Out of the frying pan, into hazardous waste.

George Leal led Dames & Moore onto the expansionary path of a new business

If it weren't for George Leal, Dames & Moore, currently the 16th largest engineering design firm in the U.S., probably would have been "bought or bankrupt," says Bill Moore, one of the company's founders.

Back in 1981 the company was experiencing the double whammy of the oil crisis and a recession and "I had the rather unpleasant job of removing his predecessor because we were going out of business," says Moore, who, at 80, still works in the company's San Francisco office.

Moore chose Leal to take charge as chairman and chief executive because there was something about him, intelligence coupled with a stability, that made Moore think Leal could help pull them out of the crunch they were in.

"I think he was the best candidate we had, his character, his personality. I'd like to say there's a difference between being aggressive and being effective," Moore says. "He's effective and very persistent, and that's important."

Prior to Leal taking over, the company's profits slumped for about three years in a row, Moore says. "We had a lot of people doing a lot of different things, but no one was really responsible. No one was watching and balancing the outgo and the income. It was going on for two or three years," Moore says.

Hank Klehn, chief operating officer, says the company was not losing money, but "we were not as profitable as we had been."

In addition to the oil crisis and the general recession, Dames & Moore, which had consulted on the construction of about half the nuclear power plant facilities in the U.S., was dealt a crushing blow when construction of facilities basically ceased under political pressure in the 1970s, Moore said.

Shortly after taking over, Leal restructured the company with the help of a management consultant, moving resources from nuclear power division to the hazardous waste division, Moore says. Dames & Moore had begun work in hazardous waste consulting before Leal headed the firm, but he made it the company's dominant focus, he says.

In the last 11 years, Leal has taken a company with 1,000 employees which was known mainly for its consulting on soils and geological matters and turned it into one of the leading hazardous waste design firms in the world, with 3,300 employees at 75 offices worldwide.

The company, headquartered in downtown Los Angeles, reported record revenues of $259.6 million and record earnings of $19.4 million, or 97 cents a share, in fiscal 1992, which ended March 27. Revenues were up 10 percent and income gained 33 percent.

In March, Dames & Moore, which had been a partnership for more than 50 years, went public, completing a $130 million initial public offering of 5.75 million shares of common stock at $20 a share.

In the offering of 5.75 million shares of common stock, 2.5 million were sold by the company and 3.25 million by Hochtief A.G., an Essen, Germany-based company which owned 40 percent of the company before the offering.

In the offering the company netted $44 million and is now 55 percent owned by past and present Dames & Moore partners and 29 percent by the public. Hochtief's stake was trimmed to 16 percent.

The German company "deliberately sold some of their shares (because) they did not want to become an extremely large holder of a public company," Leal says.

Before the offering, analysts touted the company as a growing environmental firm which would achieve earnings of $1.30 a share for fiscal 1993, an increase of about 30 percent.

But the stock was the second biggest loser on the New York Stock Exchange on June 25, falling $2.125 to $15.675 a share on news that the company would not be able to meet its projected earnings for the fiscal first quarter ending June 26. The stock was already down about 10 percent from its offering price before that, along with some other environment companies' stocks that were hit by lowered expectations on Wall Street, Klehn said.

Leal says the company had projected earnings of 27 cents a share for the quarter, but revised that down to 24 cents because of continued sluggish economic conditions in California. "California is about 20 percent of our total business. When California isn't doing well, we certainly feel it," Leal says.

The stock price has since rebounded and was at $17.75 on July 27. First quarter results will be released on Aug. 6.

Regardless of stock fluctuations, the company is set for an acquisition spree, Leal says. With the $44 million netted from its offering, the company paid off debt and is in "serious talks" to buy three smaller environmental companies and hopes to announce the deals by the end of 1992.

Leal declines to reveal the targets' identities, but he says each of the three companies has annual revenues in the $20 million to $50 million range and would boost Dames & Moore in one of three ways:

* Provide expertise and a client base in a specialty Dames & Moore does not currently have;

* Provide an office in a geographic area where Dames & Moore currently does not have a presence, such as Texas and the Gulf Coast.

* Provide a workforce of employees with national security clearance, which would help Dames & Moore snare future contracts with the Department of Defense and the Department of Energy.

Leal says Dames & Moore's new public status should enable it to take advantage of the current trend of consolidation of the environmental industry, with larger companies consuming smaller ones. "We absolutely are committed to the growth of our business around the world," he says.

The San Francisco native recalls his father was an entrepreneur who "started up businesses to sell them to someone else." But from an early age, Leal decided he wanted to be an engineer, something different from anything in his family had done before. "I saw engineers as doing something useful," he says.

Leal majored in civil engineering at the University of Santa Clara, and has a masters in engineering from Caltech as well as an MBA from the University of Chicago. He began joined Dames & Moore in 1959 and was the principal engineer responsible for site safety analysis for more than a dozen nuclear facilities which were built in the U.S. in the 1960s.

In 1976, Leal assumed the management of Dames & Moore's geographic division and in 1981 he was named chairman and CEO of the company.

He is a cool, calm leader who is "never stressed" and "never late for anything," says Jayne Chesebrough, who has been his assistant since 1981. "Even his wife has told me she has never seen him stressed."

Every day, Leal arrives at the office in the 911 Wilshire Building at 9 a.m., works until noon, takes exactly an hour for lunch and leaves at 6 p.m., Chesebrough says. "He is a very dependable, methodical person."

Before he gets to work, the 58-year-old jogs, reads the newspaper and eats breakfast, Chesebrough says. He is a "concert-level" pianist and plays Mozart and Scott Joplin every night on his concert grand piano. Leal gives concerts for friends and family, but does not perform in public because he is uncomfortable with "being the focus," Chesebrough says.

Leal says his mother forced him to take piano lessons as a kid, something he hated at the time, and he started tickling the ivories again about 10 years ago. He works in a corner office which is only a smidgen bigger than the offices of staff engineers who work on the same floor. Chesebrough says it was

she who convinced him to get a few pieces of custom-made furniture befitting his new status.

Chesebrough says she has never heard Leal raise his voice and only once did a business problem cause him to show he was upset. In that case, which Chesebrough won't detail, Leal dealt with the situation by "writing a very strong-worded memorandum," she says.

Ray W. Judson, former president of Pasadena-based giant environmental engineering firm, Parsons Corp., agrees with Chesebrough's description of Leal as someone "who never gets flustered."

Judson met Leal in the late 1970s when Leal and other Dames & Moore partners came to him with a deal for Parsons to buy the company, he says. At the time, "they had a fantastic reputation, but their business was falling off," he says.

Compounding the problem was the fact that a number of partners wanted to retire but couldn't because the company didn't have the cash to buy them out. Parsons was to give Dames & Moore millions to pay off the partners, but the deal fell through at the time, partly because Parsons was leery of the partnership structure and the company's lack of profits.

Leal later got a big cash infusion for Dames & Moore in 1985 when Hochtief bought 40 percent of the company, and was able to get the company out of the downbeat situation. Judson says Leal's ability to "get all those partners to agree" to Hochtief's offer as well as turning the company known for checking out foundations for buildings into a "very profitable" hazardous waste design firm are Leal's greatest achievements.

Judson describes Leal as "a very results-oriented" executive who is "very respected by all of his people." He adds: "I wish that deal (with Parsons) went through 13 or 14 years ago. I'd love to have that company now."

SNAPSHOT

George Leal

Native of: San Francisco

Current residence: San Marino 

Age: 58

Education: Bachelor of science, civil engineering, University of Santa Clara, 1955; Master of science, civil engineering, California Institute of Technology, 1958; Master of business administration, University of Chicago, 1955