MWH's global reach

Steamboat office of engineering firm prospecting for work in Europe, Asia

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— The story of how a small mine engineering shop in Steamboat Springs became part of a global giant doing business from Buenos Aries to Shanghai is an unlikely one. It has everything to do with hard work, business acumen and a picture postcard.

Alan Krause had already turned down an opportunity to move to Steamboat Springs 10 years ago when he received a postcard of Perry-Mansfield Performing Arts Camp.

"I showed the postcard to Kathy (his wife) and said, 'Are we making a mistake?'"

The postcard had been sent by John Adams, who owned ACZ Inc. Adams had already resigned himself to the fact that Krause would not move to Steamboat. He had sought him out to assume the leadership of the small company he had purchased to augment his existing mining operations. Krause had a secure position in the Denver office of a large mining engineering company, Golden Associates. He never took Adams' offer to become president of ACZ seriously until the postcard created doubt in his mind.

Today Krause is senior vice president and group manager at Montgomery Watson Harza. The company builds dams, water treatment plants and performs mine reclamations from Peru to Indonesia. The Steamboat office is directly responsible for supervising 400 employees in South America with projects in Brazil, Venezuela, Peru, Chile and Argentina.

Krause is charged with growing the company's mine engineering and reclamation business in all corners of the globe. He and his colleagues are taking up the challenge from their office in the Pine Grove Center. The Steamboat Division of MWH is prospecting for new work in Europe and Asia.

With 35 employees in the Steamboat office, Krause said his firm is here for the long term, and there's a significant chance the local office will grow. Krause bases those predictions in part on the fact that the operations he supervises represent one of the company's most profitable groups on a margin basis. That condition is due in part to low overhead.

"I think the office will stay here as long as we're

successful," Krause said. "As long as we're profitable, it doesn't matter where we're located."

The beginning

When Krause elected to leave the security of his job with Golder Associates, he lured a colleague, Pat Corser, from the company's Seattle office to join him. The two men negotiated half ownership in ACZ, Inc. and the opportunity to buy Adams out after a certain period of time, which they eventually did.

The two executives also retained key existing employees from ACZ, Inc., people like Rex Bell, currently vice president/director of operations in the Steamboat office.

"The company was really in the tank," Krause recalled. "We put a lot of energy into it and we turned it around really quickly."

By 1993, ACZ Inc. was renamed TerraMatrix. The company scored a coup in 1995 when it landed the contract to conduct the superfund cleanup of California Gulch near Leadville for gold mining giant, Newmont Mining Company. TerraMatrix tackled a similar Superfund site near Telluride.

Those successes led to work for Newmont in Indonesia and Peru. The path to success became clear to Krause.

"We've really done it by following our clients offshore, " he said.

TerraMatrix made the leap to South America and opened an office in Santiago, Chile. That country contains 40 percent of the world's known supply of copper, and Krause and his colleagues saw opportunity there. As TerraMatrix expanded to a global outlook, it also expanded the range of its services to include mine permitting, geo-technology, mine engineering and design, and mine closure. The projects were undertaken on behalf of clients in North America, Australia and South Africa.

Attractive acquisition

During that phase of TerraMatrix' history, Krause began fielding calls from larger companies interested in acquiring the successful company in Steamboat Springs. At one point, the calls came almost daily.

When Montgomery Watson called, Krause and Corser were impressed enough to make a deal. But they insisted on remaining in Steamboat.

"I wasn't going back to Denver," Krause said. "That was clear from the beginning."

Krause says he made another critical decision when Montgomery Watson purchased his company. He had acquired stock in the new, privately held owner, and he passed some of that stock out to 10 or 12 senior employees.

"The best thing I ever did was to give them stock, so they became owners," Krause said. "Because now, they're vested."

Under new ownership, the Steamboat office was given responsibility for the South American operations, but also tasked with utilizing the company's existing offices all over the world to make inroads for the mining portion of the firm's business.

Employees of the local office of MWH travel frequently, and Steamboat isn't the most convenient location from which to make business trips. But Krause said when you're embarking on a 30-hour trip, another three hours doesn't make that big a difference.

Employees at MWH work hard, but they're well rewarded, he added.

"You do what it takes to get the work done," Krause said. "You play hard and work hard."

In addition to their salaries, employees get bonuses based both on individual and company performance.

"I think they're very well rewarded," Krause said. "The company has done so well, the bonuses have been quite large."

Krause takes personal satisfaction in projects like the new drinking water treatment and distribution system in Canarana, Brazil, a city not much lager than Steamboat.

The ranching community of Canarana has 13,000 inhabitants who had never enjoyed adequate drinking water treatment and had no sewage system.

"We held an open house in Canarana," Krause said. "It was moving to me. (Before the plant was built) these people couldn't drink water out of the tap."

The Canarana project is also emblematic of the way multi-national companies are bringing infrastructure to towns in emerging nations that couldn't otherwise afford the multi-million dollar projects.

MWH designed and built the drinking water treatment plant in Canarana. And for the next 30 years, MWH will operate the plant under a concession agreement with the city of Canarana.

MWH anticipates recovering its initial investment within about 7 years. During the subsequent 23 years, it will profit from the user fees the system generates. And after 30 years, the infrastructure reverts to city ownership.

Increasingly, MWH is landing contracts by bringing the financing package to the client. In many cases, it is able to obtain U.S. government guarantees for the loans. The financing might come from an independent bank, but in the case that the client does not repay the bank, MWH would still get paid, because of the government guarantee.

The increasing amount of work in the financing end could lead to an expansion of the Steamboat workforce, Krause said.

Doing business abroad

Accomplishing the design and build of mine projects in South America can be fraught with difficulty, Krause agreed.

"They're big and they're risky," Krause said. "South America is an exciting place to work, but it's a risky place to do business."

In addition to business risk, there is some degree of personal risk for American executives traveling in rural areas of South America.

MWH manages both kinds of risk in part, through its field offices. When MWH personnel fly into an emerging nation where there is some degree of political upheaval, they are met at the airport by local staff, and transported to their hotel. Locals also transport visiting staff into the field.

A great deal of emphasis is placed on the development of domestic employees and managers in all of the countries MWH works in, Krause said. When he visits MWH jobs sites, he almost never meets with the clients. The native project managers are more than capable of handling those duties, he explained.

"They don't need expatriates to tell them how to build a facility," Krause said.

Krause is aware that mining and dam projects in emerging nations raise issues of environmental protection.

He said, most often, the role of MWH is to ensure the projects are carried out in an environmentally sound fashion.

In many cases, the role of MWH is ensuring rehabilitation of a site once a project is complete.

In one particular case, MWH is bidding to participate with the World Bank in an exhaustive study of a giant wetlands area in Brazil that makes the Florida Everglades look small.

The World Bank is funding the study of the Pantanal, which will consider the many ways in which human cultures interact with the natural systems of the area.

MWH is bidding for the assignment of undertaking program management for studies of water, air and soils in the region. The work would be done out of MWH's SPaulo office.

"I had a chance to fly in last summer and spend four or five days there," Krause said. "It is absolutely spectacular."

Corporate culture

On a sunny day in December, several of the employees and managers at MWH in Steamboat had just returned form spending their lunch break cross-country skiing at the Steamboat Ski Touring Center. They arrived back at the office in time to celebrate a colleague's 50th birthday with a buffet of smoked turkey.

Krause is optimistic the Steamboat office can retain its small company feel and remain a place where employees believe their contributions are valuable.

"I like that it's a privately held company," Krause said. "It's employee owned, and that provides strong motivation. It's a very flat organization. We all wear many hats and we all go wherever we have to go. We're family oriented."

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