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John F Mika Senior Vice President of Procurement CH2M HILL............ Climate of Concern............The Path Forward.

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Presentation on theme: "John F Mika Senior Vice President of Procurement CH2M HILL............ Climate of Concern............The Path Forward."— Presentation transcript:

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

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

3 Procurement Executives Group 3 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 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 4

5 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…. 5 Ethics and Integrity Safety Quality Diversity Sustainability Collaboration Leadership in Procurement Excellence Ethics and Integrity Safety Quality Diversity Sustainability Collaboration Leadership in Procurement Excellence Charter Core Values 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 6

7 7 Global Recovery: Diminished Expectations United States Eurozone United Kingdom Japan China India Brazil World Real GDP Growth Source: IHS Global Insight

8 8 U.S. Economic Growth by Sector Real GDP Unemployment Rate Consumption Light Vehicle Sales (Millions) Industrial Production (growth) Housing Starts (Millions) Business Fixed Investment Fed Government CPI yr Treasury Yield Oil Prices (WTI, $/bbl) (Percent change unless otherwise noted) Source: Global Insight

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

10 10 Pressures in Supply Chains are Beginning to Abate United StatesChina Eurozone Brazil 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 11

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

13 13 Global Energy Demand Source: U.S. Department of Energy, International Energy Outlook & BP Statistical Review. Fossil fuels projected to meet 80% of energy demand in 2035 Forecast 50% Growth MMBOED Liquids Natural Gas Coal Nuclear Renewables

14 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 15 Source: IHS Global Insight

16 Regional Global Capex 16 Source: Global Insight

17 EPC Industry Landscape 17 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 18 Spend Forecast - Revisited

19 ‘Crystal Ball’ – Part II 19 - Revisited

20 …….Climate of Concern 20 Logistics is even more critical to EPC success! 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

21 Questions & Answers 21


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