Blending companies
Wood’s local leader tells how he’ll bring Amec Foster Wheeler into the fold.
Wood Group’s $2.7 billion acquisition of Amec Foster Wheeler, which closed last week, creates a newly branded Wood with a logo featuring lowercase lettering and a period at the end — “Wood.” The two United Kingdom-based engineering and construction giants for the energy and industrial sectors combined for a total head count of 55,000 people, including more than 6,000 in the Houston area.
Wood Group focused on offshore project design and engineering, and that expanded to onshore U.S. shale projects. Two years ago, Wood Group bought the Infinity Group, based south of Houston in Clute, to expand in construction and maintenance work for the refining and petrochemical sectors.
Meanwhile, Amec and Foster Wheeler just merged three years ago to create a Houston strength in refining and petrochemical engineering work.
Leading much of the new team is Andrew Stewart, a 40-year-old Australian who moved to Houston almost two years ago. He’s essentially Wood’s highest-ranking official in North and South America, and he spoke to the Chronicle last week about his plans.
Q: How would you describe the merged company, as well as the new brand launch?
A: We’re a world leader in the delivery of projects, engineering and technical services across energy as well as industrial. We were quite deliberate about having a new name and having a new logo. The reason for that is we really wanted the acquisition to be a new start for 55,000 employees, rather than Amec Foster Wheeler being acquired by Wood Group. So the name is obviously a progression from Wood Group, and the color palette (purple, green and blue) is from Amec Foster Wheeler. It reflects that we have a breadth and depth that is now unmatched.
Q: How is the new company more diversified? Does that make it stronger?
A: Wood Group was around 80 percent oil and gas — mostly upstream — and, as of now, we’re about 55 percent oil and gas. It’s still the key part of our portfolio, but it does enable us to have a sector and geographical spread. Having that natural balance with downstream is helpful. That is a growing sector over the next couple of years. We have a great position now in mining that we’ve never had before. Amec Foster also has a business called power and process, which is 60 percent renewables, largely solar. So having a progressive energy mix here in the Americas is really helpful.
Q: Because of job cuts and business divestitures, the total employee counts for Wood Group and Amec Foster Wheeler shrunk from about 64,000 last year to 55,000 with the completion of the merger. Will that downsizing continue?
A: Make no mistake about it, we’re bringing the two businesses together to grow. And both businesses in Houston today are adding head count. Albeit it’s modest, but it is a growth story today in Houston for both of the legacy businesses. We’ve publicly committed to a cost synergy target, which justifies the price of the deal. And, really, that target will be delivered over three years, and a large part of it will be non-labor (nearly $200 million in annual savings).
Q: So there will be office closures?
A: Of the offices where we are physically, we’re literally down the street from each other in the Energy Corridor. We’ll probably do an office-by-office approach, because we do want to co-locate. We feel that creates collaboration and shoulder-toshoulder approach. Physically which buildings we’ll sit in is yet to be determined because we certainly have projects in play, and we don’t want to cause any non-productive time or interruptions. We’ll get after that fairly quickly because, as you know, it’s either won or lost with culture and how you work together. So, certainly, we have a list of all 226 offices in the U.S., and we do have a timetable, and clearly we’re focusing first on those that are easier. We have the Wood Group campus here (Barker Cypress Road and Park Row Drive), the Amec Foster Wheeler building (North Eldridge Parkway and North Dairy Ashford Road), and the other major office is in Deer Park. We have about 350 out there.
Q: So the business diversification is key?
A: What makes it easier, particularly in Houston and the U.S., is the businesses are so complementary. Everything we do, they don’t, and vice versa. That naturally gets us to a good place that’s exciting, rather than if we’re here with consolidating two offshore groups. We didn’t compete much at all in the U.S. market. There’s no wholesale consolidation. Bricks and mortar are a huge part of our costs base, and we’re keen to tackle that quickly. The natural one behind that is IT with getting all that hardware and software integrated. And then there will be some back-office efficiencies. But we’re focused on the non-labor.