Click for next page ( 67


The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 66
5 Education and Training Although the U.S. system of professional education continues to produce highly qualified engineers, architects, and construction managers, and to attract students from countries around the world, the committee nevertheless feels that change is needed. Experience in the international construction market shows clearly that young professionals need strength in four key areas to meet the challenges of global competition: . A strong technical base; A clear understanding of design; . An understanding of the intimate connection between tech- nology and culture; and . An understanding of foreign languages and regional studies. Strength in these four areas cannot be achieved only within the context of formal educational programs. Institutions offering undergraduate training necessarily focus their attention and limited resources on developing a student's basic skills, understanding, and intellectual outlook needed to maintain professional success over the course of several decades. Real work experience is an indispensable element of education and training for international construction. 66

OCR for page 66
ED UCATION AND TRAINING 67 PROGRAMS OF STUDY Education in civil engineering or architecture is the primary course of study for professionals entering construction and design leading to construction. Other engineering and scientific disciplines, culture, history, art, and the often intuitive processes of design are also essential elements of knowledge for the construction professional. However, construction professionals note that construction cannot be taught in the same way as manufacturing or other activities with standardized production. Construction training needs the specificity of carefully chosen cases to balance the tendency of formal edu- cational programs toward abstraction and generalization. Despite Japanese and European experience with modular housing, the fail- ure of Project Breakthrough in the early 1970s was an example of the mistaken belief that structures could be built the same way as machines (i.e., using the mass production lines of the automobile industry). Engineering In the United States today, 267 academic institutions offer 1,323 engineering programs accredited at the bachelor's level and 30 at the master's level (see Table 9~. (While there are a much larger number of graduate programs they do not require accreditation.) The general criteria for basic accreditation of engineering programs require at least one year's training in a combination of mathematics and basic sciences, one year's training in engineering science, one-half year's training in engineering design, and one-half year's training in humanities and social sciences. Up to one year is then available for other required and elective courses. The criteria for accreditation at the advanced level require the completion of a basic level program, plus a fifth year. In the additional year, at least two-thirds must comprise some combination of advanced level work in mathematics, basic science, engineering science, and engineering design. Table 10 provides a perspective on the annual number of graduates of engineering programs at the B.S., M.S., and Ph.D. degree levels. There are four accredited programs in engineering management. However, engineering management programs are typically offered at the M.S. degree level, and accreditation at the graduate level is not prevalent because of a restrictive policy which severely limits the accreditation opportunities for engineering programs at that level.

OCR for page 66
68 BUILDING FOR TOMORRO W TABLE 9 Total Accredited Engineering Programs by Program Area, as of October 1986 Program Area Bachelor's Master's Level Levela Civil, construction201 1 Engineering management3 1 Architectural engineering10 0 Mechanical engineering218 2 Electrical engineering238 3 Chemical engineering142 1 Industrial engineering85 1 All other (24 areas)426 21 Total1,323 30 aThese are the accredited programs at the master's level. Most accreditation occurs at the bachelor's level, so that there are only a few graduate programs counted for accreditation purposes. TABLE 10 Degrees in Engineering Awarded, 1986 Decree Program AreaB.S.M.S.Ph.D. Civil engineering8,7983,197439 Engineering management(N/A)(N/A)(N/A) Architectural engineering381480 Mechanical engineering16,7023,462565 Electrical engineering24,5145,926779 Chemical engineering6,1481,430534 Industrial engineering4,6451,798120 All other (15 areas)16,9907,1641,249 Total78,17823,0253,686 Note: Currently, there are 95 institutions offering four-year bachelor's level programs, and 155 offering two-year associate degree programs in engineering technology. These institutions offer 273 and 460 programs at the four-year and two-year levels, respectively. No published data are available on the number of degrees currently awarded per year in the technology programs.

OCR for page 66
EDUCATION AND TRAINING 69 At present, there are approximately 20 graduate level programs in engineering management offered at U.S. institutions. Architecture There are 103 accredited professional architecture degree pro- grams in North America. A professional degree is either a five-year bachelor of architecture or a master of architecture. According to statistics that are available from the National Architectural Accredit- ing Board (NAAB), 3,088 B.Arch. degrees and 1,545 M.Arch. degrees were conferred in 1986-1987. Although it has been said that "there exist as many curricula as there are programs in architecture, and in many schools there are a number of options that lead to the completion of the degree require- ments," professional architecture programs actually share similar core curricula. Criteria for accreditation require courses in design, history, materials, human behavior, practice, and so on, with the emphasis placed on the design studio. Other courses taken either within the architecture school or in other departments are meant to complement and enhance the design core of the program. The philosophy statement of the Graduate Program in Architecture at Columbia University is representative of many architecture schools in its declaration that Columbia's Graduate School of Architecture is dedicated to the proposition that architectural design has always been and will continue to be the core of professional education. Behavioral, technological, and art historical course work is offered as support for the design studio. Often attempts are made to integrate the attitudes inherent in these disciplines into the design exercises. However, it is the ability to synthesize vast, differentiated bodies of knowledge as they affect and modify the design decision-making process that is stressed. In addition to the basic core requirements, there may also be a sequence of courses in architectural history and theory. Many schools also require, or at least encourage, speech or writing courses, and other work in the humanities and social sciences to parallel professional courses. Engineering and Architecture Technology Engineering and architecture both involve z mix of technical skill and creative application of judgment about how general principles apply in specific cases. The relative balance between innovative

OCR for page 66
70 BUILDING FOR TOMORRO W thinking and straightforward analysis shifts from job to job, and from task to task within a project. Opportunities arise for dividing the labor, giving rise in turn to opportunities for personnel who function as a bridge between designer and craftsman. Engineering and architectural technology require the application of scientific and engineering knowledge and methods combined with technical skills in support of engineering and architecture. The tech- nologist is applications-oriented, building on a background of applied mathematics, science, and technology to produce practical, workable results quickly; to install and operate technical systems; to devise hardware from proven concepts; to develop and produce products; to service machines and systems; to manage construction and produc- tion processes; and to provide sales support for technical products and systems. Normally, the technologist will hold a degree from an accred- ited engineering or architecture technology program. In contrast to the two-year programs of training for technicians qualified to conduct relatively standard field measurements and laboratory tests, the tech- nologist may spend an additional one to two years receiving training in basic principles. Because of his key role as an implementer, the technologist is called on to make independent judgments that will expedite the work without jeopardizing its effectiveness, safety, or cost. The technologist should be able to understand the components of systems and be able to operate the systems to achieve concern tual goals established by the responsible engineering or architecture professional. Cont~nu~g Education Generally speaking, professional enhancement through continu- ing education probably offers the most promise for the near-future development of professionals in the international construction field. Many opportunities exist for both architects and engineers, with di- verse subject matters, institutions, and lengths of course. The subject matter may range from technical topics at a high level of sophisti- cation, to administration and management. Continuing professional education courses are offered primarily by educational institutions, professional and technical societies, large corporations, and engineer- ing firms. The policy of the American Institute of Architects (ATA) on continuing professional education states:

OCR for page 66
ED UCATION AND TRAINING The ultimate responsibility for professional development lies with the individual architect. Professional development occurs properly in both formal continuing education and less formal learning experiences, including everyday professional practice. The AIA advocates the professional development of its members and is committed to provide resources and services in its support. 71 In many instances, course offerings in subject areas frequently not included in formal, university-based education are more prop- erly available in a continuing professional education setting. Eco- nomics, cost estimating, real estate principles, management, and other courses that are not traditionally offered in a professional de- gree program might in fact have greater impact on the professional student who already has some work experience on which to build. ISSUES IN CIVIL ENGINEERING Civil engineering teaching in the past two decades has focused on methods of analysis. The emphasis has been on fundamental studies of mechanics, applied mathematics, and the analysis of structures or of systems. The computer has already influenced much of this teach- ing and that influence is increasing. Courses in steel and concrete structures do include current practice as expressed in codes and do focus on the principles of detailed proportioning once the form and loads are given, but civil engineering education is almost exclusively analytic, concentrating on instilling basic knowledge and depending on subsequent on-thejob experience to teach students how to apply this knowledge. Emphasis on Design This dominance of analysis means that there is almost no teach- ing devoted to design as a synthesis, to construction as the process of economical building, and to the performance and permanence of civil works as derived from field observations. The present thrust of education treats the works as objects for analysis rather than as subjects for creating new ideas in design and construction. This teaching direction mirrors closely the present state of struc- tural research weighted heavily toward methods of analysis and on computers. From a design standpoint this research is passive; it is oriented toward improvements in analysis rather than changes in de- sign. It is certainly true that more efficient analysis can help design as

OCR for page 66
72 BUILDING FOR TOMORRO W a process, but it is hard to show how more competitive construction has arisen because design as a process is more efficient. Design improvement depends on effective performance evalua- tion, for which field observations are crucial. The performance of actual civil works is not currently a part of education. Existing courses on analysis do provide a sound basis for interpreting the re- sults of field observations, but at present this powerful potential is unrealized. Because educators do not use data from real works in their teaching, there is little effort to collect data, and such data, if collected, rarely are published. In the teaching of concrete struc- tures, for example, performance criteria are taught almost exclusively through code provisions, which is of course necessary but not suffi- cient. Design is treated as controlled by a generalized set of rules rather than as informed by specific, but characteristic, examples. One dramatic example of the tendency to treat improvements in civil works as arising from general analysis is the highway pavement research program pursued by the Bureau of Public Roads from 1920 to 1945. The program tried to represent observations of performance and constructed a Tong series of laboratory analytic studies devoted to the fundamentals of pavement design. That work ultimately had to be abandoned, and following World War IT the bureau returned to a major full-scale field study as the basis for design improvements. However, the lessons learned in this analytical work still underlie current understanding of the materials mechanics of pavement be- havior. ConstFuction Management Construction and construction management are treated sepa- rately from design, and the ultimate relationship between design and construction is only rarely discussed. Also, construction is often treated as a set of processes to be analyzed and not as a series of individual unique cases. This distinction is well recognized in prac- tice and was recently articulated in an editorial of the Engineering News Record (May 7, 1987) commenting on an April 1987 workshop sponsored by the National Science Foundation at Lehigh University: The dominant theme was rejection of task-specific robots or expert systems and embracing new methods to distribute information. The reason for both is the same: construction is one of the messiest industries around. Each project differs from others and each changes from day to day. Figuring out how to complete a construction project efficiently has no relation to figuring out how to make the same

OCR for page 66
EDUCATION AND TRAINING spot weld in the same car chassis every few seconds. Repetition is irrelevant; coordination is vital. 73 The absence of construction management in a civil engineering education thus leaves a distinct void that has important implications for how effectively the resulting professionals can support construc- tion. This void may then influence the entire U.S. construction industry. ISSUES IN ARCHITECTURE For most of recorded history (going back to the time of the Egyp- tian pharaohs) architects were educated by becoming apprenticed to a professional already in practice. Toward the end of the nineteenth century, formal schools were established outside of the architect's office to provide special "ateliers" for gaining a professional educa- tion, usually with more emphasis on the art of architecture than was afforded an apprentice in a normal office. The Ecole des Beaux Arts in Paris became by the early part of the twentieth century the leading place to study architecture, if one's family could afford it. The influence of this school's method of teaching spread around the world as colleges and universities began to offer architecture courses within their programs. By the time of World War II, the "design studio"-a group of 10 to 20 students under the dominance of a "crit" (member of the teaching faculty who criticized the students work)- formed the heart of all schools of architecture, and still does to this day. The method of teaching is essentially, therefore, still a form of apprenticeship, but with a series of masters and with no visible financial connection between master and apprentice. When a student is fortunate enough to work with one or more really skilled crit, the educational format is superb, but when the crest is neither a skilled practitioner nor a good teacher (and this is all too often the case in the past few years), the student is not well educated. Further, the context of the university tends to be dominated and overshadowed by the demands of the design studio. It is a common sight to find the lights in the architecture design studios burning all night when a student project is coming up for juried evaluation. The term "en charrette" was coined during these periods of intense concentration in the Ecole des Beaux Arts, because at the final and formal end of a project's schedule, a cart or "charrette" would be pulled through the studios to collect the students' work.

OCR for page 66
74 BUILDING FOR TOMORRO W Critics of the architecture education system claim that the design studio is overemphasized, and that technical instruction suffers as a result. Proponents of the status quo suggest that it is possible for a student to acquire needed specific technical skills in the workplace. Specialization and Small Practices While education emphasizes creative design in the studio setting, architecture as practiced by professionals who are licensed by each state is a synthesizing activity which converts the requirements of a client into building spaces that are structurally sound, provide a safe and healthy environment, are economically suited to the client's needs, and are stylistically in keeping with both the client's tastes and the professional community's standards. In practice, the architect will use consulting engineers for such specialized design and analy- sis as structural systems, heating, ventilating, and air-conditioning systems, lighting, acoustics, energy efficiency, cost estimating, and so on. The practicing professional then must be prepared during his educational program to understand and communicate with such consultants, but not necessarily to have these analytic skills himself. As the novice architect moves into practice, he will be led to focus on design, engineering, construction, or the production of working drawings and specifications. In large firms most employees will end up on the production side, and it is those skills that are addressed in varying degrees by schools of architecture. Those schools that are organized around two- or four-year programs of "architectural technology" are most clearly focused on providing the training for people who will devote their careers to design production. There are about a dozen schools in the United States with programs in architectural engineering, having as their purpose the preparation of professionals who will focus on that aspect of practice (which almost always means structural engineering, however). The vast majority of students are being educated as though they will be designers. It is not surprising that in the United States so many small architecture firms exist (the median size of architecture firms is 4.2 persons on the staff), since the designer has to be seen as "gifted" to play that role in a large firm, and not many graduates of architecture schools can meet the criteria associated with ~gifted." In the past few years, especially in high-priced real estate areas such as California and New York, architecture graduates have been pursuing careers in the development side of the building industry.

OCR for page 66
EDUCATION AND TRAINING 75 This is not only a more lucrative career choice, but since a develop- ment firm normally builds first and sells or leases later, it provides an easier means to being "the designer" for the projects. As indicated elsewhere, international practice (outside of the United States) tends to be dominated by firms that are vertically integrated so that ar- chitects and engineers are staff members of large firms that provide "turn-key" services to their clients, a situation poorly suited to the great majority of U.S. architectural firms. Architectural Research and Education The 103 schools of architecture in North America have had an inconsistent history of research. The majority of the schools have no formal unit concerned with research, although individual faculty members might undertake research studies themselves. It would be unusual for such individual research efforts to include undergraduate students, and it would be difficult to document the contributions that such research makes to the teaching program of the school. The Architectural Research Centers Consortium, created in 1976, is a group of some 30 research units attached to schools of architecture that provides a means of exchanging research plans and results. The consortium, originally intended to make it possible to undertake large-scale research efforts by combining institutions into teams, has had limited success. To enhance prospects for architectural research as a contribution to education, the committee recommends the inclusion of advanced technological content in the architectural curriculum: . Courses that provide an understanding of how buildings are actually built, not just the materials and equipment that go into a building, but the tools and techniques used for construction in the field and in the factory; . Courses that provide working experience in the use of com- puters as tools of design and analysis; and . Design studio courses organized around making use of the growing research base, which ranges from research on human needs to research on indoor air quality. Unless professionals in practice receive early training in how to use the knowledge base available to them, they will not likely do so. Continuing education programs should be offered by the AIA and professional schools to provide professionals in practice opportunities

OCR for page 66
76 BUILDING FOR TOMORROW to learn about, and experience, the design and construction practices of other countries. SKILLS FOR GLOBAL ENTERPRISE Knowledge of foreign languages, cultural environments of other nations, and significance of historic and cultural characteristics for both business practice and building is the basis for effective perfor- mance within the international construction community. The com- mittee observes that the United States has not kept up with its foreign competition in developing these skills. For example, a few architectural schools offer study-abroad pro- grams, but faculty opinions about the value of these programs is mixed. In most cases, students returned to their home institutions with a more sophisticated and heightened awareness of design possi- bilities; in one or two instances, this held true for building technology problems as well. Most of the programs provide for ample oppor- tunity for mixing with students, faculty, and local practitioners in other countries. While it is generally agreed that this type of experience con- tributes significantly to any education, most faculty responding to a questionnaire distributed by the committee felt that such a program did not adequately prepare students for professional involvement in international construction projects. There was uniform agreement that few students had foreign language skills, with the exception of a program in China organized by Carnegie-Mellon University, for which the students were required to study Chinese for one year prior to enrolling in the program. Crose-Cultural Training for the Construction ~dustry The Agenda for American Competitiveness," issued by the Business-Higher Education Forum, the Northeast-Midwest Coali- tion, and the Congressional Clearinghouse for the Future, points out that about 10,000 English-speaking Japanese business execu- tives work in America, handling billions of dollars in trade, some of that trade in construction. However, very few of the 1,000 American businessmen in Japan can speak Japanese. Generally speaking, the Japanese seem to be much better equipped to come to the United States to study the technologies and practices of industry here than Americans would be to go to Japan.

OCR for page 66
EDUCATION AND TRAINING 77 A 1984 survey cited by the "Agenda" report demonstrated that U.S. students are increasingly ignorant of world geography (and in particular, countries which are of strategic importance to the United States): fewer than half could locate Iran, only 30 percent could locate Afghanistan, and only 25 percent knew where El Salvador was. The "Agenda" report recommended that colleges and univer- sities significantly strengthen their international studies courses- language, cultural, political, and economics and make them readily available to U.S. business executives as part of their own lifelong learning programs. Certainly business degree programs cannot afford to ignore the increased globalization of business both domestically and in overseas markets. Engineering schools would do well to consider foreign language degree requirements and international studies courses. One way to involve engineering students in such studies would be to design the courses so that they would include engineering aspects of other cultures and an emphasis on the relationship between technology and culture. Architecture students already receive a strong dose of cultural studies in the architectural history courses that are a part of the core curriculum. The committee suggests in particular that the Fulbright Program should be expanded to encourage more architects and engineers to gain exposure to other cultures. According to a report* of the National Academy of Engineering (NAE), one way of connecting U.S. engineers with foreign technolo- gies is by increasing their participation in international activities, particularly in the setting of international standards for products and services. Another way would be through the development of case studies, researched and written by expert consultants from var- ious nations, and then incorporated into the curriculum. The NAE report stated that "technological isolation will surely undermine the future of our industries." Increasingly, as the U.S. design and construction industries look to greater participation in the global enterprise, engineering schools, professional societies, and business organizations must look outside themselves to learn how to do business in an international economy. Only through more deliberate exposure to foreign languages, geography, business, and culture will U.S. design professionals gain access to foreign-originated *Strengthening U.S. Enginecrtng Through International Cooperation: Some Rcc- ommcndations for Action, National Academy Press, Washington, D.C., 1987.

OCR for page 66
78 BUILDING FOR TOMORROW technologies, foster cooperation with foreign work forces overseas, and develop an increased ability to deal with foreign sources of business opportunities and finance. Acquiring Foreign Languages The study of foreign languages is not generally of concern in the present educational programs of either architects or engineers. In the context of this study, well-developed language skills are far more important for the comprehension of a particular culture than for the purpose of doing business, as English has virtually taken over as the international language. According to a Modern Language Association (MEA) Language Enrollment Survey conducted in the fall of 1986, total enrollment in languages other than English at American colleges and universities exceeds 1 million for the first time in 14 years. The survey results indicate an increase of almost 4 percent between 1983 and 1986, continuing a trend that began in 1980. It is interesting to note that Japanese and Chinese courses had the fastest-growing enrollments (45 and 28 percent increases, respectively), although total numbers of students still trail those studying Spanish, French, German, or Russian. Figures are not, however, broken down according to fields of study. In the NAE report, the committee stated, "Educational insti- tutions should respond to the urgent need for increased capability in Asian languages and culture for U.S. engineers and technologists. Graduate degree programs in engineering and applied sciences should emphasize the need for spoken and technical competency in at least one foreign language." The same chapter also emphasizes "the use- fuiness of early study of languages and experience that reinforces language skills needs to be better appreciated by young people who wish to pursue careers in engineering and technology." It is also suggested that study of any language be done in conjunction with study of the technology and the culture in question. Having some familiarity with a foreign culture, even without the language, can be very helpful to those professionals working overseas. As far as architecture programs are concerned, it is safe to say that the same is true, although this information is school-specific, according to the Association of Collegiate Schools of Architecture (ACSA). For certain special areas or programs within the field, such as architectural history or theory, certain languages may be manda- tory (such as a Rensselaer Polytechnic Institute program in Rome,

OCR for page 66
EDUCATION AND TRAINING 79 which has a prerequisite of one year of Italian), but languages are not required for general admission to most schools. In undergradu- ate architecture programs, there is generally more time for elective courses than in engineering schools, as the first professional degree is often structured for five or six years of study. In many architecture programs, students are strongly encouraged but not required to take courses in other languages. Several factors favor the study of foreign languages by architec- ture and engineering students: . Language skills are transferable; once one foreign language has been studied and/or mastered, it becomes much easier to tackle another one, because those particular mental skills have been devel- oped and exercised; . In the study of a language, the student learns something about the culture of that nation, which can be very useful profes- sionally; and . Language skills enhance a student's accomplishments, mak- ~ng him more marketable to international projects in the building industry. Factors that work against the study of foreign languages have largely to do with time limitations. Since both engineering and archi- tecture programs are fairly highly structured, and since in many cases the languages that have been studied will not be useful in currently developing international markets, continuing education courses may be the answer for the short term. INTERNATIONAL PROJECT MANAGEMENT Most training and education in international project manage- ment have been through Hanson experience obtained individually by members of construction and engineering firms engaged in execut- ing individual projects. The international market is characterized by a number of unique conditions that can dramatically affect project cost, schedule, and quality. These conditions are very country- and site-specific, and substantial local market research is required of prospective engineering and construction firms seeking overseas work. American firms performing overseas construction work may have difficulty in obtaining the required commercial licensing, face possible transportation delays, and encounter difficulties in obtaining customs

OCR for page 66
80 BUILDING FOR TOMORROW clearances. These issues may be further compounded by language barriers and in-country restrictions on the employment of Americans. Firms entering the international marketplace need to be ready to react to unique labor laws, requirements for use of local materials, and significant differences in quality standards. They must also be prepared to make substantial investments in technology transfer and training to develop the skill base necessary to complete the project. The host country's business practices and construction process con- cepts are frequently at odds with a U.S. contractor's normal business methodologies and procedures. Personnel conducting contract negotiations frequently do not have sufficient time to become totally familiar with nuances of the construction process of a given country. Expensive lessons have been learned simply because inexperienced contractors have failed to take into account the impact of the host country's culture on their standard operating procedures. The degree to which the client becomes involved in the construc- tion project can be a positive or negative factor clepending on his familiarity with the construction process and the role he chooses to play. If the client chooses to act as liaison with the host nation's government, the contractor will be at the mercy of the client when it comes to acquiring needed information, permits, and other ap- provals. This can have a significant impact on project schedules and costs. In general, the committee concludes that U.S. construction and design firms and their professionals need better training for their role in the global economy. The relationship built between Philipp Ho~zmann and J. A. Jones Construction Company (see Case Study 5) illustrates how, with capable people willing to cooperate, firms from different nations can work together to their mutual benefit. The motivation for this inquiry has been competition, but it is becoming clear that cooperation is equally important. On both counts, U.S. skills are lagging.

OCR for page 66
EDUCATION AND TRAINING 81 CASK STUDY5: BUILDING INTERNATIONAL RELATIONSHIPS: PHILIPP HOLZMANN AG AND J. A. JONES CONSTRUCTION COMPANY A large German firm* acquisition of a large American construc- tion firm nine years ago is called a successful marriage by the partic- ipants. Not only have the two management styles mixer] well, they say, but the transfer of technology between PhiJipp Ho~zmann and IT. A. Jones Construction Company has benefited both companies by aBowing expansion of worldwide construction horizons. Philipp Ho~zmann AG had grown from a sm al] family business into a leader in international construction. Founcied as a railway contractor near Frankfurt am Main in 1849, the firm quickly ex- tended activities to include civil engineering and building of a]] types. Ho~zmann won its first major contract outside Germany, the main railway station in Amsterdam, in 1882, and since then has been ac- tive in many European countries, South America, Asia, and Africa. Ho~zmann now has major activities ongoing in the United States. The company designs and builds public and commercial build- ings, manufacturing and industrial plants, marine structures, en c! mass transit facilities. Its range of services includes "urn-key projects as weR as maintenance and operation of facilities. Ho~zmann also undertakes reconstruction en c] modernization of buildings en c] in- dustria] plants. The genera] management and overseas departments of Phiiipp Ho~zmann are headquartered] in Frankfurt, blest Germany. The company operates 30 branch offices throughout Germany and has more than 50 domestic and foreign subsidiaries engaged in special fields of construction and construction-redated activities around the world. Ho~zmann is represented in the Unitecl States through its sub- sidiary, Philipp Ho~zmann USA, by Jones Group, Inc., in Charlotte, North Carolina, and by Lockwood Greene Engineers, Inc., Spar- tanburg, South Carolina, in addition to other subsidiaries. Jones is a construction contractor, and Lockwood Greene represents the architectural and engineering side. In 1986 the Ho~zmann group of companies had sales of $6.6 bil- Jion worldwide. Approximately 48 percent of that tote] was in the United States. The decision to enter the U.S. construction and en- gineering market was a result of events around the worm. Since its first international experience in the late nineteenth century, Philipp

OCR for page 66
82 BUILDING FOR TOMORRO W Ho~zmann AG has set corporate strategies beyond German bound- aries In the earliest years, the company built the legendary Baghdad railroad, the Dar-es-Saiaam railroad in Africa By World War I, Ho~zmann had built the first skyscraper in Buenos Aires and entered the U S market with construction on the Barge Can a] in New York More recently, its activities centered in the Middle East-where some of the world's largest construction projects have been built with of] revenues including hospitals and a sports stadium in Saudi Arabia In the early 1970s, more than 50 percent of the company's foreign revenues came from Saudi Arabia But the Iranian revolution, [ran-Iraq war, and the softening of of] prices made the prospects of a blooming construction market in the Middle East seem less promising Ho~zmann carefully evaluated the possibility of future construc- tion market collapses and, in order to protect the company *om such uncertainties, decided to diversify by investingin other coun- tries Economic and political stability and a seif-sustazning market in the United States were an attraction Ho~zmann sought a US company that would complement its strengths and, in 1979, acquired the Chariotte-based ~ A Jones Construction Company which had 90 years of experience in the U S construction industry J A Jones has its own history and many successes Founded in Charlotte, North Carolina, it has grown to become a US and in tern ationa] leader James Addison Jones started his work as a bricklayer in 1890, and got most of his early experience building for the textile industry throughout the southern states But J A Jon es* first project, like Ho~zmann 's, involved the railroads Jones built the dining car facility in Charlotte for the Southern Railroad Company Following the 1930s depression, Jones signed one of the largest construction contracts to that date, for a new Debase in the Panama Can a] Zone Since that project, military construction has been an im- portant factor, including construction of Liberty ships during World War Il. followed by what was then the 'largest construction project in the history of the world" the gaseous diffusion plant at Oak Ridge, Tennessee Following World War IT, Jones began a long series of heavy and highway construction work while continuing commercial building throughout the country Today, the company is also involvecl in industrial and energy work as we]] As it, too, looked to the Middle East for work in the 1970s, ~ A Tones competed against Ho~zmann;

OCR for page 66
EDUCATION AND TRAINING 83 they then worked as a joint venture on a military training center project in Saudi Arabia. In October 1978, 3. A. 30nes Construction Company announced its agreement to be acquired by PhiJipp Eo~zmann AG. The purchase encied a plan by Jones to be empioyee-ownecI, a process begun in 1968. Stockholders were assured that the firm* name, management, and work force would not change. Today, Ho~zmann is represented only on the board of directors. At the time of the purchase, 30nes's stock price was valued at $23.06 per share, which was determined by the company* own esti- mate of its value, since the stock was not widely traded. Ho~zmann * offer amounted to $40.61 per share. Although it was stated that sev- era] other companies had an interest in the purchase of 3. A. 30nes, Ho~zmann* offer was accepted. According to 30hnnie H. 30nes, then executive vice-president and now chairman and president of 30nes Group, Inc., "The philosophy en cl integrity of Ho~zmann* manage- ment were most compatible with the 30nes team." Three primary reasons were given for the marriage: (1) the fin ancia] strength of Ho~zmann would enable Jones to resume its growth en c] continue to grow faster; (2) the combined international experience of the two companies would improve their competitiveness in foreign markets; and (3} the merger would allow 30nes access to the larger firm* technology, with the combined international experience of the two companies improving their competitiveness in foreign markets. At that time HoLmann spent more than $3 million a year on research and held several patents in concrete technology. Over the nine years since acquisition, the Ho~zmann-30nes part- nership has allowed both companies to bid on a greater variety of projects because of broader market presence and shared technoJo- gies. In addition, the fin ancia] strength of Ho~zmann has given 30nes bonding capacity to increase its volume of work and the size of its projects. Benefits of the merger surfaced early. 30nes became more com- petitive in heavy construction, where Ho~zmann had for decades been a world leader, and entered the marine field with a sunken tube tunnel contract and one for a floating pontoon bridge. Ho~zmann gained expertise in the chemical plant market and in high-rise con- struction, long a 3. A. 30nes strength but at the time a costly type of construction in West Germany. To diversify further in America on the design side of construc- tion, Ho~zmann in 1981 purchaser] 80 percent of Lockwood Greene

OCR for page 66
84 B WILDING FOR TOMORR O W Engineers, Inc., of Spartanburg, South Carolina. Ho~zmann also en- couraged Jones Group's formation of a new service company, which specializes in facilities management, similar to one Ho~zmann founded in the early 1 980s. The two companies have set up an informal employees program that enables young engineers to travel and work somewhat like ex- change students abroad. Management level stay members also take part in orientation programs between West Germany and the United States. J. A. Jones has added a dimension in international construction that has benefited the parent company. By offering procurement services for materials for projects where many of the designs call for American standards, Jones can help Ho~zmann avoid problems of selecting goods in a foreign country. In turn, Johnnie Jones says that Ho~zmann "cloes not interfere with our operation but provides support. Keeping our management intact proved to us that Ho~zmann agreed with our philosophy that people are our most important assets." The Jones Company now can take on major heavy construction projects which heretofore would have been undertaken only in a joint venture. And in a totally new direction, Jones signed its first contract to build, own, and operate a lignite mine in Louisiana. "It requires] a substantial investment in the beginning, but we wouldn't have been able to clo it without the financial] support of Philipp Ho~zmann,n says Jones. Both companies are in the process of diversifying in technical fields, expanding in other locations, en c] reestablishing positions in the international market. The formation of a read estate development company in Atlanta, Mark ITI, and adciitiona] activities from Queens Properties, Inc., in Charlotte, were steps in cliversification. Because the financial] capabilities of construction firms have new importance, Jones Group this year form e cl Jones Capita] Corporation to develop project financing and to hold the assets of projects in which Jones is maintaining an ownership position. While stir] run as separate entities, Ho~zmann en cl Jones com- bined can pursue the largest construction projects in the world.