Aecom overseeing infrastructure projects ‘from concept to completion’
For years, Aecom Technology Corp. focused on engineering and design work for projects as diverse as a new financial district in Saudi Arabia in 2008 and a high-speed rail link from Hong Kong to mainland China in 2009.
But customers now want companies that can provide one-stop shopping for infrastructure projects, and the Los Angeles firm has been remaking itself in response, Aecom Chief Executive Michael S. Burke said.
As an example, Burke cited an upcoming project in downtown L.A.’s South Park area that will feature an $80-million, 40-story residential high-rise near Staples Center.
“Rather than just engineering or being a contractor,” Burke said, “we will design it, construct it. We’ve put the capital up to finance it, and we will be a part owner in the building,” with L.A. developer firm Mack Urban. Work is scheduled to begin this year.
Aecom’s goal, Burke said, is to become “the premier, fully integrated infrastructure firm in the world,” able to handle major projects “from concept to completion.”
The company is already a global powerhouse. It has 45,000 employees in 150 countries and generates about 60% of its business in Asia, the Middle East and Europe.
In the U.S., Aecom has been involved in an array of projects. It was a consultant on the $17-billion 2nd Avenue subway project in New York.
Locally, Burke said, Aecom is also providing design, construction and financing services for a new high-rise condo, hotel and nightclub project in Los Angeles called Sunset Towers.
In the Middle East, the company managed development of the Saadiyat Island cultural district in Abu Dhabi in the United Arab Emirates.
In 2012, Aecom developed the master plan for the London Summer Olympics.
Aecom is also a rarity, a Fortune 500 company that intends to remain in Los Angeles.
“There is a great pool of talent here, and Los Angeles is the gateway to the Pacific,” Burke said.
Its history dates to 1980, when it was formed as Ashland Technology, then a subsidiary of Ashland Oil Inc. It became an independent company in 1990.
Aecom went public in May 2007, selling 20 million shares at $20 each and raising $400 million.
In 2010, Aecom bought New York giant Tishman Construction Corp., the company that was managing construction of the new One World Trade Center in New York.
The latest
Aecom said last month it would acquire URS Corp. of San Francisco in a $6-billion deal, including assumption of about $2 billion in debt, that would make it the largest publicly traded company in Los Angeles.
When the deal closes, Aecom and URS will be the second-biggest engineering and construction firm in the U.S. behind Fluor Corp., with 95,000 workers and $19 billion in annual revenue.
Aecom also is buying Hunt Construction Group, a major builder of stadiums, airports and healthcare facilities.
Accomplishments
Aecom is overseeing the planning of the complex for the 2016 Summer Olympics in Rio de Janeiro.
The company is working on the design and management of a 42,000-seat stadium for the 2018 World Cup in Moscow.
Also on Aecom’s list is the design for stadiums in Qatar for the 2022 World Cup.
Challenges
To maintain growth, Burke said, “we’re continuing to go after the larger, more complex public/private partnerships.”
“A critical part of the program is looking at our core clients and selling as many services as we can in an integrated fashion to them,” he said.
There are questions about how quickly Aecom can move in managing the huge company it will become when the acquisition of URS is complete.
Andrew J. Wittmann, an analyst with Robert W. Baird & Co., said that “95,000 people is really an unprecedented size” in the engineering and construction sector, asking, “How do you get your arms around structuring this organization and managing some of this?”
Analysts
Of the nine analysts that cover Aecom, two have it rated as a strong buy, one rates it a buy and six suggest holding the stock.
Andrew Obin, a research analyst for Bank of America-Merrill Lynch, said Aecom was “one of the best risk-rewards” in the engineering and construction sector.
Twitter: @RonWLATimes
