CORPORATIONS: Flourishing Fluor

Most construction companies have been hurt by sharp cutbacks in corporate capital spending plans. But not Fluor Corp. Riding the crest of a mighty global wave of spending for energy projects—pipelines, drilling rigs, refineries—the Los Angeles-based engineering firm has won more business than almost any other heavy construction firm. It has a current backlog of projects worth an incredible $10 billion.

What makes this record doubly remarkable is that the company was in trouble as recently as 1972. Its major clients, the oil and petrochemical industries, sensed that they had enough facilities worldwide and virtually stopped building. Instead of paring his payroll as competitors were doing, Chairman J. Robert Fluor kept several hundred of his top engineers and designers. He also maintained a team to work for the Arabian American Oil Co. (Aramco) and opened three new offices overseas. Each of these decisions he explained as an "investment in the future."

Bob Fluor, 54, a grandson of the firm's founder, was taking a calculated risk that business would somehow pick up again. But that came naturally to a man with a stable of 25 race horses and a reputation for patience, even under pressure. His prescience paid off when oil prices started to skyrocket at the end of 1973. Suddenly, energy projects that had previously seemed uneconomic looked profitable, and Fluor had skilled engineers ready to do the work. The jobs were immense: a $1.4 billion contract to build twelve pumping stations and the Valdez terminal for the trans-Alaska pipeline, for example, and a $1 billion plant for the South African Coal, Oil & Gas Corp. Ltd. to convert coal into oil and petroleum products—the world's largest such facility.

Last June, Aramco asked Fluor to design and build a $4 billion plant to collect, process and pump 5 billion cu. ft. of natural gas per day. When completed in 1979, the facility will fuel Saudi Arabia's $142 billion industrialization program. The job will return to the U.S. a lot of money that American industries spend to buy foreign oil. "The Saudis instructed us both to buy as much equipment as possible in the U.S. and maximize engineering in America," says Bob Fluor. "That may be $3 billion in equipment orders. It certainly won't hurt our balance of payments." The company's own books are not hurting, either. Revenues soared 65%, to a record $1.3 billion in the fiscal year ended Oct. 31, and profits rose 43% to $47 million.

Fluor's formula for success starts with a strong tradition of meeting tight construction schedules—a big attraction because a month's delay on a $100 million project can easily cost the builder $1.5 million. The firm also makes a habit of training local workers to build and run completed facilities, a practice that has been much appreciated by the governments of Greece, Taiwan, Indonesia and South Korea. Partly for these reasons, Iran recently favored Fluor with a contract to build 65% of a $750 million refinery near Isfahan.