the incentives needed to attract investors and maintain sustainable operations, among other things.

Mapping equipment and component volumes across the entire manufacturing sector and its value chains, we identified more than 40 products that were often overlooked but accounted for $1.2 billion in annual import spend.

Next, we identified the key manufacturers, traders, and buyers across the region and gathered their input for a detailed strategic portfolio analysis. This shed light on the product families that could be manufactured under one roof to boost economies of scale and improve synergies across the product portfolio, such as shared intellectual property and engineering know-how. Coupled with our own industry knowledge, including the operations and financials of industrial equipment factories, this allowed us to identify products that could be produced locally, revealing potential targets for investment as well as the government support that would be needed to attract investors.

Our analysis uncovered an addressable import gap of $600 million—roughly half of the combined import base of the products identified. From here, we defined a plan to address $150 million of this spend over five years via a combination of local manufacturing initiatives and tailored government incentives.

The result? After two years, more products within the identified categories are manufactured locally, with a target to reach 20 to 25 percent by 2025 and 50 percent by 2030. This is contributing an additional $300 million to the economy each year and has created 2,300 new jobs. But most importantly, it has brought the production of essential equipment home, enhancing the domestic economy with industrial know-how, opening up opportunities to expand local manufacturing, and protecting sources of supply from global disruptions.