Fluor Jockeying for Eventual Afghanistan Work
By CHRIS CZIBORR
Aliso Viejo-based Fluor Corp. is angling for work rebuilding Afghanistan, according to Alan Boeckmann, the engineering and construction company’s new chief executive.
“This thing is going to be a long-term play,” said Boeckmann, who took over as chief executive on Feb. 6 after Philip Carroll’s retirement. “It’s about Afghanistan getting the international support to allow the country to get its act together to the point where investments are going to be welcome and where companies feel safe coming in.”
Any Afghanistan work for Fluor is months off,if not longer. Boeckmann is looking to put Fluor in the running when money starts flowing and projects start being awarded. The company hopes to grab work restoring Afghanistan’s woeful roads, airports, power plants and water supply system.
Fluor isn’t alone. The company stands to face competition in Afghanistan from San Francisco-based Bechtel Group Inc., Sweden’s Skanska AB and Japan’s JGC Corp., among others.
Any Afghanistan work stands to be high-profile for Fluor, though the country isn’t likely to be a major source of business for the company, which counts $9 billion in yearly revenue.
“Obviously there will be work for Fluor at some point,” said Richard Rossi, an analyst with ABN AMRO in New York. “I wouldn’t get too carried away about what Afghanistan offers the engineering and construction industry over the next 12 months. It’s not going to be the kind of magnitude of work that would warrant making a special case of.”
Boeckmann said he is realistic.
“There’s a lot of confusion right now as to who’s going to be leading that and what priorities are going to be put in place, and how it’ all going to be funded,” Boeckmann said. “Until that occurs, we’re about four to six months away from meaningful reconstruction, other than what’s currently being done by security forces and people supporting security forces.”
Even so, Boeckmann is making the rounds on Afghanistan. Earlier this month, he attended the World Economic Forum meeting in New York and took part in one of the working sessions on rebuilding Afghanistan, along with U.S. State Department officials and delegates from neighboring countries.
On Feb. 1, Boeckmann went on cable TV’s CNBC with plans to talk about Afghanistan. Instead, the interviewer asked him general questions about retirement plans and other issues that arose from Enron Corp.’s collapse.
Several pieces need to fall into place before work can start in Afghanistan, according to Boeckmann. For one, the interim government in Kabul needs to secure funding from developed nations and the World Bank, he said. That should play out in coming months, he said.
“And they need to get security to a point where they can start to put a lot of civilians on the ground,” he said. “We’re looking at the middle to end of this year before projects get defined. It’s going to go in stages, and a World Bank-supported interim government will be the body that does awards.”
The company doesn’t have anyone in Afghanistan working on business development but does have some people there helping the U.S. with logistics support, Boeckmann said.
Fluor has no plans now to set up an office in Afghanistan, Boeckmann said, though he doesn’t rule it out.
“We would consider that,” he said. “An office in Afghanistan would be for the specific purpose of deploying construction forces,we also would rely heavily on training people there to do construction labor there.”
If Fluor lands work in Afghanistan, it could employ thousands of workers in the war-torn country, Boeckmann said.
Fluor’s nearest offices are in Kuwait and India. The company also has a small office in Kazakhstan, doing oil and gas production work.
Fluor has built power plants, airports, mines and factories across the globe. The closest the company has come to what it might see in Afghanistan is its work in East Timor and Angola.
In East Timor, Fluor deployed five construction managers to oversee construction of helicopter pads for U.N.-backed peacekeepers in 1999. East Timor voted to secede from Indonesia three years ago.
In Angola, Fluor is providing project management and engineering for an offshore oil platform. The Southwest African country has seen a nasty civil war drag on for more than 25 years.
For now, security is a more pressing issue in Afghanistan than reconstruction, Boeckmann said. Beyond that, the country needs to get its legal system up and running again, he said.
“I wouldn’t call that country stable at this juncture,” analyst Rossi said. “Until it’s very clear that there’s stability,not only in the government but for security reasons,it’s obvious you’re not going to undertake anything but the most basic kind of project work. You might go in there and repair a power plant or go in there and clean up a hospital or something.”
Once things calm down, roadways stand to be one of the first areas of work, followed by irrigation systems for agriculture, Boeck-mann said.
“The agricultural industry is the first industry that’s going to get some attention,” he said. “We may work on infrastructure projects sooner, but the real economic projects are at least a year away.”
Longer-term projects the company could see include power plants and mining facilities, Boeckmann said.
One edge Fluor may have is that it is a U.S. company, analyst Rossi said.
“Obviously the U.S. has a considerable position in Afghanistan at this juncture,” he said. “There’s obviously going to be a lot of money pouring into that country,a lot of it from us. Normal business practices being such, that’s going to give U.S. companies opportunities to participate.”
While Afghanistan’s problems are daunting, Boeckmann said he is upbeat.
“I’m very impressed with the people I’ve met as very dedicated individuals with a strong sense of purpose,” he said. “And they’ve got a very balanced view,they see themselves as a focal point on the world stage right now and they understand they’ve got to handle things correctly.”
Fluor’s Power Plant Work: Down, Not Out
Fluor Corp.’s power plant business,which has both charged and dimmed the company’s stock in the past year,is slowing but still healthy, Chief Executive Alan Boeckmann said.
“Our power plant market, which has been very strong for us, is softening,” he said. “Having said that, it’s still going to be a very strong market for us for several years.”
In late 2000 and the first half of 2001, power plant building became a shining star for the company’s Duke/Fluor Daniel joint venture with Charlotte, N.C.-based Duke Energy Corp., adding more than $1 billion to Fluor’s backlog for the 12 months ended June 30.
Fluor’s stock rose early last year on expectations of more power plant construction work. But starting in June, the company’s shares began a steady retreat, due to new concerns about the troubled energy sector.
Boeckmann said he expects the power plant market to continue softening into next year.
“We clearly have to get an economic rebound in the U.S. to drive power consumption,” he said. “But there still is a need for power in a certain number of regions of the U.S. There is still an issue of power distribution bottlenecks, so there will continue to be new power awards,they’re just not going to be as strong as they were last year, when we had the best year we’ve ever had with power awards.”
Last year’s power plant contracts brought in $3 billion for Fluor, or 30% of total bookings.
“This year we’ll probably do about half that, but that’s still a fair amount of awards,” said Boeckmann. He added that the company would add to its client base by becoming stronger in some geographic areas than it is now.
“We’re going to use our financial strength to make niche acquisitions that add to our capability and to our market share.”
Oil and gas businesses are two such areas Boeckmann said Fluor is looking to.
Boeckmann said he’s inherited a company in strong financial shape, thanks to restructuring overseen by now-retired Philip Carroll.
“Working with Phil over the past several years we’ve done a lot of things that have set the stage,” Boeckmann said. “The company’s got a very strong balance sheet. We’ve put a lot of discipline into our processes, and as a result we are by far and away one of the healthier companies out there and one of the most competitive.”
Boeckmann has served as president and chief operating officer of Fluor since January 2001. He also served as president and chief executive officer of Fluor Daniel, among other positions.
Since joining Fluor in 1974 as an engineer, Boeckmann has held various management positions, including assignments in California, Texas, South Carolina, South Africa and Venezuela. He graduated from the University of Arizona in Tucson with a degree in electrical engineering.
,Chris Cziborr
