Monthly Archives: September 2014

Balfour Beatty announces sale of Parsons Brinckerhoff to WSP Global

Balfour Beatty has just announced the sale of its professional services division, Parsons Brinckerhoff, to WSP Global for a cash consideration of US$1,352.5 million (£820 million). The sale price assumes cash of US$110 million (£67 million) is retained within Parsons Brinckerhoff.

The sale is conditional upon the approval of Balfour Beatty’s shareholders, and the transaction is also subject to certain antitrust and other approvals. Completion of the sale of Parsons Brinckerhoff is expected in Q4 2014.

WSP’s press announcement states: “Since the companies possess complementary skills and serve complementary segments and geographies with limited overlap in operations, the acquisition is also aligned with WSP’s growth strategy of:

· capitalizing on opportunities in countries where it has a strong and well-established presence, such as the UK;

· enhancing its position in industrialized regions where the Corporation [WSP] is established but does not have a significant presence, such as the US and Australia;

· expanding its offerings and capabilities in its core segments, such as buildings and infrastructure, to increase its expertise and offerings worldwide; and

· developing the energy segment, while further growing its project and program management services offering.”

Pierre Shoiry, President and CEO of WSP, comments: “We are pleased to be joining forces with a firm of Parsons Brinckerhoff’s long-standing reputation and know-how as we expect this transaction to create an industry leader, with the ability to deliver more expertise and services to our client base across the world.

“We expect to successfully reach the strategic objectives we had set for 2015, by creating one of the largest global pure-play professional services firms in our industry.”

George J Pierson, President and CEO of Parsons Brinckerhoff adds: “This tremendously exciting transaction significantly expands opportunities for our employees and services to our clients. The compatibility of our respective cultures is strengthened by the complementary technical skills we each offer.”

Once the acquisition is completed, Pierson will become an executive member of the board of directors of WSP, ensuring his active role in the organisation as well as continuity and integration at the highest level.

By Gail Taylor

Does rejection of ‘Boris Island’ spell an ill wind for London?

Copyright Heathrow Airports Ltd

Copyright Heathrow Airports Ltd

Controversy over the proposed location of a new runway serving London soared to new heights this week after the government’s Airports Commission rejected plans for a new hub airport in the Thames Estuary to the east of UK capital.

The plans – dubbed ‘Boris Island’ are the brainchild of Mayor of London, Boris Johnson, who has reacted furiously to the decision that now leaves proposals for a new third runway at Heathrow as clear front-runner on the Commission’s short-list. A new second runway at London Gatwick is another, less favoured contender, as is an extension of an existing runway at Heathrow.

Airports Commission chair, Sir Howard Davies, says of the decision: “We are not persuaded that a very large airport in the Thames Estuary is the right answer to London’s and the UK’s connectivity needs.

“While we recognise the need for a hub airport…there are serious doubts about the delivery and operation of a very large hub airport in the estuary. The economic disruption would be huge and there are environmental hurdles which it may prove impossible, or very time-consuming to surmount. Even the least ambitious version of the scheme would cost £70 to £90 billion with much greater expenditure involved than in other options – probably some £30 to £60 billion in total.”

Copyright Foster + Partners How the thwarted Thames Estuary hub airport might have looked.

Copyright Foster + Partners
How the thwarted Thames Estuary hub airport might have looked.

Where the wind blows

In a column written for the UK’s Telegraph newspaper, Johnson rails against the fact that the way ahead now appears to be open for expansion of Heathrow after the country’s upcoming general elections in May 2015. (The UK government vowed not to bring in the Heathrow option during its current term of office.)

He warns: “Heathrow is already by far the noisiest airport in Europe, about a hundred times worse than Paris. A third runway will mean that there are more than a million people in the city affected by noise pollution of more than 55db – well over a third of all the victims of such aircraft noise in the whole of Europe.

“It will mean more of the medical problems associated with such pollution – stress, heart disease, etc; more struggling in school; vastly more road congestion and pollution in west London.”

Heathrow does indeed find itself in the unusual position of being a major airport situated to the west of a city, with the UK’s prevailing westerly winds blowing air pollution straight into the lungs of the capital. And its asthma and allergy suffers.

And Johnson is not the only one upset. Architects, Foster + Partners, worked alongside him to create the masterplan for the Thames Estuary proposals.

In a strong statement issued to the press, practice founder, Lord Foster, asserts: “I predict that Londoners will be scathing in their condemnation of today’s [this week’s] announcement, when confronted with the inevitability of the blighting influence of Heathrow – the risks, noise and environmental impact of overflying London – and its inability to cope with predicted growth.”

He describes adding a third runway at Heathrow as ‘merely a short term fix’ that will inevitably lead to a fourth runway in order to maintain international hub status.

He then draws a contentious conclusion: “The pattern of the most competitive emerging economies is to replace the old and obsolete and go boldly forward with the new, an opportunity today’s decision denies this country. The outcome of this process calls into question the validity of the Commission.”

Foster + Partners also claims that the Commission significantly overestimated the costs, and that independent estimates show that the new hub would cost ‘about £5 billion more when compared to expansion at Heathrow and would be faster to build’.

Hoping to befriend Boris…

However, not everyone is unhappy that Heathrow’s plans appear to be getting closer to take-off. The airport’s CEO, John Holland-Kaye, comments: “We have always agreed with the Mayor that Britain needs a successful hub airport to compete in the global race for jobs and growth. Heathrow is now the only hub left in the race. We would like to work with the Mayor to deliver Heathrow expansion in a way that benefits the whole country while reducing noise impacts for local people compared to today.”

Holland-Kaye wrote an open letter to Johnson echoing these sentiments, just prior to the Commission’s announcement on 2nd September. In the same letter, he also makes the case against Gatwick, stating: “Gatwick is different, it serves the short-haul and holiday market. We have nothing against Gatwick but you have rightly identified that its claim that it can deliver the same benefits as a hub airport is ‘a sham, a snare and a delusion’. I agree with you when you say a second runway at Gatwick would not make a bean of difference to the global connectivity we need.”

Copyright Heathrow Airports Ltd How Heathrow would look if a third runway is built.

Copyright Heathrow Airports Ltd
How Heathrow would look if a third runway is built.

However, in this fiercely polarised debate there are those who robustly back Gatwick. The point-to-point airport’s chief executive, Stewart Wingate, argues: “We believe Gatwick has the strongest case. It is the only option left on the table that can be delivered with more certainty than either of the Heathrow options, and it can be delivered without the significant environmental impacts expansion at Heathrow would inflict on London. It can be delivered faster than any other option, and at low cost and low risk.

“Furthermore, expanding Gatwick will ensure the UK is served by two successful world-class airports. It can liberate hub capacity at Heathrow and open up the opportunities for affordable long haul travel to emerging markets for the benefit of everyone.”

An article in the UK’s Guardian newspaper seems to agree, venturing: “Let’s not assume (at least yet) that a giant stitch-up to favour Heathrow is the inevitable outcome. In a world of necessary compromises, Gatwick still looks the least bad option.

“The argument that the UK must have a single ‘hub’ airport – meaning Heathrow – to make flights to deepest China viable has always seemed wildly overstated. Heathrow struggles to explain why so many short-haul holiday flights, carrying few transit passengers, still crowd its terminals. If we must have a new runway, Gatwick, the only airport capable of providing Heathrow with stiffer competition, looks the best answer’.

GATWICK TWO RUNWAYS

Time for action

Whatever final choice the Airports Commission makes next year, the urgency is indisputable. A report, The Nub is the Hub, from the Confederation of British Industry (CBI), also issued in the run-up to 2nd September, cautions: “With the UK’s hub capacity at Heathrow already full, the UK is falling behind on direct flights to emerging markets.

“The report highlights that by drawing heavily on transfer passengers, the UK’s EU competitors with their own unconstrained capacity are creating connections to new destinations within the BRICS such as Xiamen in China and Recife in Brazil, as well as links to the major markets of the future, like Peru, Indonesia, Taipei and Chile.”

Katja Hall, CBI Deputy Director-General, concludes: “The [UK] Chancellor has set businesses ambitious targets for increasing the UK’s exports, and there is simply no way of achieving these goals without upping our game in emerging markets.”

By Gail Taylor