“Our asset is entirely flesh and blood, and the way you grow is with new people,” says URS chairman and chief executive Martin Koffel speaking on Monday, the first day of his ownership of UK consultant Scott Wilson. “And our measure of success is service jobs added.”
Strength in numbers
If you are one of the 5,500 staff that has been purchased that is probably good to hear, given that acquisition is always a nervous time for employees. And at a time when Arup is consulting on making 600 staff redundant because of market conditions (News last week), Koffel has more positive news for his employees.
Everyone in the UK is waiting to hear what cuts are coming in the comprehensive spending review next month and how that will impact on their jobs but Koffel’s take on the situation for his staff is this: “I am inclined to think we are trimmed for the conditions. There is no conflict and no overlap in the businesses. I haven’t seen a dollar.”
The next few months will tell but certainly URS does not seem to be following the usual model of “share out the good meat around the existing business and throw away the bones” used by many other companies when they make acquisitions.
Rather, it wants to use Scott Wilson as a launch pad for non-US growth. “That’s the strategic subtlety,” Koffel says. “We are asking a British team to manage our international business. Hugh and his team bring international leadership for us and we elected from the outset to put the majority of our international business under the Scott Wilson team.”
Scott Wilson’s international work, particularly its track record in China and India have been a major strength of the business and were a big attraction to URS which, although enormous, does only 9% of its work outside the US. URS is structured into a balanced business of four different sectors – federal, infrastructure, power, industrial and commercial – to allow it to weather economic storms which ideally hit in different sectors at different times. But recent events have been a challenge, Koffel admits. “We never expected the structure to be so tested.”
Time is right
After 20 years of enormous growth at home – from the $100M (£65M) turnover of 20 years ago to the £6bn today – URS has decided the time is right to expand globally.
“Hugh (Blackwood) had many suitors,” Koffel says. “One of our appeals was that we didn’t want to vanquish what Scott Wilson had done. We said ‘we admire what you have achieved, want to leverage your experience and give you more responsibility than you had.
From Scott Wilson’s point of view the time was right to sell.
“After careful consideration and waltzing with a few, we decided URS was the ideal partner”
“We subscribe to the view that there will be a further continuing trend of consolidation globally,” says new URS senior vice president and former Scott Wilson chief executive Hugh Blackwood.
“We had been increasing our international business but we were a bit small for the more challenging jobs and increasingly were working with American partners. Our board thought it was time to take the initiative and explore the possibility of a partnership with an appropriate larger company.
“After careful consideration and waltzing with a few, we decided URS was the ideal partner. URS had scale but was so focused on the US it gave us an opportunity to make a difference to the business and for Scott Wilson to be a key part of the operation.
“Scott Wilson manages the team but we have all the URS resources and their multi-national clients for whom we are able to provide a presence, particularly in India and China. And we get a position in western Europe.”
Blackwood is not acquiring the URS work at Sellafield as that is set up under a different arrangement. He and his Scott Wilson staff do though now have access to URS’s extensive nuclear experience and its skills in programme and construction management.
The opportunities for vertical integration are key, says URS president, infrastructure and environment Gary Jandegian – Blackwood’s new boss.
“A lot of our clients are moving to turnkey arrangements where one company can engineer, procure, construct and manage their work. If we just do the front end services we get fees on around 8% of the project. Contractors procure and earn off 90% of the value,” says Jandegian.
URS operates on a turnkey basis in the US; Scott Wilson will help URS build that work up around the world.