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AMEC - Overview

AMEC Plc

A Corporate Profile

By Corporate Watch UK
Completed May 2002

The Company


Summary

Headquarters and registered office: Sandiway House Hartford Northwich CW8 2YA UK

Tel: 01606 883885 Tlx: 669708 Fax: 01606 883996
AMEC London details & CEO: Peter Mason Chief Executive AMEC Plc Carter Lane London EC 4V 5HF

+44 (0)20 7574 3999 / 75395800 (0)20 7574 3199

www.amec.com
AmecLondon@amec.com

Overview

Industry Areas

Materials & Construction - Engineering & Architectural Services
CEO Peter Mason about AMEC:
"AMEC is a provider of services and engineering solutions to the international infrastructure, manufacturing and process industries. The way we see ourselves is creating value for clients through the application of our technology. More and more we are working in an alliance and partnership basis with our clients, moving away from the traditional relationship and traditional forms of contract. We are very much a design-led business."[i]

Market Share/Importance
AMEC claims to be 'a leading international provider of services and engineering solutions to the world's infrastructure, manufacturing and process industries.' In June 2000, construction industry business journal ENR Magazine[ii] labelled AMEC as the world's largest firm, based on international revenue for design services generated outside the company's UK home market.[iii] For the year 2001, ENR Magazine ranked AMEC #1 in its list of Top International Design Firms,[iv] and #12 in its list of Top International Contractors.[v]
AMEC owns 46 per cent of SPIE S.A., the international electrical engineering, infrastructure and construction services company based in France, and will likely buy the balance of SPIE early 2003. SPIE holds a strong position in the telecom market, is the leading telecom and network integrator in France and the 3rd largest in Europe (see section on subsidiaries). Together, AMEC and SPIE employ over 50,000 people in around 50 countries and generate total turnover of approximately £5.5billion.[vi] The oil & gas market accounts for 25% of AMEC sales.

AMEC's top competitors include:

  • ABB - ABB serves manufacturing, process and consumer industries, utilities and the oil and gas markets. Worldwide ABB employs 160,000 people in more than 100 countries and reported revenues of $23 billion in 2000[vii]
  • Amey - Amey is aiming to transform itself from a construction firm into a major provider of business services in the UK.
    Net Income: $30 million in 2000[viii]
  • Fluor - Fluor is a world-leading engineering and construction company; the company designs, builds and staffs offices. Net Income: $19 million in 2001[ix]
  • Balfour Beatty is engaged in construction and engineering in the Asia/Pacific Rim region, Europe, and North America. It handles civil, rail, and power engineering for a wide range of projects. Net Income: $106.0 million in 2000[x]

History/Introduction

AMEC's roots and growth
AMEC Plc has roots dating back to 1848, when Matthew Hall opened a lead-work business in Lambeth. This later became the Matthew Hall Group of Companies. In 1883 Leonard Fairclough started a stone business, which expanded into Construction at the turn of the century. Fairclough Construction and William Press, also a construction group (founded in London in 1913), merged to form AMEC Plc. Six years later the Matthew Hall Group of Companies was incorporated into the AMEC Group.'[xi] In 1982, AMEC was incorporated in England and Wales.

AMEC expanded overseas in 1997 when it took a 42% stake in French builder SPIE Batignolles. The company grew further in 2000 with the £221m takeover of Canada's AGRA.[xii] (For further information regarding SPIE and AGRA see the section on subsidiaries). Investments in SPIE and AGRA have transformed AMEC from being a largely UK oriented business to one with three major markets being the UK, continental Europe and North America. The proportion of total turnover in the UK has been reduced from 71 per cent in 1995 to 35 per cent in 2001.[xiii] Expansion into rapidly developing markets such as South East Asia has been stated as a constant priority for the group.[xiv]

Changing Focus
AMEC started off as a low-margin construction firm, but soon embraced a strategy of reducing the volume of domestic business carried out in traditional contracting in favour of international opportunities and higher value added projects. In the Annual Report 2000 CEO Peter Mason put it like this: "Over the past few years, AMEC's core business strategy has been to generate value for shareholders by transforming the company into a global, service-driven enterprise with a strong base of predictable, recurring revenues from long term clients."[xv] The transformation strategy seems to have paid off; AMEC has delivered solid profits over the last couple of years.[xvi]

Recent Performance & Economic Outlook
AMEC has increased group pre-tax profit in each of the last five years, from £47.5 million in 1997 to £116.7million in 2001.[xvii] Chairman Gillibrand proudly described 2000 as "a year of excellent results". It was a year of intense corporate activity, with the acquisition of AGRA in North America and the further development of the company's partnership with SPIE.[xviii] AMEC also had a successful year in the UK, as the company continued to take advantage of the opportunities opened up by the UK government selling off the country's public utilities through its Private Finance Initiatives (PFIs). AMEC reached financial closure on three large schemes in 2000, including the company's second major hospital project.[xix]
During 2001 new contracts in upstream oil and gas, transportation and environmental consulting were secured. Details of contract awards and partnerships are available at www.amec.com/news/.[xx]

Following the terrorist attacks in New York and Washington on September the 11th 2001, AMEC won big contracts for clearance and reconstruction at both the Pentagon and World Trade Centre sites.[xxi] AMEC expects to spend the rest of this year (2002) clearing rubble from the World Trade Centre site. AMEC also stated that plans to exercise its option to acquire the 54 per cent of SPIE are progressing well, but are subject to shareholder approval. The buy-out will also require EU competition approval, although CEO Mason believes that this will be 'a formality'.[xxii]

AMEC's short-term economic future looks bright with new war-related work coming in and with AMEC's ongoing involvement in Public-Private Partnerships (see also Corporate Crimes section).

Corporate Social Responsibility
AMEC claims to be highly committed to sustainability and published its first sustainability report in 2001. When answering the question 'why sustainability?' AMEC is upfront: Integrated sustainability reporting is "simply good business".[xxiii]
CBE Gillibrand said: "We believe that the company's performance [as reported in the sustainability report] will continue to benefit from the high priority we give to the management of safety, health and environmental issues."
See: AMEC plc Sustainability - Getting started on reporting 2001. This document can be ordered at AMEC free of charge. It includes reporting on the company's health and safety performance, on ethical business conduct and environmental performance, on community involvement and on AMEC's employee and human rights record.
AMEC's rather random list of historical events can be viewed at: http://www.amec.com/aboutamec/level2abouthistory.asp?pageid=6

References
[i] Interview with AMEC CEO Mason about AMEC's merger with AGRA. Available online at: http://twst.com/notes/articles/kas001.html (source: The Wall Street Transcript, date viewed: 24.02.02)
[ii] ENR Magazine homepage: www.enr.com
[iii] www.amec.com/aboutamec/level2about.asp?pageid=1 (AMEC profile, source: AMEC, date viewed: 12.02.02)
[iv] www.enr.com/dbase/2001tid.asp (source: ENR Magazine, date viewed: 12.02.02)
[v] www.enr.com/dbase/2001tic.asp (source: ENR Magazine, date viewed: 12.02.02)
[vi] AMEC plc Annual Report and Accounts 2001, page 2
[vii] 'Donald P. Aiken named president of ABB in the US', ABB Press Release, ABB USA News, 03/05/01
[viii] www.hoovers.com/co/capsule/6/0,2163,93516,00.html (source: Hoover's Online, date viewed: 12.12.02)
[ix] www.hoovers.com/co/capsule/4/0,2163,10594,00.html (source: Hoover's Online, date viewed: 12.12.02)
[x] www.hoovers.com/co/capsule/9/0,2163,90099,00.html (source: Hoover's Online, date viewed: 12.12.02)
[xi] www.users.globalnet.co.uk/~djw02/Assets/Amec_PLC/amec_plc.html (AMEC profile, source: MIDAS Investment Club, date viewed: 12.02.02)
[xii] ‘Railtrack is still a good idea’, The City Interview, Daily Mail, 28 June 2001, website: www.thisismoney.com/20010628/nm34242.html accessed 22 April 2002
[xiii] AMEC Annual Report and Accounts 2001
[xiv] Directory of Multinationals, 5th Edition, The World's Top 500 Companies, Volume 1, A-J, Publisher: Waterlow, London, 1998, page 9
[xv] AMEC Plc Annual Report and Accounts 2000, 'Knowledge, Innovation, Technology', CEO's review, 7 March 2001, page 5
[xvi] (NewsWeb) AMEC Plc continues with its strategy of transforming business and has delivered another solid profit and cash performance in 2001. Extel Company News - United Kingdom; Jan 10, 2002, can be viewed online at: http://globalarchive.ft.com/globalarchive/article.html?id=020110012761&query=AMEC
(source: Financial Times, date viewed: 20.02.02)
[xvii] AMEC Annual Report and Accounts 2001
[xviii] AMEC Plc Annual Report and Accounts 2000, 'Knowledge, Innovation, Technology', Chairman's statement, 7 March 2001, page 3
[xix] AMEC Plc Annual Report and Accounts 2000, 'Knowledge, Innovation, Technology', CEO's review, 7 March 2001, page 6
[xx] AMEC Annual Report and Accounts 2001
[xxi] www.amec.com/news/level2news.asp?PageID=174 (source: AMEC, date viewed: 21.02.02)
[xxii] 'Strong demand for AMEC Services', Financial Times, 8 March 2002, FT.com website: http://globalarchive.ft.com/globalarchive/article.html?id=020308005692&query=AMEC accessed 28 March 2002
[xxiii] AMEC Annual Report and Accounts 2001, page 18
 
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