Steamboat Springs The ambitious construction project now under way to expand the Panama Canal has the potential to shrink the globe even further while changing the economic fortunes of the nation of Panama. And longtime Steamboat Springs resident Alan J. Krause is in the thick of it.
Krause was named president and CEO of a $1.6 billion engineering company, MWH Global Inc., in November.
Former MWH chief executive Robert B. Uhler, who now is the executive chairman of MWH, praised Krause’s knowledge of the company and his ability to think strategically.
“Through his ability to bridge cultural differences, help solve environmental and engineering-related issues and seamlessly integrate companies following a merger or acquisition, Alan has demonstrated his wide knowledge of our clients and employees as well as our company’s direction,” Uhler wrote in November.
Krause said that in the Panama Canal project, he has inherited stewardship in a defining project for his company.
“The Panama Canal is a great job,” Krause said. “It will be the biggest civil engineering project of the decade — maybe beyond. When the Panama Canal is done in 2015, we will have designed a project that changes the way global trade occurs. It’s moving East and West closer in terms of time, cost and fuel (consumption). It will be wonderful for Central America, and it’s very important to our company.”
Krause describes Uhler as a mentor who has prepared him for his new role and used an analogy from their many airline flights across the world to communicate the point that he must learn to see his new role from a different perspective.
“He’s let me know I have to learn to fly at 30,000 feet, not 10,000 feet,” Krause said. “I’ll still make a couple of trips to Asia this year, three or four to Europe and a couple to Central and South America. And I still feel it’s important to get down in the grass in order to understand our customers’ needs. But I have to manage my schedule differently.”
MWH (the initials stand for Montgomery, Watson, Harza), as a contractor to a consortium of international contracting companies, is playing the lead role in designing a giant set of new locks that will open on rollers instead of swinging open to admit the largest cargo container ships ever to travel the Panama Canal. The design will allow the water level in the locks to rise and fall without the use of pumps, relying on gravity flow to allow ships greater than 1,000 feet in length to cross the Panamanian isthmus between the two oceans.
The bigger ships that will be able to use the canal will access the locks through a new, wider channel in the canal.
Keeping water fresh
The assignment MWH has been charged with also includes protecting the freshwater of Gatun Lake, which is of critical importance to the Panamanian people. The new locks on the Atlantic and Pacific sides of the canal each will have several water-saving basins to help attain the goal of protecting the lake.
Krause, who first came to Steamboat Springs in the early 1990s to take a stake in local environmental testing company ACZ Laboratories, said the water quality issues woven into the canal expansion are a natural fit for his company, which has developed an international reputation for its expertise in water infrastructure. MWH continues to play an important role in such diverse projects as the development of a large dam in Pakistan to maintenance and upgrades to the largest domestic water systems in Great Britain, a hydropower project in Africa and wastewater management in small cities in South America.
Yet water infrastructure is just part of MWH’s scope of work. The company has tackled the design of new railway stations from New Zealand to the Washington, D.C., subway system; designed provincial roads in a mountainous region of northern Vietnam; and provides environmental engineering services to the oil and gas industry.
On Dec. 21, MWH Global announced it had landed two contracts totaling $122.8 million from the U.S. Agency for International Development, the largest being a $120 million project in Pakistan involving water control infrastructure, sanitation and power. The second, a $2.8 million contract, is to study the feasibility of developing port operations along the North Haiti Development Corridor.
Accepting new challenges
Krause’s ascension to the role of CEO at MWH Global had its roots in the early 1990s, when he and a colleague in another engineering firm came to Steamboat to assume half-ownership with the late Bob Adams, of ACZ Labs. They eventually started their own engineering firm, TerraMatrix, which gained stature through its handling of Superfund cleanups in Leadville and Telluride on behalf of large mining companies.
Montgomery Watson acquired TerraMatrix, and Krause remained to build a clientele in South America. In 2001, Montgomery Watson merged with Chicago-based Harza Engineering Co. to increase its international standing, and Krause was assigned to play a major role in blending the two corporate cultures.
When he took on that role, he expected to commute to Chicago for several months. It turned into six years. Today, he is based at MWH Global’s Broomfield headquarters, but he and his wife, Kathy, still call Steamboat home, and he tries to get to his Old Town home at least twice each month.
Trips to Steamboat ease the increased levels of stress that come with his expanded responsibilities, he said.
“Really, the most stress I felt was in the months leading up to the announcement of my new position, and I realized the burden that would be on my shoulders,” Krause said. “Now that I’m CEO, the stress has been relieved a bit. It might sound strange, but as soon as I begin the drive up I-70 toward Steamboat, I start to unwind.”
Leadership and the future
MWH Global’s existence as a privately held international engineering company is a rarity in the field, Krause said, and that fact goes a long way to defining his role with the company.
Krause said MWH’s stature as a top-three water engineering firm is critical to its ability to compete for top-tier jobs. In an environment where larger, publicly held companies constantly are continuing to increase their competitiveness through acquisitions and mergers, the new CEO of MWH will have to make shrewd decisions about how to grow.
When a publicly held company wants to acquire a new company, it may pursue a new stock offering to raise the capital. MWH doesn’t have the same path to growth.
“We’ll stay private unless we get in a position where (increased) capitalization is essential to growth,” Krause said.
A similarity between MWH and its larger, publicly held competitors is that they all have shareholders. But where a public company’s shareholders are relatively anonymous, Krause is familiar with his shareholders. In addition to investors, about 25 percent of MWH Global’s 8,000 employees own shares in the company, and their success is the foundation of the company.
“If I lose sleep over anything, it’s over protecting their investment,” Krause said. “It’s their nest egg. Our business is entirely service-driven. If we don’t have a growing environment, they don’t have the ability to grow professionally. So I see growth as imperative.”
Still, with less access to capital, MWH can’t afford many missteps.
“We have to be very careful and selective,” Krause said. “Now is the time for us to do acquisitions, but I can’t go to stockholders and say, ‘We’ve decided to dilute your value because of the potential for long-term value gains.’ They want their values to be strong right now.”
So, Krause must plot a course to help his company find acquisitions that represent good value for both his company’s future but won’t overburden its balance sheet.
Krause is of the strong conviction that issues related to sustainability will become increasingly important to companies in all kinds of businesses, and he intends to position MWH Global to provide engineering services that arise after natural disasters and in the wake of climate change.
His company is working under a contract with a large insurance company that indemnified many of the homes and commercial buildings in Christchurch, N.Z., before the February 2011 earthquake.
MWH is overseeing the distribution of funds from the insurance coming in a systematic way intended to result in lasting fixes for the damaged buildings.
Krause said he enjoys pushing himself and encouraging others to go outside their own comfort zones to learn what they can achieve, which will make for an interesting ride in the years ahead.
“The world has changed,” Krause said. “If big businesses aren’t already thinking about sustainability and climate change, they’re going to miss the wave. It’s part of our mission statement.”
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com