Fluor 2001 Annual Report Download - page 11

FLUOR CORPORATION 2001 ANNUAL REPORT
INDUSTRIAL & INFRASTRUCTURE
Fluor’s Industrial & Infrastructure business segment serves five broad market areas:
manufacturing and life sciences; commercial and institutional; mining and min-
erals; telecommunications; and, transportation. Operating profit in 2001 for Industrial
& Infrastructure declined 16 percent to $97 million, primarily due to a significant down-
turn in the telecommunications industry and the effects of softening economic
conditions on certain of the more economically sensitive segments of this market. New
awards for Industrial & Infrastructure were $2.6 billion, a decline of 21 percent from the
previous year. As a result, backlog decreased 11 percent to $3.0 billion from $3.3 billion
in fiscal 2000.
Strong growth in the life sciences market during 2001, helped offset the negative
impact of softening economic conditions and the global downturn in the technology sec-
tor on Fluor’s work levels in the industrial and microelectronics manufacturing markets.
A long-time leader in serving the biotechnology industry, Fluor has leveraged its
expertise and technical skills to establish a leading position in pharmaceuticals as well,
and has now established strong relationships with leading companies across the entire life
sciences market.
In addition to the expertise required for large-scale pharmaceutical manufacturing
facilities, Fluor expanded its services to include assistance in the validation process. The
pipeline of new and increasingly complex compounds seeking FDA approval is currently at
record levels. This is driving strong growth in demand for Fluor’s validation services, which
are highly technical and critical to the licensing of new drugs. Additionally, successful
commercial development of biological products has led to a significant increase in the size
of biotechnology manufacturing facilities, where Fluor dominates.
During the year, Fluor expanded its geographic scope in the global life sciences
market and is now working on projects in the U.K., Ireland and Europe, in addition to its
strong continuing presence in North America and Puerto Rico.
Despite a significant decline in 2001 capital spending by the microelectronics
manufacturing industry due primarily to excess capacity, Fluor continues to maintain
strong relationships and perform work for major customers in this global market. Early
indications of a recovery suggest renewed capital investment by the microelectronics
industry beginning in the latter half of 2002.
Building on its strong market position
in microelectronics, Fluor strengthened its
technical capabilities to enhance produc-
tivity and add new product lines to existing
facilities. Importantly, Fluor’s specialized
capabilities in this market have positioned
it at the forefront for implementing 300 mil-
limeter next-generation technology which is
poised to replace the current 200 millimeter
manufacturing capability.
In the more economically sensitive
industrial and consumer products manufac-
turing sector, Fluor is highly focused on its
core customers. While activity levels declined
during 2001, Fluor’s focus is on maintaining
its strong client relationships and respond-
ing to their smaller capital program needs.
During 2001, Fluor selectively increased
its focus on growing opportunities within
the commercial and institutional facilities
market. Fluor’s significant capabilities, expe-
rience and expertise provide a strong com-
petitive position in the market for highly
technical facilities such as teaching and
research laboratories, often associated with
higher educational institutions or govern-
ment facilities. These sophisticated labora-
tory facilities require specialized technical
skills such as expertise in clean room
environments and biohazardous facilities.
PAGE 9