Face to face: Marc Heerink, Fluor
Marc Heerink says Fluor’s experience on multibillion-dollar mega plants, coupled with its integrated OneFluor strategy, will enable the EPC giant to maintain and grow its sizeable market share in the Middle East, regardless of the oil price
Considered by many to be the energy capital of the world, the Middle East has built – and is continuing to develop – oil, gas, and petrochemical facilities on a grand scale. High-profile construction projects, such as the UAE’s Expo 2020 site and Saudi Arabia’s Jeddah Tower, might garner the lion’s share of column inches, but their project spends pale in comparison to the region’s largest energy and chemical plants.
This segment may maintain a relatively low profile, but it is the stomping ground of numerous industry giants. And make no mistake, Fluor is one of the biggest. In 2015, the US-headquartered engineering, procurement, and construction (EPC) outfit secured $21.8bn of new awards, and achieved revenue of $18.1bn. Fluor employs more than 60,000 people worldwide, 4,000 of whom (excluding Stork’s 1,400 regional employees) are based in the Middle East. At present, the firm is managing more than 14,000 construction workers across its regional project portfolio.
Marc Heerink became Europe, Africa, and Middle East (EAME) executive director for business development within Fluor’s Energy and Chemicals division on 1 October, 2016. Speaking to Construction Week just weeks later, he seems impressively undaunted by the scope of his new role. In fact, he is adamant that the magnitude and diversity of Fluor’s operations represents one of its greatest strengths.
“Fluor has been active in the Middle East for a truly long time,” he begins. “We’ve enjoyed more than 65 years of continuous operations [in this region]. We have offices in Saudi Arabia, Kuwait, Qatar and the UAE, and we’re active in the sectors of oil and gas, chemicals, power and infrastructure, government services, mining and metals, life sciences and advanced manufacturing, and water and wastewater. This [diversity] is a key driver for Fluor; we call it our OneFluor strategy. We have multiple businesses, and the good thing about that is that if one goes through a bit of a trough, others will thrive. Being a diversified company is the core of our strategy.”
Fluor arrived in the Middle East in 1947, upon winning an award from Aramco – now Saudi Aramco – to expand a major oil and gas facility in the kingdom. In the years since, the company has completed approximately 600 projects in the region, with a combined value of more than $150bn in today’s money.
This is an undeniably strong heritage, but the past two years have seen the price of oil fall dramatically, from more than $110 per barrel in 2014 to approximately $45 today. Diversified though its operations may be, one may expect Fluor’s Middle East businesses to have been adversely impacted during this period. However, when asked about the firm’s recent regional performance, Heerink is surprisingly upbeat.
“Business has been good for Fluor in the Middle East; we’ve enjoyed a number of very successful [contract] wins,” he explains. “In Kuwait, for instance, we are working on Kuwait National Petroleum Company’s (KNPC) Clean Fuel Project (CFP), awarded in 2014; and the Al-Zour Refinery Project, awarded in 2015.
“We’ve also been active in the mining sector. About a year ago, we finished a large-scale aluminium project on behalf of the Ma’aden-Alcoa joint venture (JV) in Saudi Arabia. This was a $10.8bn (SAR40.5bn) programme, with various scopes of work, including a bauxite mine, an alumina refinery, an aluminium smelter, and a rolling mill. Fluor executed front-end engineering design (FEED); engineering, procurement, and construction management (EPCM); and project management consultancy (PMC).”
In the kingdom, Heerink and his team are supporting a $2.7bn (SAR10.13bn) facility on behalf of Saudi Aramco-Dow Chemical Company JV, Sadara Chemical Company. This contract involves the world’s largest single-phase development for a chemicals facility.
Fluor’s historic GCC energy projects include the front-end engineering package for the UAE’s Shah Gas Development; Qatargas Operating Company’s Berth 6 Project in Ras Laffan, Qatar; and FEED services for Qatar Petroleum (QP) and Shell Global Solutions’ Al-Karaana Petrochemical Project.
Fluor is also active on a selection of regional infrastructure developments, such as the Saudi Landbridge Project and King Abdulaziz University (KAU); and government projects for clients like the US Air Force Center for Engineering and the Environment, and the US Army.
Though Heerink concedes that Fluor’s experience on multibillion-dollar mega plants is commercially advantageous when it comes to winning new work, he also emphasises that his team is not solely focussed on large-scale developments.
“The ability to deliver megaprojects is a distinct differentiator for Fluor,” he explains. “So yes, clients choose Fluor to support multibillion-dollar projects for a specific reason; that’s what we’re known for in the market. Nevertheless, we are supporting a whole range of projects in the Middle East, starting from conceptual work, right up to operations and maintenance. These are projects of all sizes. We might be best known for our work on mega- and even gigaprojects, but we are also working on developments with investments [of less than $10m].”
When Heerink says that Fluor is performing well in the Middle East, he is not suggesting that the regional downturn has had no effect on the region’s construction or infrastructure segments. Instead, he argues that, owing to his employer’s historic strategic decisions, his team is succeeding in winning a larger share of a smaller market.
“We too see a market in the Middle East that has come down significantly,” he elaborates. “However, throughout the down cycle, we’ve been operating in a good manner. So sure, we see a market with fewer opportunities ahead, and it’s going to take all of our diligence to deal with that. But I don’t foresee a lower level of activity for Fluor; just fewer prospects. What does that mean? It means that we need to win a higher percentage of work because we don’t want to see our activity decreasing.”
And this, according to Heerink, is why the OneFluor strategy has been – and will continue to be – so important for his team’s Middle East operations. Essentially, Fluor has made a series of investments, and entered into numerous collaborations, to ensure that it can offer a comprehensive suite of services to its clients.
“A market that sees less opportunity and, therefore, more competition, has actually forced us to reconsider the way in which we execute and win projects,” says Heerink. “With this in mind, we’ve rolled out strategies that form part of, what we call, our integrated solution.
“For instance, Fluor has grown an extremely strong procurement capability. We are buying approximately $16bn worth of materials, equipment, and services on an annual basis. And through these activities, we know very well how to buy in China and India and, indeed, across the world. In a number of locations, we’ve established self-perform construction and fabrication capabilities; we’re increasingly using modularisation.
“For example, in 2015, Fluor formed a new JV with COOEC, called COOEC Fluor Heavy Industries Co Ltd (CFHI). Through this partnership, both stakeholders will own, operate, and manage the Zhuhai Fabrication Yard in China’s Guangdong Province. This collaboration will result in one of the world’s largest fabrication yards for onshore and offshore modules. Fluor holds 49% ownership in the JV, whereas COOEC has a 51% stake.
“This integrated strategy means that, wherever we have the capability, we can control the entire engineering, procurement, fabrication, and construction (EPFC) process, in addition to FEED. To remain competitive and win a larger market share, we’ve had to come up with smart ways of designing and delivering plants.”
In terms of Heerink’s personal priorities for Fluor’s operations in the Middle East, he is confident that he has assumed the responsibilities of EAME executive director at an opportune juncture.
“My main priority is to work with the Fluor team, and guide the [company] through a period of lower [market] activity,” he explains. “This will mean [pushing ahead] with the smart approaches that we’ve been developing over the past few years: the integrated solutions and OneFluor strategies.”
Heerink concludes: “Fluor has always been a company with good foresight. We invested in our operations before the difficult times arrived and, for that reason, so far, we’ve come through this downturn in a very good way. And now, because of the pre-investments that we made, we’re very well positioned to continue operating in an effective manner.”