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EPC Outlook Procurement Executives Group

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Presentation on theme: "EPC Outlook Procurement Executives Group"— Presentation transcript:

1 EPC Outlook Procurement Executives Group
The Path Forward Climate of Concern John F Mika Senior Vice President of Procurement CH2M HILL

2 Discussion Topics Procurement Executives Group (PEG)
Global Economic Environment Supply Market Landscape EPC Industry Landscape Concerns and Threats Questions and answers

3 Procurement Executives Group
AMEC, Peter Jessup Bechtel, David Hammerle Black & Veatch, Mike Gammill Burns & McDonnell, Matt Nordhus Burns & Roe, Michael Clark CB&I, Dan Kinsey CH2MHill, John Mika Fluor, Jim Scotti, Ed Ruane Foster Wheeler USA, John Crockett McDermott, Ryan Siebenkittel Jacobs, Harry Breijaert KBR, John Townsend Kiewitt, Christopher Gonzalez Kvaerner Americas Inc., Jeanean Slamen Mustang, Ted Kelly S & B, Kent Malone Shaw, Gary Dellesky, Jim Malone Technip USA, Art Wardlaw The Industrial Co., Michael Chambers URS, Joe Christopher, Larry Dinger Worley Parsons, Tom Brock Zachry, Glenn Kloos

4 2011 Membership Profile ENR Rankings Top Contractors
6 of top 10 are PEG 10 of top 25 are PEG 12 of top 50 are PEG Top Design Firms 7 of top 10 are PEG 13 of top 25 are PEG 15 of top 50 are PEG Top International Contractors 15 of top 225 are PEG

5 Charter Core Values Ethics and Integrity
The Procurement Executives Group (PEG) serves as a forum for the executive leadership of procurement and supply management in the engineering and construction industry. We seek to represent, promote, and improve the contributions of our profession to the industry we serve. In fulfilling this mission, PEG and our member company representatives are committed to a set of Core Values…. Ethics and Integrity Safety Quality Diversity Sustainability Collaboration Leadership in Procurement Excellence For more information, visit

6 Headlines Concern around a double dip recession
US and European expansion anemic Consumer and business confidence Sovereign worries Fiscal tightening Gridlocked US government Emerging markets fairing better Best growth Best pricing potential, selling or buying Projects “Giga Projects” is the new landscape

7 Global Recovery: Diminished Expectations
Real GDP Growth 2009 2010 2011 2012 2013 United States -2.6 2.9 1.5 1.8 2.3 Eurozone -4.1 1.7 1.2 1.6 United Kingdom -4.9 1.4 1.1 1.9 Japan -6.3 4.0 -0.2 3.9 China 9.2 10.3 8.3 8.9 India 9.1 8.8 7.5 8.1 8.6 Brazil -0.6 4.2 4.6 5.2 World -1.9 4.1 3.0 3.6 Source: IHS Global Insight

8 U.S. Economic Growth by Sector
(Percent change unless otherwise noted) 2010 2011 2012 2013 Real GDP 3.0 1.5 1.8 2.3 Unemployment Rate 9.6 9.1 9.2 8.9 Consumption 2.0 2.1 1.9 Light Vehicle Sales (Millions) 11.6 12.5 13.5 15.0 Industrial Production (growth) 5.3 3.7 2.9 Housing Starts (Millions) 0.58 0.60 0.67 0.94 Business Fixed Investment 4.4 7.8 4.3 5.7 Fed Government 4.5 -2.3 -2.9 -3.6 CPI 1.6 3.2 10 yr Treasury Yield 2.8 2.7 Oil Prices (WTI, $/bbl) 79 94 98 106 Source: Global Insight

9 Purchasing Managers’ Indexes: Manufacturing Slowing Down
Source: Global Insight

10 Pressures in Supply Chains are Beginning to Abate
United States China Brazil Eurozone Source: Global Insight

11 Supply Base Risks and Influences
Supplier performance Shop capacity restraints Global dispersion of supply chain, continues Regulation changes and compliance Financial condition and access Commodity volatility Energy cost and availability Counterfeit, fraud, and suspect items

12 Market Capital Expenditures (Capex)
Power Oil, Gas, and Chemical (OG&C) Civil Mining

13 Fossil fuels projected to meet 80% of energy demand in 2035
Global Energy Demand 50 100 150 200 250 300 350 400 1965 1975 1985 1995 2005 2015 2025 2035 Forecast 50% Growth Renewables MMBOED Nuclear Coal Natural Gas Liquids Fossil fuels projected to meet 80% of energy demand in 2035 Source: U.S. Department of Energy, International Energy Outlook & BP Statistical Review.

14 Power Global Capex Oil, Gas & Chemicals Global Capex
Civil Global Capex Mining Global Capex Source: IHS Global Insight

15 Total Global Capex (Power, Oil, Gas & Chemical, Civil, Mining
Source: IHS Global Insight

16 Regional Global Capex Source: Global Insight

17 EPC Industry Landscape
Strong capital expenditures 2012 – 2015 Significant growth in EPC Spend ahead, some bow wave happening Global project challenges Attracting and retaining staff Local labor shortages Lack of infrastructure Remote and challenging locations Complex scope and size Global sourcing Opportunities and challenges

18 EPC ‘Crystal Ball’ - Spend Forecast
Spend Forecast - Revisited

19 ‘Crystal Ball’ – Part II
- Revisited

20 Logistics is even more critical to EPC success!
…….Climate of Concern 40% chance for double dip Can Washington work again in collaboration Can the European debt crisis stabilize From Arab Spring to Arab Fall Can we continue to be ready for impending expansion Logistics is even more critical to EPC success!

21 Questions & Answers

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