67.7 F
Laguna Hills
Saturday, Feb 4, 2023
-Advertisement-

Housing Crash Knocked Down Engineering Cos. Growth

The crash of housing and commercial real estate and a slowdown in corporate projects have hit many local engineering companies hard, according to this week’s Business Journal list.

The 30 largest engineering companies operating here saw lower billings in the past year as the slowdown played out.

Aggregate numbers offer just a glimpse of the trend. Combined, the 30 companies on the list saw a relatively mild 1% drop to $2.5 billion in local billings for the 12 months through June.

That figure includes an estimate for Irving, Texas-based Fluor Corp., which has operations in Irvine and Aliso Viejo. Fluor dominates the list with an estimated $1.4 billion in local billings.

Without Fluor, the 29 other companies were down 3% to $1.1 billion in local billings.

But that figure, too, was skewed by the Santa Ana office of No. 2 CH2M Hill Cos., which upped its local billings 15% to $360 million, thanks to global projects and government work.

Like Fluor, CH2M Hill weighs heavy on the list with more than four times the local billings of No. 3 Aecom Technology Corp.

Without Fluor and CH2M Hill, the 28 other companies saw a 9.5% decline to $709 million in local billings.

In all, 11 companies reported lower billings. Seven came in higher. Figures for 11 companies are Business Journal estimates—which could be seen as another indicator of tough times as some may have been reluctant to disclose declines.

No. 16 Owen Group is a newcomer to the list and didn’t provide past revenue.

Among decliners, billings were down an average 26%.

However you slice it, this is the first year of down billings in at least a decade. The companies on our 2008 list posted a 60% gain in local billings, driven by a surge at Fluor. Without Fluor, they were up 7%.

The downturn played out on employment.

Excluding Fluor, OC’s 29 largest engineering companies saw a 7% drop in local workers in the past 12 months to 5,080 people. The number of local engineers also declined 9% to 975.

Fluor, which drove the group’s gain a year ago, declined to break out numbers for this year’s list. A year ago at this time, it reported a 154.3% gain in local billings to $1.4 billion.

Back then, the company landed a windfall of contracts for work on power plants, oil refineries and other projects that required remediation, cleanup, air quality permits and other services.

Locally, Fluor also does work for the chemical, mining and transportation industries.

A lot of that work is estimated to have held up for Fluor locally in the past year. For the 12 months ended June, Fluor’s companywide revenue was $22.8 billion, up 18% from a year earlier.

But more recent numbers tell a different tale.

For the three months through June, Fluor’s companywide revenue was $5.3 billion, down 8%, “driven by declines in the oil and gas, global services and power segments,” the company said in a release.

In June, the company also saw a 6% year-over-year drop in consolidated backlog to $30.9 billion, due to “cancellations and scope reductions of oil and gas projects during the first quarter,” Fluor said.

CH2M Hill was the list’s biggest billings gainer by dollar amount. It upped its local billings by $47 million to $360 million.

Diversification drove the higher billings, said Kellie Freeman, acting area manager in Santa Ana for CH2M Hill.

In the past few years, CH2M Hill has won many program management jobs around the world, including managing the expansion of the Panama Canal, infrastructure development for the London 2012 Olympic Games and sewage work in London and the United Arab Emirates.

The company also has used its climate change consulting and sustainability work to weather the recession, according to Tessa Anderson in the company’s Denver headquarters.

Stimulus Dollars

Like many companies on the list, CH2M Hill recently has focused much of its energy on public sector work, where stimulus dollars still are pushing work ahead.

It is involved with the cleanup of the Iron Mountain Mine near Redding, which the Environmental Protection Agency said in April would receive from $15 million to $25 million in federal stimulus funds.

CH2M Hill also has focused on helping clients obtain stimulus dollars by assisting them with putting together proposals and doing evaluations of renewable energy projects.

Like CH2M Hill, No. 5 Irvine-based RBF Consulting has assisted clients with obtaining stimulus money, which has prevented project delays and helped get stalled projects moving, according to Barbara Eljenholm, senior vice president of corporate affairs.

RBF recently helped the Irvine Ranch Water District and the Mojave Water District target federal stimulus funds, as well as helped a client get funds to build a bridge over the Santa Ana River to the Green River Golf Course.

Local billings for RBF were down 13% to $60 million for the 12 months ended June, mostly due to the housing and commercial real estate crash, Eljenholm said.

To make up for the crash, RBF recently has focused on the public side of work.

It specifically has gone after federal, military and state government work involving stormwater quality, management, transportation and desalination projects, according to Eljenholm.

Despite the recession, things are beginning to look up for many engineering companies.

“We are seeing positive signs in the economy and looking forward to the future,” said Bob Kallenbaugh, co-chief executive of RBF.

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-
-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-