Zachry Engineering Corp. burst out of the recession with a full head of steam. On the heels of a tough couple of years, the design arm of Zachry Holdings is back among the region's powerhouse firms. After its regional revenue dropped from $124.5 million in 2009 to $41.4 million in 2011, the company more than doubled the total in 2012, reaching $90.4 million. That secured it eighth place on the current list of top design firms in Texas and Louisiana.
Zachry held its ground in the down years, retaining key personnel and positioning itself to take advantage of the region's significant power sector demands in the coming years. In light of its recent success, ENR Texas & Louisiana names Zachry Engineering Corp. its 2013 Design Firm of the Year.
Old Firm, New Capabilities
While the roots of San Antonio-based Zachry Holdings reach back to 1924, its engineering arm is relatively new. Seven years ago, Zachry Holdings acquired Utility Engineering, a Denver-based firm with which it had partnered on joint venture projects. "Zachry Engineering sprang out of that," says Keith Manning, executive vice president of Zachry Holdings. "It's been an organic growth."
More than just creating a stand-alone engineering shop in a construction firm, the acquisition established Zachry as a true EPC contractor, significantly bolstering its ability to land work in the highly competitive power, petroleum and industrial sectors. "Zachry Engineering is very important to the strategic evolution of our business," Manning adds.
The NRG Cedar Bayou plant in Baytown, Texas, the company's first EPC project, included Zachry Engineering and Zachry Industrial. Completed in 2009, it was named by McGraw Hill Construction as the best industrial project in Texas and the best overall project. The following year, the company's EPC work on Topaz Barney Davis and Nueces Bay power projects in Corpus Christi also earned best industrial project honors.
The company's project successes also earned it repeat assignments from Golden Spread Electric Co-op. The utility's $20-million, 168-MW Antelope Station project in Abernathy, Texas, which was completed in 2011, includes a 9.34-MW Wartsila reciprocating engine generator. Zachry followed up as EPC firm for the owner's $60-million Mustang Station near Denver City, Texas, which was completed in March 2013.
Although revenue was lean in 2010 and 2011, Zachry executives maintain that the firm had a sufficient pipeline of work during those years with significant future prospects on the horizon.
"We certainly weren't growing during the recession, but we had a pretty good backlog of work, primarily in the power space, at that time," Manning says.
Last year, the company started roughly $200 million in EPC work at Calpine Corp.'s Channel Island Energy Center in Pasadena, Texas, and Deer Park Energy Center in Deer Park, Texas. The projects, which will add around 400 MW of combined capacity, are scheduled for completion in 2014.
Given its pipeline of projects, more than 93% of Zachry Engineering's 2012 revenue was in the power sector. On this year's list, the firm ranked third in solar power, eighth in fossil fuel, 11th in nuclear plants, 14th in power and 15th in cogeneration.
While power projects remain its primary target, Zachry also sees opportunities to expand in other market sectors. In 2012, it signed an $80-million contract to design and build a new production plant for emulsion polymers at BASF's Verbund site in Freeport, Texas. The plant, set to begin production in mid-2014, will manufacture acrylic emulsion polymers used for architectural coatings, construction chemicals, adhesives and paper chemicals. Jerry Burke, president of Zachry Engineering, sees it as a cornerstone for future growth in EPC. "It's part of what we see as growing process, petrochemical and refining markets," he says.