Jacobs Engineering Group Inc.
Business History
Jacobs Engineering Group Inc. is a technical professional services firm based in Pasadena, California, USA. It provides a range of technical, professional, and construction services to industrial, commercial, and governmental clients globally. The Company provides four categories of services: project services; process, scientific and systems consulting services; construction services, and operations and maintenance services.
Jacobs fundamental business strategy is building long-term client relationships. With more than 60 years in the industry, they have attracted and retained clients by providing superior customer value with over 80 percent of their repeat business from loyal clients. This strategy yields cost advantages, profits, and growth, which allows them to attract and retain investors, and thus fuel further growth. The combination of a loyal client base and steady growth enables them to attract and retain the industry’s top talent. As a result of this sound business strategy they are prospering in diverse markets worldwide. Their global network includes more than 200 offices in over 25 countries with operations in North America, the United Kingdom, mainland Europe, India, Australia, Africa and Asia.
Jacobs Engineering Co. was started in 1947 by Joseph J. Jacobs operating as an engineering consultant and a manufacturers’ representative for process equipment. In 1956 with 20 people on staff completed first chemical project for Kaiser Aluminum in Louisiana. Awarded first design-construct project in 1960 and expanded to 150 people. Began work on a feasibility study for Arab Potash Company in Jordan. Designed their first diatomaceous earth (DE) facility in 1966 and went on to design almost all other DE plants in the United States. With over 300 employees Jacobs opened its first satellite office in New Jersey. Jacobs became a publicly owned company in 1970. Opened a project office in Dublin, Ireland and entered the Gulf Coast hydrocarbon market. Jacobs had expanded to 1600 employees by 1978 and in 1982 began their first major contract for the US federal government. In 1991, passed the $1 billion mark in annual revenues. It expanded international presence in 1993 to the United Kingdom and India. In 1997, it expanded into Mexico and staff numbered over 15,000. In the late 1990’s began to focus on services like managing the Ford Motor Company’s North American wind tunnels. It gained a presence in Canada and strengthened their upstream oil and gas capabilities. Named Fortune Magazine’s Most Admired Engineering and Construction company for the second time in 2003. In the mid 2000’s began expanding by acquiring other engineering companies such as Techna-West Engineering Limited in Canada and W.H.Linder Company in Louisiana and Texas. A number of additional acquisitions through the 2000’s to the present have continued to expand their capabilities.Current Management
| Craig L. Martin | President, Chief Executive Officer, Director |
| John W. Prosser Jr. | Executive Vice President – Finance and Administration, Treasurer |
| George A. Kunberger Jr. | Executive Vice President – Global Sales |
| Thomas R. Hammond | Executive Vice President – Operations |
| Gregory J. Landry | Executive Vice President – Operations |
| Joseph G. Mandel | Executive Vice President – Operations |
| William C. Markley III | Senior Vice President, General Counsel |
| Nazim G. Thawerbhoy | Senior Vice President, Controller |
| Patricia H. Summers | Senior Vice President – Global Human Resources |
| Cora L. Carmody | Senior Vice President – Information Technology |
Production
Jacobs Engineering Group Inc. is one of the world’s largest and most diverse providers of professional technical services operating within a monopolistic competition market. The competitiveness of the bidding process prevents Jacobs from incorporating large profit margins which means that they are operating where average cost curve is close to the average revenue curve minimizing economic profits. Jacobs makes up for this by the volume of work that they do.
With 2011 revenues of over $10 billion, they offer full-spectrum support to industrial, commercial, and government clients across multiple markets. Services include scientific and specialty consulting as well as all aspects of engineering and construction, and operations and maintenance. Primary markets include:
By having such a diversified portfolio of services, Jacobs has a great demand for their services with a backlog of contracts worth over $14 billion at the end of fiscal year 2011. Jacobs has fixed cost for their offices and staff throughout the world. Variable costs include the sub-contractors hired on a contract by contract basis, but these costs are incorporated into the bid on the contract. Jacobs has posted a 5% operating margin and a 3.23% net profit margin, which is not very high, but on revenues of $10 billion that still results in net earnings of $331 million during 2011. The 2011 earnings are still down from the 2008 record of $420.7 million, but still represent a 10 year compound annual growth rate of over 17%.
Competition
Strongest Competitors – Fluor Corporation, KBR Inc., Quanta Services Inc., URS Corp, AECOM Technology Corp., The Shaw Group Inc., Tetra Tech, Inc.
Competitive Advantage – Jacobs has differentiated its services by providing excellent customer service and a diverse selection of specialized services.
Summary
Despite the recent economic turmoil Jacobs Engineering Group Inc. has not only survived but flourished thanks to the fact that despite a recession their largest customers, the US Federal Government and US military have continued to require their services. Other industries such as the petroleum industry are growing despite, or because of, the worldwide recession. Although Jacobs is one of the largest engineering firms in the world and much of its business is repeat business, it must still compete on a contract by contract basis, which allows new businesses to enter the market. The large number of specialized engineering fields makes it difficult for a single corporation to enter and participate in all areas organically, Jacobs has begun to acquire smaller specialized engineering firms in order to take advantage of these new revenue streams.
Sources
Corporate Information
Official Homepage
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