Welcome to the ENR site

business & labor

GLOBAL SOURCEBOOK 2007:
MANUFACTURING/INDUSTRIAL PROCESS
Expansion of Market Spurs Firms
To Adopt Coherent Global
Approach
Projects increasingly include international component
12/19/2007
By Tom Nicholson

For contractors and designers that

construct the plants and factories that
make everything from cars to candy
bars, the ever-expanding
globalization of manufacturing and
industrial process sectors is shaping
new markets and spurring new ways
of building projects. In markets where
nearly every project has an
international component to it whether
it be clients, labor from abroad, or
globally procured materials—
contractors are adopting global
approaches.
PCL Constructors Inc.
“There is a general blurring between Hot Market. PCL fabricates pipe rack for industrial
domestic and international projects,” process plants.
says Rob Smith, president of energy,
chemicals and industrial systems at Englewood, Colo.-based CH2M Hill. Citing New
York Times columnist Thomas L. Friedman’s best-selling book The World is Flat, which
points to the flat playing field that is evolving across expanding global industrial
markets, Smith says, “The world markets are getting flatter, and it is blurring
distinctions” between what is considered global or local.

One example is a chemical plant project in Singapore this year in which CH2M Hill
assembled a multi-national team of de signers and engineers, with team members
representing disparate regions and cultures from Atlanta to Buenos Aires. “On that
project, we had people involved from six continents,” Smith says.

These days, a large-scale

manufacturing project typically
looks something like this: A
client in North America eyes
burgeoning demand in a
European market; it then

http://enr.ecnext.com/comsite5/bin/enr_descrip...&item_id=0271-47431&format_id=XML&action=print (1 of 5) [3/27/2008 7:25:02 PM]

Welcome to the ENR site

assembles a team of
designers and engineers from
several continents to build the
project. The team then
delivers the project using labor
from Malaysia, Singapore or
Taiwan, procuring steel from
the U.S., Japan or Russia, and
cement from China. Shuffle
the players around a bit, and
the formula depicts the
method used on nearly every
large-scale industrial process
or manufacturing project
taking place in the world today.
Small World
The global dynamic is
changing the way contractors
do business as they groom
multi-lingual workforces and
form relationships across
international and cultural
borders. “The world has gotten
to be such a small place,” says
Tim Gelbar, president of the
industrial Americas group at
London-based AMEC. “Small
market fluctuations happen in
other parts of the world and
everyone, everywhere has to
react. Everyone has to look at
their formulas differently. It’s
really changed dramatically.”
The 2007 Global Sourcebook
● Overview:
Firms Are Now More Selective
●Manufacturing/Industrial
Process:
Expansion of Market Spurs Firms To
Adopt Coherent Global Approach
● Environment:
Environmental Market Strong As
Developing Nations Update Facilities
● General Building:
Economic Recession Worries in U.S. Fuel
Interest in International Projects
● Telecommunications:
Growing Global Telecommunications
Market Reaching Developing World
● Petroleum:
Growing Demand in Developing World
Boosts Petroleum Market
● Power:
Despite Climate Change Fears, China
And India Focus on Coal
● Transportation:
Rapid Global Development Fueling
Greater Demand for Rail and Transit
● Complete Report
The Complete 2007 Global Sourcebook
with data and market analysis

Those changes are rippling through several sectors. In cement production, “we are
following our clients to numerous places,” says Gelbar, who notes that AMEC is
providing various engineering services on several cement plant projects in the $150-
million to $400-million range in South America, West Africa and New Zealand. “The
cement industry has changed,” he notes. “Ten years ago, it was regional suppliers; now
it is dominated by large centralized suppliers.”

Demand for wood pulp products in raging markets in China, India and Russia ripples
across continents to South America, where AMEC is involved with front-end
engineering on several projects, including a $750-million pulp plant, which Gelbar does
not divulge the location or owner of, but notes, “The main driver for that market is
coming from developing regions such as in China.”

Rising energy costs are also spurring a spate of projects as manufacturers strategize
on how to cope with climbing production costs. Demand for cellulosic feedstocks for
ethanol produced is gaining momentum, says Smith. “We are doing several projects

http://enr.ecnext.com/comsite5/bin/enr_descrip...&item_id=0271-47431&format_id=XML&action=print (2 of 5) [3/27/2008 7:25:02 PM]

Welcome to the ENR site

along those lines for clients who want ethanol from materials other than corn, which
impacts food supplies,” he says. “Many clients are making strategic realignments to use
biofuels as a feedstock” in lieu of petroleum. Fertilizer producers are among those
reacting to oil costs. “It used to be that fertilizer plants were built...

advertisement
...

business & labor

GLOBAL SOURCEBOOK 2007:
MANUFACTURING/INDUSTRIAL PROCESS
Expansion of Market Spurs Firms
To Adopt Coherent Global
Approach
Projects increasingly include international component
12/19/2007
By Tom Nicholson

...near customers’ bases,” Smith says. “Now they are building them closer to feedstock
supplies.”

Smith also notes a growing demand for poly silicone plants, a vital substance for
manufacturing solar panels. “That is a driver that didn’t exist two years ago.”

Still, there is growing demand among petroleum and petrochemical producers for new
processing facilities around the world, says Peter Stalenhoef, president and CEO of
heavy industrial for Edmonton, Canada-based PCL Constructors Inc. From its
fabrication facility in Alberta, the firm has tapped a strong market for steam generators
among hydrocarbon-based clients on projects in Kuwait, Madagascar and other
locations in the Middle East. “It is the very beginning of that market” for PCL, Stalenhoef
says.

Global connectivity has broadened prospects for contractors, but also opened up the
playing field to new competition, both among contractors and clients. World competition

http://enr.ecnext.com/comsite5/bin/enr_descrip...&item_id=0271-47431&format_id=XML&action=print (3 of 5) [3/27/2008 7:25:02 PM]

Welcome to the ENR site

has manufacturers playing their cards close to their vests this year when it comes to
revealing project details. Nearly across the board in this sector, contractors are
declining to give details about who they are working for and where. “Particularly in this
sector,” says Gelbar. “They are such competitive markets.”

It is the same story in Europe, says Ulf Erickson, director of Holborn, U.K.-based WSP
Group’s construction division in Stockholm. “I can tell you that we are doing a lot of
work in the industrial markets in Scandinavia, but I can’t tell you any more than that,” he
says. But Erickson does note that after several years of heated industrial markets in
Europe, “they have started going down. The markets here have been at a high level for
the past three or four years, and 2007 was the highest. We have seen a lot of work in
steel and in mining driven by demand in Asia for metals, including copper and silver, but
it works in cycles and we expect the decrease to start coming next year accordingly.”

Industrial markets in Russia,

however, are ripening, says Michael
McKelvy, president of manufacturing
and life sciences for CH2M Hill.
“There are many multi-national
companies looking to locate around
Moscow and St. Petersburg,
particularly in the aluminum
processing, automotive and food and
beverage markets,” he says.
“Originally it was all American and
European companies, but we are
starting to see more and more
Russian clients, and they have
started to become more comfortable
hiring foreign contractors to do those
projects.”
PCL Constructors Inc.
Skilled labor now is scarce throughout the world.
But McKelvy notes that business
abroad does often come with a few
caveats as cultural and geographic differences inevitably rear up in many regions. “It is
expensive to work in Russia both because of the harsh weather and the way business
works there,” he says.

With globalization’s influence on markets ongoing for several years, contractors and
clients now are reaping the benefits of relationships that have had to time to gel. That is
an aspect of globalization CH2M Hill is uniquely positioned to leverage, as the firm has
offices in Russia, China, Singapore, Argentina, Brazil and Mexico. “It is part of our
global project execution,” McKelvy says.

The firm has continued its commitment to plant roots in burgeoning globalized markets
by securing a general contracting license in China last year, positioning it among a few
foreign firms with that capability.

As a result, the firm now regularly self-performs engineering, procurement, construction

and management contracts in China, most recently doing EPC on a $15-million
manufacturing plant for American Axle in Shanghai this year.

http://enr.ecnext.com/comsite5/bin/enr_descrip...&item_id=0271-47431&format_id=XML&action=print (4 of 5) [3/27/2008 7:25:02 PM]

Welcome to the ENR site

Labor Crunch

But as prospects explode, the availability of manpower is a snag that contractors accept
as a long-term market problem to be reckoned with. “The trend is that everywhere you
go these days, you’d better have a labor strategy,” says Greg Kozicz, CEO of St. Louis-
based Alberici Constructors Ltd. “Demand for ironworkers is really significant, and as a
result, we are seeing more relatively inexperienced people in the trades. Owners are
staggering phasing to deal with lack of labor, and sometimes competing owners are
communicating with one another in order to phase projects around labor availability.”

In the labor crunch’s wake, “there have been some delays,” says CH2M Hill’s Smith. To
cope, “we build time into projects, but it takes creativity, and we have to be a lot better
at every aspect of the delivery process.”

advertisement
...

Copyright © 2006 The McGraw-Hill Companies - All Rights

Reserved.

http://enr.ecnext.com/comsite5/bin/enr_descrip...&item_id=0271-47431&format_id=XML&action=print (5 of 5) [3/27/2008 7:25:02 PM]