In the past, the international market has been a refuge for U.S. design firms facing tough times at home. But since the World Trade Center and Pentagon attacks in 2001, engineers have been seriously re-examining their priorities abroad. Security has now joined payment reliability, currency stability and rule of law as a key issue to be considered.

"We've really looked at the international market with more restraint in the past three to five years than we have in the past," says Frank DeMartino, president and COO of Parsons Corp. He says the design firm is taking a cautious approach to some countries in Southeast Asia where shaky or repressive political situations may put employees at risk. DeMartino declines to identify them.

"We can't help but notice some of the anti-Americanism in some of the foreign markets where we work," says Robert Uhler, CEO of MWH. The firm has tried to identify locally in any country where it works closely with local personnel, clients and regulators. The company's decision two years ago to change its name to MWH after the merger of Montgomery Watson and Harza has actually helped in an ironic way. "There are firms out there with names that are automatically associated with America or Britain that may be experiencing a sort of backlash over the war in Iraq," he says. Having an anonymous name avoids this.

1 ABB Lummus Global
2 Bechtel
3 Fluor Corp.
4 Foster Wheeler Ltd.
5 Jacobs
6 Earth Tech
7 Kellogg Brown & Root (KBR)
8 AECOM Technology Corp.
9 The Louis Berger Group Inc.
10 MWH
11 URS
13 Parsons Brinckerhoff Inc.
14 Parsons
15 CH2M HILL Cos. Ltd.
16 Black & Veatch
17 The Shaw Group Inc.
18 The ERM Group
19 CDI Engineering Group
20 Hellmuth, Obata + Kassabaum
21 Paragon Engineering Cos.
22 Aker Kvaerner Inc.
23 Mustang Engineering LP
24 VECO Corp.
25 Skidmore Owings & Merrill LLP
26 CDM
27 Burns and Roe Group Inc.
28 Fugro Inc.
29 Sargent & Lundy LLC
30 Lockwood Greene
31 Corrpro Companies Inc.
32 M+W Zander U.S. Operations Inc.
33 Kohn Pedersen Fox Associates PC
34 Washington Group International Inc.
35 Gensler
37 RTKL Associates Inc.
38 T.Y. Lin International
39 Heery International Inc.
41 Wimberly Allison Tong & Goo (WATG)
42 Gulf Interstate Engineering Co.
44 Ecology and Environment Inc.
45 BE&K Inc.
46 Willbros Group Inc.
47 Perkins & Will
48 CMA Architects & Engineers LLP
49 Arquitectonica
50 Wilbur Smith Associates

For some firms, security of personnel is a way of life. ABB Lummus "is very much thought of as an American company," says Khalid Farid, executive vice president. "We have worked in Colombia, Nigeria and Algeria without trouble because of the care we take in safeguarding our people." He concedes, however, that security remains a constant concern. "We are cautious about some countries. We won't take a job in them if it requires placement of large numbers of people in-country," he says. But as technology and communications improve, Khalid says more work will be done away from the jobsite.

The traditional paradigm of pursuing work abroad when the U.S. market softens seems to be eroding. "We're currently in 37 countries, but were are considering contracting down to 34," says Uhler. "But that's a market-based decision. We see competitors out there who say they plan to withdraw from all but a few prime foreign markets. It's a different attitude entirely from the past."

Even so, China continues to lure with its huge population and growing prosperity. Firms find it is not an easy market to crack, however. "China has wonderful potential and values U.S. designers, particularly the knowledge base we bring," says Henry Mann, CEO of Perkins & Will. "But we are priced significantly higher on the basic design services than local firms." As such, partnering with local firms is a must, he says. Getting established in China "requires an investment," Mann contends. "We've been marketing in China for the past six years and saw that investment start paying off in 2002."

Another architectural firm doing well in China is NBBJ. "In China, you don't build projects; you build cities," says Scott Wyatt, managing partner. This means starting with infrastructure but rapidly proceeding to architecture. "We've found quite a few opportunities throughout China in sports facilities, not just for the Olympics [in 2008] but for the local communities," he says. But Wyatt agrees about the need for building local relationships. "You have to pay close attention to the culture and the regulations, so we generally partner with local firms," he says. "We generally found them to be sophisticated and good partners."

Earth Tech is another company finding success in China. Privatization is still a necessity for clean water there, says President Diane Creel, who will leave the firm next month. Earth Tech is "now the largest privatizer in China," she claims. "We have three major contracts there, two for water and one for wastewater."

China also continues to grow as a corporate construction market. Lockwood Greene recently won a major auto plant job for BMW in Shenyang through its newly formed partnership with Dutch designer Tebodin BV. "We've been able to share in some of its strong relationships with European firms while providing access to regional markets where Tebodin didn't have a strong presence," says Bill Linton, Lockwood Greene director of strategic development and marketing. "Tebodin had a relationship with BMW, and we had offices [in China] and that helped us with this contract."

But another once-key Chinese market has proved disappointing. "Hong Kong has been a tough market, with most of the Chinese investment going to Shanghai or Beijing," says Uhler. "It is now experiencing deflation, and we are now having to cut salaries there," says Robert Prieto, chairman of Parsons Brinckerhoff. "You think it's tough telling people you're holding the line on salaries? Try telling them they have to take a pay cut."

Other global markets are also struggling through economic jitters. In Western Europe, the market has softened considerably. "Germany is not growing–it barely avoided a recession," says Yorgos Papatheodorou, manager of strategic and market development for Lockwood Greene. "And the appreciation of the Euro against the dollar hasn't helped businesses throughout the continent. Even previously strong markets like the U.K. and Ireland have been falling off."

Financial pressures in the U.S. and elsewhere are having a big impact on multinational clients' construction programs in Europe. "Many employers in the U.S. have changed from defined benefit plans for retirees to defined contribution plans," notes MWH's Uhler. "But in Europe, defined benefit plans are still the rule." With a declining financial market and low interest rates, large clients are being forced to dip into earnings to maintain their retirement plans, causing some to defer capital spending plans.

Many designers are looking at the former Soviet Union as slowly realizing some of its potential. "Russia is humming along," says Papatheodorou. "But much of that is fueled by higher oil prices." Further, the country has proved to be politically stable long enough to become interesting to investors, he says. Farid of ABB Lummus agrees that downstream petroleum work continues apace. "Russia has great potential, but investment in the more upstream projects has been proceeding at a slower pace," he says. Click here to view chart

Water and wastewater privatization is also in demand in Europe and elsewhere. Earth Tech and Yorkshire Water recently were selected to privatize water and wastewater facilities on all U.K. military bases. Creel says there are 900 water-wastewater sites in southern England alone. She also is enthusiastic about environmental work in Eastern Europe. "We just won a contract for a privatized wastewater facility for an oil company in Hungary," she points out. "And in the Czech Republic, we are doing environmental closure work on old Soviet bases."

While a likely multibillion-dollar reconstruction in post-war Iraq will alter the Middle East market dynamic going forward, current hostilities there and elsewhere in the region have not seemed to weaken its current potential. "We are very strong in the Middle East and despite all that is going on we believe that the market is going to get stronger and more stable," says Parsons' DeMartino.

Farid says a new government in Iraq could spur massive development. "People have a lot of expectations about post-war Iraq. After all, it has the second largest oil reserves in the world," he notes. But not everyone has their sights set on Iraq. Many designers complain about the secretive reconstruction procurement process. And some simply are not going to bother. "We won't be chasing the Iraqi market," says Noel Watson, CEO of Jacobs. "We will stay home and take care of our customers here."

Many firms are staying home when it comes to Latin America. "Mexico has been hurt bad by the recession in the U.S.," says Papatheodorou. "Argentina seems to have finally hit bottom, although it still has stability problems," he adds, noting the country's gross domestic product fell 12% in 2002. Other nations are in the same boat. "Venezuela had a lot of plans on the boards but the political crisis has put them all on hold," says Farid.

Overall, the world has become a much more complicated place and firms now are increasingly more cautious before grabbing their passports.

Click here to view Cover Story: Top 500 Design Firms>>

Click here to view Top 500 Design Firms List>>