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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 67
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.
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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.
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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
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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:
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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
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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 73
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.
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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.
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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
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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.
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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.
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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,
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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
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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.
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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
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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 83
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
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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.
Representative terms from entire chapter:
international construction
