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London eye: Amec is leader in design and delivery worldwide.


SERIOUS companies do not always get the serious attention they deserve.

An example of this is Amec, a name familiar in the North-West as it has been much involved in local water and sewage projects and also has a major facility near Warrington where it manages its nuclear and defence activities.

Although Amec is still known to most as being a UK civil engineering and construction company, the reality is that over the past decade it has been transformed by chief executive Sir Peter Mason into an international company, a world leader in design and project delivery work.

Sir Peter, 58, made his reputation as one of the most respected figures in the UK's engineering industry even before he joined Amec rival Balfour Beatty.

Amec now ranks with such giants as ABB, Bechtel, Kellogg Brown Root and Fluor (a company with which it is incidentally in partnership in Iraq in restoring electricity supplies). Some of these may be bigger than it. But they lack Amec's strength in Europe through its stake in the French construction giant Spie.

What makes Amec financially newsworthy is that a few days ago it quietly raised pounds 90m, of which pounds 20m went to buy a Houston oil services group and much of the rest to finance various PFI projects.

The money was raised with a placing of new shares priced at 300p each. There was no shortage of big institutional investors ready to subscribe to the placing, but it caused little interest among investors or even analysts and last week saw the Amec shares ease down by 12p to 307p.

Such price slippage was natural enough, given the despondent end-January state of the stock market and the temporary satiation of big investor demand resulting from the placing. But what is irksome is the lack of press attention given to a British company such as Amec, one which is involved in projects some of which are so large that they could be said to be changing the geography of the world.

This lack of interest is also reflected in the careless way in which we discard our national jewels. In recent times we have lost to foreign ownership Rolls Royce cars, Jaguar, Rover, P & O Cruises, Abbey National, Westland helicopters and only last week London's Savoy Hotel was acquired by a North American group. Even the London Stock Exchange itself is about to be taken over by the Germans. The merits of the individual deals quoted are debateable. But the common factor is that the foreigner both has the money and is willing to take the risk at a time when the bulk of Britain's population is now extraordinarily risk-averse and busy squirreling money away in the supposed safety of Premium bonds or housing.

Moreover, perhaps because we are so busy saving Iraq for democracy or Africa from Aids, we as a nation seem to have lost our nerve for backing major projects at home, some of which are badly needed.

Admittedly, the last big project was the Channel Tunnel (for which Mrs Thatcher, of all peo-ple, was responsible) and this is now turning out to be a bit of a liability (but arguably that is because we have neglected modernising the rest of our rail system).

On the Continent they are nothing like so negative about the importance of rail and the go ahead is expected soon for an Alpine tunnel which will be 34 miles long (against the Chunnel's 31. 3 miles, of which 24 miles are under sea).

This will provide a rail link between Lyons in France and Turin in Italy and so open the way to complete the big plan of linking Western Europe's rail system to eastern Europe and even as far as Kiev in the Ukraine.

A similar development already under construction (open for use in 2008) is a rail tunnel under the Bosphorus in Turkey.

Sadly, British companies such as Amec are unlikely to get much of a look in on these European projects. But nearer home Amec has established a formidable reputation as a successful tunneller. It was responsible for London's Jubilee Line and is currently building an extension to the Docklands Light Railway.

This DLR extension will transform the accessibility of London City Airport (which is located in the middle of the old Royal Docks). Amec is also in a consortium (with Royal Bank of Scotland) which is now preferred bidder for a contract worth pounds 200m over 30 years to build a tunnel under the Thames to extend the DLR from the airport to Network Rail's Woolwich Arsenal station on the south side of the river.

This is a good example of how Amec is helping to change the geography of London, as when it is completed Kent rail commuters will then have much easier access to the Canary Wharf financial area. .

Amec is also busy working for BP in the land-locked Caspian Sea. And nearer home it is part of a consortium that looks after many of Shell's platforms in the North Sea. Amec is valued at just under pounds 1bn in the stock market.

This valuation is, of course, not based on it size or that it now employs 40, 000 worldwide but on how much profit the stock market analysts expect it to make.

On that score there is no doubt that it is in a highly competitive business with many risks.

But unless such serious companies doing real work prosper it is hard to see how the UK consumer boom (which has Tesco for example now valued at pounds 24bn) can continue. And if Amec's profit performance were to slip you can be sure those foreign company snatchers would be in there like a shot.

Several mega projects around the word are being discussed

WHAT makes the future look bright for project-delivery companies such as Amec is the way in which the world is fast growing up, with numerous local construction projects already under way plus several mega projects now being discussed.

One of these that has just come to light is China's proposal to build a 100-mile bridge and tunnel link to Taiwan (the independent Republic, which China has always argued was really part of mainland China).

Another is Sri Lanka's discussion of a link to connect it with mainland India. Nearer home it will not be long before a 30-mile sea barrier from Gravesend to Southend is considered to save London from flooding.

These projects are so far just ideas. But given the level of global building activity already taking place it was no surprise that Swiss-cement group Holcim decided to make a takeover of British quarrying group Aggregates Industries for pounds 1. 8bn. And that led to speculation that Pilkington might soon be on the list to be snapped up.


Amec has been helping to restore the electricity supply to the centre of Baghdad
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Copyright 2005 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Date:Jan 26, 2005
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