After almost a year in charge of consultant Atkins, new chief executive Uwe Krueger’s focus is now resolutely on growing the business. Report by Antony Oliver.
When Uwe Krueger took over as chief executive of Europe’s largest engineering consultancy Atkins last June, his appointment without doubt prompted questions. Not least: “who is this German physicist and what does his background in private equity, industrial engineering and contracting mean for Atkins?
One year later the answers are much clearer. As a seasoned and highly successful international businessman, Krueger describes his role and challenge at Atkins as simply to leverage the firm’s global reputation for engineering excellence and deliver even greater growth.
“This company has positioned itself with a fantastic brand image in terms of excellence in the engineering design,” he says, paying compliment to the work done by his predecessor Keith Clarke to re-establish Atkins’ technical prowess.
“Now we have to take advantage of the platform and we have to grow this business as fast as we possibly can.”
He is a very different character from Clarke, who came to Atkins with clear construction roots, first in architecture, then as a client, then as boss of a major contractor. By contrast, Krueger’s career, while grounded in engineering, has spanned the industrial and process engineering sectors and has focused heavily on business management and financing rather than project delivery.
Clarke was, thus, a hard act to follow. His eight years in charge were characterised by the recovery of a business in turmoil and Atkins’ return to the top table of engineering excellence. As an outspoken advocate for low carbon design he also moved Atkins and industry thinking towards the sustainable design agenda. And as Krueger is pleased to note, over the last eight years the firm has bucked trends to drive growth and win work for influential clients around the world.
The firm’s most recent half year results to the end of September 2011 highlight the continuing growth trend with revenues up 27% and operating profit up 9%.
But with Atkins’ engineering credentials firmly re-established across multiple disciplines and regions, the firm faces a different set of challenges.
Krueger says the challenge of his term at the helm will be to boost revenues and margins simultaneously.
“Margin growth comes from offering unique solutions to problems for clients,” he says, underlining that his task is not simply to create a bigger Atkins.
“I am convinced that it is possible to grow the company from both ends [revenue and profit]. Bottom line growth is very much geared towards operational excellence and efficient processes within the company. Top line growth is about choosing your work wisely and to figure out how you are differentiated to achieve above average growth in this industry.”
Krueger’s background, culture and style is overtly analytical and characterised by a desire for precision and clarity.
Those reporting to him expect to be grilled on detail and challenged on strategy in the certain knowledge that his homework will have been done meticulously.
But make no mistake, Krueger is not simply about running the numbers. Yes, he has studied at Harvard, Columbia University and the École Normale Superiéure in Paris. Yes, he has a PhD in brain research. And yes, his last job was in private equity funding, but it is very apparent that the complexity of an engineering challenge fires him up as much as any of his technical staff.
To this end, Krueger and Clarke are similar in their fascination for engineering. And getting the engineering right is more than just a means to a business end - it’s fundamental.
So while his challenge is to boost shareholder return, Krueger remains rooted in sharing with clients the engineering passion and excellence now embedded in the firm. Or as he puts it: “Finding solutions to the most complex problems around the planet.”
“Where I am leading the company is exploring routes to expanding on the basis of engineering competence - it is not trying to look at areas of consultancy that have a different set of expertise as their basis,” he says. “It is about looking specifically at our core strengths and out of this core growing the company.”
There are, he says, lots of great firms around vying for the attention of global clients. Differentiation is therefore critical to Atkins’ future success and to its growth potential.
“What I have learnt over the last few months is that what makes us different is that we are capable of integrating a vast array of different disciplines within the company to deliver stunning work,” he says, highlighting the recent work to prepare the London 2012 Olympic Games site as an example.
“Project by project we ask the question in a disciplined way. What makes us different in bidding for it? If the answer is that we are just trying to meet best price then this isn’t for us.”
Size matters “to a certain degree”, he says, when it is a question of having the size, clout and resource to compete internationally. Atkins currently has 18,000 staff and he says this figure will rise.
“The way that we grow the business is first and foremost organic,” he says, pointing out that with some 1,200 vacancies across the globe, Atkins is actively recruiting engineers.
“But focused merger and acquisition activity is an important component and I have strengthened the team here to take advantage of opportunities,” he adds.
Potential to thrive
The energy sector is a great example where Atkins has the potential to thrive and to increase its business activity, not least following the acquisition of Norwegian oil and gas business Poyry in 2011. Equally he sees major opportunities to grow in aerospace, defence and industrial engineering.
Geographically major opportunities will flow from the United States, building on the 2010 purchase of multidisciplinary consultant PBSJ which added 3,100 staff and more than 80 offices. The Middle East, Scandinavia and India will also be targeted for growth. A new office opening in Delhi will add to resources in Bangalore.
These growth sectors and regions, he says, are all “areas where we feel that we have a differentiated service offering and are appreciated by our clients because of the engineering expertise that we bring to the table - not because we are the cheapest around.”
Like all major consultancy businesses, Atkins’ global reach has increased significantly over the last decade. Its two recent major £65M and £70M contract wins to manage a Qatari infrastructure development programme underlines the consultant’s huge Middle East operation. But elsewhere around the world, projects such as the land reclamation project in Hong Kong’s Victoria Harbour, the new nuclear fusion research facility in France and the refurbishment of New York’s Statue of Liberty will be built on to drive Krueger’s international growth plans.
At the moment Atkins’ global turnover is around £1.6bn, of which £1bn comes from the UK. Krueger wants to change that.
“I want to outgrow the UK revenue base that we have now over the next three to five years,” he explains. “Today probably mid-40% of our revenues are generated in the UK. I want to have that sitting around 25%.”
Krueger is resolute about the need for engineers at Atkins to gain experience working outside their home region. International experience, he says, is critical not only to career development but also to boost the firm’s competitiveness.
“It is not an option - we really expect you to be ready to pack your bag and to go to Bangalore or to Doha for a certain period of time,” he explains. “I expect an eagerness to learn from different cultures. It is driven by our client’s expectation. They expect us to bring to the team people with international experience. It needs a constant reminder.”
Yet the global shift will not be at the expense of UK opportunities. For all the talk of austerity and public sector spending freezes, Krueger is confident that the UK market is looking better than it has for some time.
“The UK business is not so driven by margin growth but if you have an intelligent approach then you can gain market share,” he says, a point underlined by Atkins/Skanska’s recent £400M Highways Agency Asset Support Contract win to take Area 2 from incumbent Balfour Beatty.
UK is key market
“I see the UK as a key market and I am more positive now about the UK than many are at the moment. We are benefiting from sensible moves from the government side,” he adds, referring to prime minister David Cameron’s recent speech at the ICE about the value of civil engineering and a growing consensus about the national infrastructure plan priorities.
Private finance will inevitably be part of the future, he says, with Atkins playing a central role in consortiums such as the Connect Plus team now delivering the 30 year M25 upgrade concession.
But he categorically rules out the prospect of following the trend by buying his way into the world of contracting.
“Of course I have noticed that there have been some acquisitions that have merged contractors with design firms, but I have no intention of mirroring that and acquiring a contractor,” he says. “I think that our value is when we bring independent advice. The jury is out as to whether this combination is going to be successful.”
And it is this focus on client need and client expectation which fundamentally defines Krueger’s strategic outlook and plan for growing the business.
As with all consultants, he explains, the fundamental route to growth is finding ways to add value to the service you provide to clients. For Krueger that means helping Atkins’ passionate, technically excellent staff to spend more time with clients.
“While the motivation for engineers is creativity and problem solving, they absolutely understand that this is connected, one to one, with the commercial benefit that the client has out of the solution,” he says.
Uwe Krueger’s CV
Position: Chief executive, Atkins
2010-2011: President, Cleantech
2009-2011: Director, Texas Pacific
2007-2009: Chief executive officer Oerlikon
2004 - 2007: Senior vice president and chairman Turner International (part of Hochtief)
1997-2004: Hochtief, posts included chief executive officer Central Eastern Europe and senior vice president of corporate development
1994-1997: Management consultant, AT Kearney
University of Frankfurt: Degree in chemistry and physics, PhD in complex systems and brain research