As Fluor's work in Iraq and Afghanistan winds down, the company has turned to new hires and a renewed focus on sales to reposition the company for the post-war era.
When the government has continuing tight budgets, a shutdown of operations and a sequestration all in one year, restructuring the sector that serves it might seem like adding salt to the wound. But at Fluor, an engineering and construction company, the decision to do just that had positive results.
Irving, Texas-based Fluor earned $27.4 billion in revenue in 2013, $2.7 billion of that coming from its Government Group, which saw segment profit of $161 million, up from $150 million a year ago. The group focuses on three lines of business: environmental and nuclear, services, and contingency operations, said William Bodie, senior vice president of business development for the government group.
Its services business, which includes IT, engineering and professional services, garnered the company a No. 11 ranking on the 2014 Top 100 with $2.1 billion in prime contracts.
The strategic repositioning began in 2009, when Bruce Stanski became president of the group. Last year, he hired experts such as Bodie; Thomas D’Agostino, a former undersecretary at the National Nuclear Security Administration who is now the group’s senior vice president of strategic planning and development; and Kevin Leonard, vice president for contingency operations and a former Army major general.
“I would say in the last five years Fluor has paid a lot of strategic attention to its government operations, it’s brought in some new people, reorganized, tried to put some new energy into our sales operations, and we’ve been able to team fairly well and really reach back into the broader Fluor Corp. in a ‘one Fluor’ approach to be able to recruit the best and the brightest for certain jobs that we’re going after,” Bodie said.
One of those jobs was managing and operating the Strategic Petroleum Reserve, the world’s largest supply of emergency crude oil. The Energy Department awarded the five-year, $697 million contract in September to a Fluor-led consortium.
Another major win came to the Services group from the Army, which awarded a follow-on contract worth an estimated $109 million over five years. Under the terms, Fluor and two other companies will provide base operations support at the Rock Island Arsenal in Illinois and six other Midwest locations.
Overall, the government business brought in $4.1 billion in awards last year.
“We know it’s a very competitive environment out there and we’re trying to bring the best values from a 100-year-old company with its traditions and its established processes while also bringing in new ideas and a continuous-improvement approach,” Bodie said.
One of the biggest strategic challenges Fluor faces is a reduction in business activity associated with overseas military contingency operations, he added. As a contractor on the U.S. Army Logistics Civil Augmentation Program, the company has been supporting Army and coalition forces in Afghanistan. As those forces leave, so does the work.
“How do you maintain a strong capability in this regard -- a strong logistics, engineering and construction capability that can support military operations when there isn’t a large contingency going on?” he said. “You do so by doing what you do best but adapting your strategy to adjacent markets and to more steady-state work.”
For example, Fluor is looking at providing support services, facilities management and maintenance at domestic bases and in Guam. It’s also looking to take advantage of its footprint overseas by partnering with the State Department to help maintain the U.S. embassy in Afghanistan after troops withdraw.
Other government reductions are taking a toll, too. Sequestration introduced a new level of uncertainty with customers, Bodie said.
“We have found that the real impact has been in delays on decisions and contract awards that would be normally accomplished in a series of weeks or a couple of months stretching out into the years,” he said. “It makes it a lot more difficult to do your resource planning, your business planning.”
The environment may be new, but the key to success hasn’t changed.
“I think it all comes down to winning new work,” Bodie said. “We’ve been focused like a series of laser beams united in bringing all of the technical, human and financial resources of a company like Fluor to bear on the opportunities that are out there.”