As Fluor Turns 100, Chairman and CEO David Seaton Reflects on Fluors Success and Market Challenges
Fluor Corp., one of the world's largest engineering, procurement, construction and maintenance services companies, celebrates its centennial in 2012. The publicly traded Fortune 200 firm now has $23.4 billion in global revenue and 43,000 employees in 30 countries. Chairman and CEO David T. Seaton, a 28-year veteran of the Irving, Texas-based company, takes stock in an April 5 interview with ENR Editor-at-Large Debra K. Rubin on market challenges for Fluor and other industry firms.
How important is U.S. energy and infrastructure finance policy to restarting America's growth?
Unfortunately, there is very little adult supervision in Washington and little hope we will see regulating agencies do anything that will be economic enablers in the U.S. Power producers are ready to spend billions on coal plants and fix them with technology, but they need someone to tell them the rules. Even when agencies do, the regulations are so poor, there is no surety. Greenhouse gas regulation is a great example. Change is required and a lot of it.
The U.S. has the highest corporate tax in the world. It is focused on the wealthy. It's an attack on success that has lots of people sitting on the sidelines. For the U.S. to regain momentum, we have to get off the sidelines.
The [Obama] administration, according to Secretary Chu, has said it wants to drive gas prices up to push renewables It's not just about driving a car. It's about firms being able to afford fuel, from trucking companies to airlines.
American public policy has lost touch with the fact that we must have affordable energy. It is the underpinning of our economy. When we put handcuffs on refiners, we don't have economic development. It's a simple fundamental that is lost in Washington.
Anti-business sentiment is hampering growth. The Business Roundtable and other groups that support business, their voice is out there, but it needs a receiver to have a conversation. A good example is how [business, labor and academic leaders, led by General Electric CEO Jeffrey Immelt] took on the challenge at the request of the White House to develop ways to create jobs: Have any of their recommendation seen the light of day after they submitted their report [in 2011]? There is no two-way dialogue.
Fluor has sort of perfected the public-private approach [to infrastructure finance], and it's doing quite well. This is the only way we'll be able to upgrade U.S. infrastructure. Whether we have a federal infrastructure bank or something else, I believe in giving states what they need. But I'm not optimistic we will have a comprehensive U.S. policy.
What is your outlook for Fluor's financial results?
Wall Street is disappointed with our guidance for this year. But we're coming out of the worst recession [and facing effects] from turmoil in Iran and the Arab world and changes in China. Why would anyone be optimistic? There is a lot of headwind and uncertainty. The rest of 2012 will look like 2011. I see improvement in backlog, but it may not translate to earnings until 2013.
Clients have deferred maintenance and capital improvements in an uncertain economy. Do you see rehabilitation and O&M work returning? How does Fluor see itself in this sector?
Middle-size projects will be the first to come back in the U.S. Assets have been starved for capital for years. The whole shutdown-turnaround market will re-emerge here. It has started elsewhere in the world and is a major growth area for us in the near-term. We're well positioned to do that work.
How has Fluor made innovation core to its culture and business model?
We've been a leader in innovation when you look at design tools. Others have followed. But what concerns me is how to attract and retain talent. It's a global issue. Innovation must come from skill sets, so you must get the best and brightest. Construction once was a career, but we have lost our way a bit. Although we are shifting back, the industry must show how attractive a construction career can be.
We must provide stability and opportunity. It's not just a U.S. issue. The Western world will be pinched for skill sets. The way people are learning today is different than when I learned. Teaching techniques may not be keeping up. We need to change the educational process.