Fluor, Japanese Firm Plan Joint Construction Ventures

In a precedent-setting agreement, Fluor Corp. said Wednesday that it will join forces with a Japanese company to enter bids on major construction projects in both the United States and Japan.

The “cooperation agreement,” believed by industry experts to be the first of its kind, will allow the Irvine-based company’s Fluor Daniel construction unit to participate in projects with Ohbayashi Corp., one of Japan’s “Big Six” construction firms.

Jerold Glenn, Fluor group president in charge of worldwide sales, said the pact will give Fluor a foothold in the huge Japanese building market.

“We have been looking for some time at the Japanese market, and we feel this agreement is the best way to go,” Glenn said. “We will be able to gain experience in the Japanese bidding process,” he said, which until now has been virtually closed off to American construction companies.

The deal comes just one day after Japanese Prime Minister Noboru Takeshita met with President Reagan in Washington to discuss ways to open the Japanese construction market to American corporations.

“Although we are not trying to gear this decision directly to political considerations, obviously they were a factor in our evaluation of how to approach the market,” Glenn said.

Fluor is targeting its efforts toward private construction projects. This differs from other American construction companies, which are eager to land a piece of Japan’s public works projects such as the Kansai Airport and the Tokyo Bay bridge.

Glenn said Fluor hopes to work with Ohbayashi in Japan to build such high-tech facilities as pharmaceutical and petrochemical plants for American clients, an area in which it has extensive experience in the United States. On the other hand, the firm wants to expand its U.S. construction business for Japanese companies. Ohbayashi is currently contracting out to Fluor part of its construction of a Toyota plant in Kentucky.

No agreement has actually been struck between the two companies to build in Japan. “We have identified some potential projects, but it would premature to discuss them at this time,” Glenn said. Projects would take the form of joint ventures, he added.

Wall Street analysts and other industry experts generally reacted favorably to the deal. “Japanese contractors have a lot of cash. So far they’ve been using it to do business directly in the U.S., in contrast to the Europeans, who do mergers and acquisitions. But it’s too early to know what this agreement means,” said Mark Chalpin, a spokesman for the International Engineering & Construction Council, a Washington-based lobbying group.

“What Fluor is doing is announcing that it wants to position itself to take advantage of any bidding opportunities that may arise,” said Deborah L. Thielsch, an analyst at First Boston, a New York brokerage house. “The one question I have is how much they can actually benefit, because most of the bidding that will be coming up in the next year are public works, an area in which Fluor is not competing,” she said.

Japan’s construction proposal disappoints U.S., Page 2.