THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: MONDAY, June 27, 1994 TAG: 9406250143
SECTION: BUSINESS WEEKLY PAGE: 2 EDITION: FINAL
SOURCE: Dave Mayfield
DATELINE: 940627 LENGTH: Medium
Two British-owned companies - Hanson PLC and Tarmac PLC - have in the past year made Hampton Roads the base for their restructured U.S. construction operations.
{REST} Tarmac was the latest to make the move. In March, the concrete and materials company decided to relocate the headquarters of its Tarmac America Inc. subsidiary from Reston to Norfolk, where one of Tarmac America's units has been based. It also decided to slim down its regional office in Deerfield Beach, Fla., and move much of the decision-making for the Florida operation to Norfolk.
John Carr, previously managing director for Tarmac Mid-Atlantic in Norfolk, is now chief operating officer for Tarmac America. He runs the entire U.S. operation on a day-to-day basis from the Tarmac office in Norfolk Industrial Park.
Carr says Tarmac America's Norfolk headquarters staff could double to about 100 by the time the restructuring is done in October. But Tarmac's overall administrative staff in the United States will be about 40 less, he said. That, plus the fact that operating costs are cheaper in Hampton Roads than Northern Virginia, will produce about $3.5 million a year in savings, he predicts.
This is significant given Tarmac America's marginal profitability. Last year, the U.S. subsidiary posted an operating profit of $5.2 million on sales of $332.7 million, reported Tarmac PLC's annual report. That was an improvement from the year before, however, when Tarmac America had an operating loss of about $2 million on slightly higher sales.
Ideally, Carr said, Tarmac would be near an airport, like Charlotte's or Atlanta's, with direct flights to England. But Tarmac doesn't have nearly the market presence in those cities as it does in Hampton Roads. And one way he plans to continue Tarmac's revitalization is getting senior managers out more on construction sites or in concrete plants.
``It's good to remember what you do for a living,'' Carr says.
Hanson PLC's choice last October of Virginia Beach for its U.S. construction subsidiary's headquarters had a smaller local economic impact. Only six people work in the head office of the newly organized subsidiary, Spectrum Construction Group. But it's a high-profile operation, a nameplate local economic-development types love to toss around when recruiting other big businesses.
Spectrum oversees Hanson's 10 U.S. construction companies. Together last year, they did $456 million worth of business in 15 states as far as New Mexico. That put Spectrum 57th on Engineering News Record magazine's latest list of the 400 largest U.S. construction contractors. It's the second-largest contractor in Virginia behind only ICF Kaiser International Inc. of Fairfax, a $1 billion-a-year outfit, ranked 32nd.
Within Spectrum, one of the biggest units is Tidewater Construction Corp. In fact, Tidewater's headquarters along South Military Highway houses the handful of Spectrum executives.
David Eastwood, Spectrum's president, had run Tidewater after it was bought in 1987 by another British company - one that Hanson later took over. Hampton Roads was chosen for Spectrum's base, Eastwood says, largely because it's a central location for the company, which does most of its work along the East Coast.
If the location had been based on business conditions, Spectrum would have been headquartered in the Carolinas or Georgia.
Virginia is one of the toughest states for Spectrum to operate in right now, Eastwood says. Road and bridge construction, accounting for about 70 percent of Spectrum's work, is off. That means more spirited bidding for the contracts that are available - and thus lower profit margins.
Yet Tidewater, in particular, has gained its share of work in Virginia. It's the lead contractor on the Coleman Bridge project at Yorktown. Replacing sections of that bridge across the York River is a $75 million job.
Eastwood says Tidewater will also seek the contract to build a parallel bridge for the Chesapeake Bay Bridge-Tunnel. The bridge-tunnel commission's requests for bids on that job, which could cost as much as $300 million, could go out before year's end.
``We're looking forward to that one,'' Eastwood says. Tidewater led the building of the current Bay Bridge-Tunnel in the 1960s.
by CNB