|Local engineering firm ABMB merges with a Canadian giant to secure its future.|
For more than 25 years, ABMB has been one of the leaders in the local engineering market, with 130 employees, a portfolio of high-profile projects and a niche in the transportation sector.
So it might have come as a surprise to some when the company announced earlier this month that it's being acquired by Stantec, a major player among North American engineering companies, with more than 11,000 employees, $1.6 billion in gross revenues last year and a portfolio of projects that spans the globe.
But really, the deal makes perfect sense for both companies, say industry observers. For the Canada-based Stantec, it's the latest in a string of such acquisitions, part of a deliberate growth strategy the publicly traded company has been pursuing for the past decade on its quest to become one of the top 10 engineering companies in the world. For ABMB, the deal means more opportunities to work in a wider variety of markets and market sectors, which translates into greater security at a time when that is needed more than ever.
“This makes ABMB more competitive,” says Gary Tulacz, senior editor of Engineering News-Record, an industry trade publication. “They will be able to bring more assets to bear when they bid on projects … and they will be able to draw on the experience and technology of the entire group.”
ABMB principals acknowledge as much. Says ABMB principal Mike McGaugh: “We thought, 'They're a big firm. They can offer a lot of resources.'”
Though McGaugh and partner Mike Bruce won't say they were actively shopping their firm around, they concede they were receptive to the idea of selling, in part at least because of the sluggishness of the market niche in which they have established their expertise—transportation construction.
Until recently, it proved to be a lucrative niche, and ABMB has had its share of work both in this area and throughout the region. Among the firm's recent projects are the widening of Interstate 12, site design and associated services for L'Auberge Casino on River Road, and several highway projects in Mississippi, where it has three offices. The firm has also made a name for itself with its CFI traffic flow design, a concept that moves turning traffic to the side to let cars driving straight ahead keep going. ABMB implemented the design locally at the intersection of Airline Highway and Sherwood Forest Boulevard, and has since designed similar systems in five other states.
Though ABMB founding principal Mike Bruce says the firm has a backlog of projects that exceeds the industry average—which is about six months—the cushion isn't as padded as it was just a few years ago. That's because the federal highway funding bill that funnels road construction dollars down to the states has been tied up in Congress for two years, a situation that isn't expected to change at least until after the fall election. Meanwhile, federal stimulus dollars from the recession are all spent, as is the state's post-Katrina surplus money.
“The state's transportation is about one-fourth of where it was just a couple of years ago,” Bruce says. “It's scary.”
A competitive advantage
Becoming a part of Stantec will alleviate some of the pressure ABMB has been feeling. Stantec offers a wide array of services in engineering, architecture, surveying, environmental sciences and management of infrastructure and facilities projects. It has public and private sector clients and more than 170 locations throughout the world, though it was lacking a presence in the Deep Gulf South, which is where ABMB is based.
“They provide an excellent geographic fit for us,” says Scott Murray, Stantec's senior vice president, U.S.-East.
Acquiring ABMB is in keeping with the way Stantec has grown its operations and positioned itself among the world's top 15 engineering design companies. Over the past decade it has acquired 55 firms, many of which, like ABMB, are regional companies with a specialty in one or two particular areas.
THE DEAL AT A GLANCE
A publicly traded, full-service design company based in Canada with expertise in engineering, architecture, surveying, environmental sciences and project management.
By the numbers: 11,000+ employees, 170 locations and revenues of $1.6 billion
Why it works: Acquisitions are the way Stantec grows. The company has acquired 55 firms in the past decade as part of its strategy to become among the top 10 design firms in the world. ABMB gives Stantec a strong presence in the Gulf South, where it was lacking one.
A privately held engineering firm based in Baton Rouge with a specialty in transportation design.
By the numbers: 130 employees, four offices and estimated revenues of $20 million
Why it works: Becoming part of Stantec gives ABMB bench strength and allows it to branch out beyond the transportation sector, which has seen a decline in federal and state funding in recent years.
“Essentially they are looking, as are several publicly held engineering firms, to be as local as possible in as many market sites as possible,” Tulacz says. “They are amassing transportation engineering skills throughout the country.”
If the experience of other companies that have been acquired by Stantec is any indication, the deal with ABMB will be a proverbial win-win. Cliché as that sounds, it gives the local firm much more of a competitive advantage when it goes to bid on projects. That's particularly the case now in south Louisiana, which is a very competitive market at a time when jobs are relatively scarce.
“In Mississippi you might have 10 firms compete for a highway project,” Bruce says. “Here there might be 30 or 40; and though, yes, we're bigger than Mississippi, we're not four times bigger.”
Bruce can't speculate as to why so many companies cross state lines to bid on work here, but he concedes that going up against the big boys has been a tough sell and being a smaller firm has sometimes cost ABMB jobs.
“Now we'll have bench strength,” he says.
Aside from becoming a larger, more competitive company, it's hard to say what other changes are in store for ABMB. One certainty is that the name will change; ABMB will become a local office of Stantec, not an affiliate or subsidiary.
“Stantec's philosophy is to change the name and become a brand unto itself,” Tulacz says.
MAKING THEIR MARK
But Stantec's Murray doesn't anticipate any management shakeups or layoffs. On the contrary, the company will staff up as needed. After all, what made ABMB attractive in the first place was “its strong regional reputation, its clients and the fact it is well managed,” Murray says.
“As long as a firm is well run and well managed, we want them to maintain their focus and their clients,” he says. “We don't want that to change.”
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