Backlog of work gives Fluor Corp. a boost

COLUMBIA, SOUTH CAROLINA - The current economic downturn is affecting companies large and small, and Fluor Corp. is no exception, said David Seaton, senior group president in charge of three of the company’s major operating segments.

“We’re somewhat insulated from the high peaks and the low valleys,” he said, because of Fluor’s “tremendous backlog” of work that stretches over several years. “We have a very robust backlog.”

Occasionally, Fluor loses a backlogged project, he said. Recently Kuwait pulled a project for political rather than economic reasons.

“What we’re seeing is they’re delaying the spending decisions,” he said of clients, although some marginal projects have disappeared.

The result: “We will reduce our staff globally this year,” said Seaton, who grew up in Florence and North Augusta and graduated with a business degree from the University of South Carolina.

Although Fluor is not hiring right now and some people are finishing up projects or retiring, “it’s easier for us to remain stable in Greenville.”

Seaton, 47, heads up the Energy & Chemicals, Power and Government groups, which make up about 70 percent of Fluor. Two of those, the Power and Government groups, are based in Greenville. Government and Operations & Maintenance, which also is in Greenville, have long-term contracts with stability, he said.

Brian Mershon, Fluor spokesman, said employees who are flexible and can move easily may find it easier to remain with the company through any downturns.

“A lot of people in the functional areas have transportable skills,” Seaton said. People in areas such as contracting can work in any group. And the Greenville office is the only one worldwide that has significant operations in all five groups. For example, Houston is primarily oil and gas, and Calgary, Canada, is 90 percent oil and gas.

“Flexibility is key,” said Seaton, adding that the company revamped its offices about five years ago, spreading the work between them. That reduced the boom-and-bust cycle that is often part of a project-based company where employees are hired when a project begins and leave when the project is ended.

Energy is an important element in Fluor’s business mix as well as the fuel of the U.S. economy and economic systems around the world. The U.S. Energy Department’s Annual Energy Outlook 2009 projects that growth in domestic consumption between 2007 and 2030 will slow to about half a percent a year. Also, the use of flex-fuel, hybrid and diesel vehicles will increase sharply by 2030.

In the future, petroleum-based energy probably will no longer be king but will take its place in a mix of various energy sources, he said. That change, however, will take time and won’t be easy.

For example, “we’re going to have brownouts in the not-too-distant future” as energy demand grows and capacity is constrained, Seaton said.

Utilities and project developers are finding it difficult to raise the capital needed to build energy facilities, and the permitting process is too slow, he said.

As a result, he sees nuclear energy as a necessity, and that’s good for Fluor.

“That’s in our sweet spot,” he said, adding that Fluor built nine nuclear facilities in the 1970s and 1980s.

Although nuclear is considered by many a relatively clean energy, the permitting process is slow.

A South Texas project probably is the closest to beginning construction, he said. The major environmental problem is waste storage, Seaton said, and he expects waste to continue to be stored on site.

The Savannah River Site, which is now managed by Fluor, should be allowed to store more waste from nuclear reactors rather than keeping it on site at private utility facilities, he said.

“They know how to handle it,” he said, and the waste is probably safer from theft and misuse there than at locations scattered around the country.

As a product of the Aiken County school system, “I’m really proud we’re at Savannah River,” he said.

When it comes to nuclear energy, “we don’t have a choice. If the U.S. is not going to allow any capacity from coal as a fuel, we have no choice,” and Seaton said, “It’s a robust energy around the world.” But he doesn’t believe nuclear is the only answer.

“Coal will come back,” he said. “Coal is the most abundant natural resource the United States has,” and new ways of cleaning it have been developed.

In addition, equipment is being developed to use heavier crude oil, that from Canada and Venezuela, rather than being solely based on sweet crudes from the Middle East.

Environmentalism is not necessarily opposed to the use of all natural resources.

“We want to be good stewards of the earth. Being a steward doesn’t mean not using our resources,” he said.

Alternative energy sources also will be important. In fact, President Barack Obama has carved $15 billion from his overall stimulus package to be put toward the alternative energy industry.

“I think wind is the coming wave,” Seaton said, adding that Fluor is working with this energy source.

The company has partnered with Scottish and Southern Energy to design and construct the $1.8 billion Greater Gabbard Offshore Wind Farm, producing 500 megawatts of power. The venture is the world’s largest offshore wind farm in the construction phase, he said, and is being built about 15.5 miles off the Suffolk Coast. The project will provide carbon neutral, renewable electricity for more than 415,000 homes.

The project was developed as a joint venture between Fluor International Ltd. and Airtricity, which was bought by SSE in 2008.- The wind farm will feature 140 wind turbines, supplied by Siemens Wind Power A/S. Construction on the offshore site is scheduled to begin this summer and be completed in 2011.- “This investment in Greater Gabbard is... a prime example of the increasing number of renewable projects that are now taking place across the UK,” said John Hutton, UK Secretary for Business.

In addition, the United States must come up with alternative motor fuels, Seaton said.

“There are electric cars. There are hydrogen cars. They have their own challenges,” he said.

BMW Group has developed the Hydrogen 7, a vehicle that operates with both gasoline and hydrogen as fuel sources. Other automakers are trying to develop cars powered by hydrogen fuel cells.

An obvious issue is the distribution system for hydrogen or even electricity. Also, batteries today are not capable of supporting the driving characteristics of the U.S. driving public, he said. Americans tend to drive long distances at any time, not a job for current batteries. But electric cars could be a major solution in large cities, he said.

“Solar and wind will be pieces of the solution” to the need for alternative energy sources, Seaton said. Ethanol will be another part, but it can’t totally replace crude oil. Also, methane gas can be another piece of the energy puzzle.

“A holistic view is what we need,” he said. “It is a multifaceted problem. It will require all the sources to fuel the economy.

Fluor fits in with that kind of view, he said. “We’re pretty diverse as a company.”

Seaton joined the Daniel division of Fluor in 1985, doing work with Milliken & Co. and other textile firms. He began working with Fluor simply to gain a couple of years experience and has never left.

He still recalls something the late Buck Mickel said in a taped broadcast: “I hope this company never loses the personal touch.” And Seaton said he believes Flour has maintained that touch.

“We’re a people company, whether it’s the employees we have or the partners we have,” he said.

The family’s home base remains Greenville and South Carolina, he said. His children were all born in South Carolina, and “this is kind of their home” even though the family has lived in Saudi Arabia and Europe as well as Houston and Dallas.

“Even when we lived overseas, we went to the South Carolina coast” every summer, he said. And the family spent a couple of months in South Carolina every year they were stationed in Saudi Arabia.

He credits Greenville for launching him on his climb in the company. When he was assigned to the Middle East, that was his “launching pad for greater things in the company,” he said.


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