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1960 - 1969: Structuring for a New Era

As Bechtel’s sixth decade came to a close in 1958, the organization had compiled an impressive record, having worked on 2,000 projects in 40 states and in 30 countries on six continents. But in many ways, Steve Bechtel Sr.’s most important creation was not a physical structure that transformed some remote corner of the world; it was the organization he built and the attitude he brought to its work. In 1960 at the age of 60, he decided it was time to turn the reins over to the next generation, to pass along the responsibility to his son, Steve Jr.

Stephen D. Bechtel Jr. was just 35 years old, a child by corporate standards, but he became president of Bechtel in a time that seemed to call for new, young leaders. Steve Jr. was ideally suited in terms of education, experience, and temperament to oversee Bechtel’s corporate transition to this new age of organizational complexity.

The nation was just recovering from a modest recession—a mere breather after the torrid postwar growth phase—and about to embark on a prolonged period of robust economic expansion. In 1960, Bechtel’s revenues were more than double those of 1955 and four times the 1950 figure. The company’s salaried workforce had climbed to an all-time high of nearly 4,000.

Energy use, fed by growing economies everywhere, was on the rise, fueling strong demand for petroleum products, natural gas, and electric power. The need for production, processing, and transportation facilities was increasing dramatically. New projects were getting bigger and more venturesome. This was also the golden age of space flight; anything was possible. Bechtel’s markets never looked better, and Bechtel was in an excellent position to respond. 

As a sort of welcoming present to his son, Steve Sr. commissioned another soon-to-retire executive, Finance Chairman John L. Simpson, “to review our past policies, philosophies, and practices and give me your recommendations on how they might logically be changed for the present and the future.” He wanted Simpson to articulate what made Bechtel successful, and what it would have to do to continue on that road.

Leadership, said Simpson, had been the key to Bechtel’s achievements. Steve Jr. would have to preserve as much of that as possible to maintain an entrepreneurial spirit and sense of individual involvement and responsibility. Simpson also encouraged him to maintain Bechtel’s flexibility, its readiness to deal with new developments.

But because of Bechtel’s growth, Steve Jr. would need to create a more sophisticated, tightly woven management structure that could manage complexity and risk as well as provide some sort of continuity in a business that had historically been characterized by an endlessly repeated series of beginnings and endings. The relentlessness of that cycle had always dictated an emphasis on immediate accomplishment rather than long-range planning and personnel development. But business now was less influenced by a handful of key customers. The number of major projects had increased to the point where no particular customers dominated the scene. This represented a dramatic shift from Steve Sr.’s earlier determination to concentrate on large projects for a small, select group of major customers.

Report in hand, Steve Jr. began working on a major overhaul. His arrival marked a generational change throughout the company, a gradual shift of management functions to a seasoned team of younger executives. He simplified the organizational structure, clarified the lines of responsibility, and strengthened top management, which already boasted such leaders as Bill Waste, Perry Yates, John Kiely, and Jerry Komes. 

International Pathbreaking Projects

While the management of Bechtel was evolving, the building of everything from pipelines to energy plants continued unabated throughout the world. Bechtel entered the 1960s with a wealth of landmark international projects:

• Western Europe’s first international crude oil pipeline, the Rotterdam-Rhine pipeline, was completed by Bechtel in June 1960. Built at a time when Europe was converting from a coal to a petroleum economy, the pipeline was a significant example of the increasingly integrated European community.
• Bechtel served as engineer-manager on the Texaco Pembroke refinery in the United Kingdom, incorporating some of the most advanced automation control equipment in use at the time.
• Bechtel built the Republic of Panama’s first oil refinery in 1961.
• With Bechtel’s completion of a saltwater conversion plant on St. Thomas in 1961, tourist boards rejoiced, since residents and visitors to the Virgin Islands no longer had to obtain drinking water from Puerto Rico or from basins that caught rainfall. Every day, the new plant supplied 275,000 gallons of fresh drinking water from the Caribbean Sea.
• Bechtel oversaw the engineering, procurement, and construction of the largest chemical plant complex ever built at one time, the 11-plant Ponce petrochemical facility in Puerto Rico, completed in 1972.
• Bechtel built the first long-distance iron-ore slurry line in the world, the 53-mile Savage River project in Tasmania, completed in 1967. Construction required throwing a 1,200-foot suspension bridge over the nearly inaccessible Savage River. This 9-inch slurry pipeline was a pioneering method of transporting iron ore and other solids. The ore was crushed at the mine site, then flushed through the pipeline with water to its final destination. There it was reconstituted into a solid.
• One of the most modern petrochemical projects of the time, the Chocolate Bayou plant in Texas was built by Bechtel and featured on-line digital computer controls. Detailed engineering began in November 1960, ground was broken in 1961, and all units were turned over to the customer, Monsanto, in September 1962. 

The Trans-Alpine Pipeline

Although Bechtel was diversifying into new arenas, pipelines continued to be big business. One of the most challenging projects was the Trans-Alpine pipeline, a system that traversed parts of Italy, Austria, and Germany. When it was completed in 1967, Trans-Alpine carried 500,000 barrels of crude oil per day. Bechtel was responsible for the feasibility study, procurement, project engineering, and construction management of nearly 300 miles of 40-inch pipe, from the Gulf of Trieste over the Alps to central Bavaria. The pipeline, which reaches mountain-goat elevations, required three four-mile tunnels bored into the Alps and five pumping stations.

Bechtel pipeliners built the 1,400-mile Alberta-California natural gas pipeline, which was completed in 1961, then expanded in 1965 and again in the 1990s. Planning for this immense project began in 1956. The project enhanced Bechtel’s growing reputation for managing large, complex undertakings.

Another European pipeline was begun in 1961, the 470-mile South European pipeline. The route made a total of 2,500 crossings, including the Durance, Rhône, Isère, and Drôme rivers; roads; canals; and railroads. The longest crude oil pipeline in Europe, it shortened the total tanker-pipeline transit time from North Africa to Central Europe by five days, lowered total transportation costs, and made possible a major refining center in the Alsace–Upper Rhône area. 

Nuclear Engineering

The company faced one of its stiffest management challenges in nuclear energy, a field that was growing rapidly and attracting many competitors. From 1960 to 1965, Bechtel watched its early lead in nuclear power slip away. The building of nuclear power plants was a dazzling technological feat in the 1950s, but it wasn’t long before a number of companies could do it. To complicate matters, turbine and generator manufacturers such as GE and Westinghouse, having made huge investments in nuclear energy, were now keen to protect their business. Bechtel found itself in an escalating battle with these competitors, leading to a showdown at Turkey Point, a nuclear facility for Florida Power & Light (fpl) to be located in a mangrove swamp south of Miami. Bechtel had already built two oil-fired electric plants at the site for fpl, and Steve Jr. fought hard to win the project.

Westinghouse, GE, and other manufacturers were pressing clients to make them the prime contractors on such turnkey jobs, thus ceding them control over all aspects of the work. Not Bechtel. “We didn’t want to make reactors,” said Harvey Brush, then engineering boss of the Power & Industrial Division and later executive vice president of Bechtel Group, Inc. “But we didn’t want them to do engineering and construction.” Despite its early leadership, by the 1960s Bechtel found itself working largely as a subcontractor. To head off the other old-line builders, Harry Reinsch, who was responsible for many of Bechtel’s power plant developments, offered an unprecedented multiproject contract, on a lump-sum basis.

But there was a problem, and Reinsch knew it—the deal would lose money for Bechtel, and he couldn’t bear it. He walked away from the deal, telling the fpl boss, “We just can’t do it.” Back in San Francisco, a stunned John Kiely, who was senior vice president at the time, was as emphatic as Reinsch was uncertain. “Harry,” he told Reinsch, “you’ve gotta go back and get that job.” Kiely, too, knew that Turkey Point was a loser, but he argued that making it a loss leader would guarantee Bechtel a future in the nuclear business. If Bechtel lost this job, said Kiely, it would never be a major player in the nuclear industry.

Bechtel would take a $20 million loss on the two nuclear plants, Turkey Point Three and Four. But it brought in the Florida plants at a lower cost to its clients than the reactor manufacturers ever had. Bechtel had lost money, but it made the industry a viable sector for work again.

By 1968, three years after winning the battle for Turkey Point, Bechtel had also completed the San Onofre nuclear power plant for Southern California Edison, which, at double the size of any existing U.S. plant, was then the largest single-purpose nuclear power plant in the United States. At this point, Bechtel had completed or was at work on 27 nuclear-fueled generating units and had built up a backlog of work that would last more than 15 years. By the mid-1980s, the company was responsible for 40 percent of all nuclear work in the United States and half the nuclear plants in developing countries. 

Scientific Development and New Technologies

The nuclear experience proved not only that demands for new technology surface all the time, but also that shifts occur quickly. To stay on top of these opportunities and challenges, the company’s Scientific and Nuclear Development Department was expanded. The department conducted applied research and development and made work for the U.S. space program possible. The department was also instrumental in the development of the Argonne fast breeder reactor, a type of nuclear reactor that manufactures plutonium as a by-product. Research into the application of microwaves to industrial processes resulted in the design and construction of the first non-Bell microwave communications system.

Typical of the application of new technologies was the Great Canadian Oil Sands (later named Suncor) project at the Athabasca tar sands, built between 1962 and 1964 in northern Alberta. Here, Bechtel helped develop the first successful plant to process tar sands into high-grade synthetic crude by the use of hot-water separation. The tar sands in this remote region, 600 miles south of the Arctic Circle, contained twice as much oil as all the world’s known conventional petroleum reserves, but until then no one had figured out an economical way to separate the oil from the sand. Bechtel developed a system whereby giant bucket-wheel excavators scooped up the tar sand onto high-speed conveyors, each with a capacity of 100,000 tons per day, and carried the sand to the first step in a process that produced high-grade synthetic crude. 

Mining and Metals

Bechtel’s expertise in transforming oil and electric power and its experience working in isolated or inaccessible regions were further utilized in its work with metal resources. The 1960s brought a new era for the metals industries, resulting from new recovery processes, many of them enhanced by Bechtel engineers. The Carol Lake iron ore beneficiation project in the remote lake region of western Labrador, 600 miles northeast of Montreal, was one of the largest beneficiation plants in the world. So remote was its location that the project initially required development of a town site, airport, and railroad. In the end, it processed more than 15 million tons of ore annually.

The extraction processes used by Bechtel at Athabasca did double duty in the company’s extensive mining and metals projects in the Southern Hemisphere. In South Africa, from 1963 to 1972, the company worked on the Palabora copper project, one of the world’s largest open-pit copper mines. Designed by Bechtel, Palabora also used the world’s largest grinding mills. The original smelter produced 80,000 tons of 99.4 percent pure copper anodes, used ultimately in the manufacture of copper wire and cable.

A few miles from the highest peak in Irian Jaya in Indonesia, at an elevation of 11,000 feet, Bechtel demonstrated with the West Irian copper project (started in 1968 and completed in 1973) that, once again, no body of ore was too remote or inaccessible. Helicopter transport was used extensively during construction, and access from the mine site to the concentrator, 2,300 feet below, was provided by three aerial tramways. 

Building Hotels Around the Globe

In the 1960s, Bechtel also became a premier hotel builder. In the late 1950s, Pan American World Airways Chairman Juan Trippe had urged Steve Sr. to take over the construction of several hotels that the airline’s Inter-Continental Hotels subsidiary had under way. With construction hopelessly behind schedule, Steve Sr. at first declined. But Trippe persisted and, as a teaser, sent over a list of countries where new Inter-Continental Hotels were to be built. Trippe’s project list included 10 countries that neither Steve Jr. nor his well-traveled father had ever visited, much less worked in. Steve Sr. finally concluded that doing these hotels might provide Bechtel a valuable entrée to a number of newly emerging nations, possibly leading to bigger projects. Bechtel would, father and son agreed, take on two of the hotels and see how they turned out. If things went well, they would do more.

Things turned out very well, indeed. In Zambia, Bechtel’s Inter-Continental Hotel was the first of its kind ever completed on time and under budget in that country. Mightily impressed, Zambian officials asked Bechtel to build a new airport. And then a refinery. In the years that followed, Bechtel would build more than $250 million worth of facilities for the government of Zambia. That experience was repeated in Sri Lanka, Zaire, Romania, and a dozen other countries where Pan Am furnished an introduction and Bechtel’s work attracted the attention of local officials.

The hotel building program that was begun in 1958 grew rapidly during the early 1960s. By 1967, 22 hotels had been completed or were under construction in 14 countries as a result of a Bechtel-Inter-Continental arrangement. 

Liquefied Natural Gas

Beginning in the 1950s, Bechtel began to expand its market development studies. From time to time, both Steve Jr. and Steve Sr. had launched research to investigate their often inspired hunches rather than waiting for work, since bringing well-conceived projects to potential customers could create business.

Bechtel’s researchers were keenly aware that energy supplies were critical to industry. But which countries needed them most? And who had energy to spare? And how do you connect the two? The answers to these questions led Bechtel to liquefied natural gas (lng)—natural gas held in a liquid state by lowering the temperature to minus 260 degrees Fahrenheit. Japan needed energy, and Alaska had a plentiful supply of natural gas. A pipeline was impractical, but from 1966 to 1970, Bechtel designed and built for Phillips/Marathon the only plant to export lng from North America. The facility, built on Alaska’s Kenai Peninsula with Phillips “cascade” technology, was a particular challenge because of the severe, cold climate and strong tides. The lng was transported by ship to Tokyo Electric Power Co. Twenty-five years later, Bechtel and Phillips teamed up to optimize the cascade process. In 1996, after three years of work, Bechtel began building the technology into a new lng plant in Trinidad for customer Atlantic lng. 

Rapid Transit

San Francisco Bay Area planners knew that something had to be done to relieve the increasing traffic congestion in the region if it were to continue to enjoy growth and maintain its livability. In 1951, California’s state legislature created a commission to study the problem. In 1959, the Bay Area Rapid Transit (bart) District authorized a joint venture of Parsons Brinckerhoff, Tudor Engineering, and Bechtel to develop engineering data, a preliminary design, and estimates for the Bay Area Rapid Transit system. Three years later, the plans were approved and the District gave the joint venture the go-ahead to perform detailed engineering and manage construction.

From an engineering standpoint, the bart project was magnificent. It was the largest and most advanced rapid-transit project ever undertaken—a 71.5-mile, double-track line that passed through 3 counties and 14 cities with the key link of a 3.8-mile-long tunnel underneath San Francisco Bay. The system has since been extended. 

From Tragedy to Triumph at Churchill Falls

In 1534, French explorer Jacques Cartier described Labrador as “the land God gave to Cain.” “This country,” he noted, “has nothing of any use to mankind.” Barren year-round and locked in ice more than six months of the year, this remote region possessed huge amounts of untapped energy in the form of water that poured over Churchill Falls in the vast plateau of central Labrador.

In the early 1960s, harnessing that energy became the mission of Churchill Falls Labrador Corp. (cflco). It became Bechtel’s mission, too, after the company was chosen, along with Acres Consulting Services, to undertake the development of a hydroelectric plant. The challenge was daunting. The Acres Canadian Bechtel (acb) joint venture team would have to devise and build the infrastructure to handle trillions of gallons of water and channel it through an enormous underground power station. The cost would be just under a billion dollars.

Tragedy struck on November 11, 1969. A corporate jet belonging to cflco flew into a hill while approaching  Wabush Airport on a heavily overcast day. Bechtel’s Fred Ressegieu, general manager of acb, and his two top construction men, Herb Jackson and Arthur Cantle, were killed instantly, as were Donald J. McParland, cflco’s president, his two senior officers, and the plane’s two pilots.

Over the next several years, acb would build and build. They carved out of solid rock the world’s largest underground powerhouse, 972 feet long and 154 feet high. They built 300 miles of new roads, 6 huge concrete spillways, and one of the world’s largest switchyards. With Churchill Falls, Bechtel had built a single-site power system that dwarfed anything in the western world, producing 5,225 megawatts. “It was,” said Steve Jr., “a fabulous job of civil engineering.”

For Bechtel, the 1960s had been a time of unparalleled growth at home and abroad. The organization’s professional staff had more than tripled, reaching around 14,000. As the decade closed, the company was working on about 100 major projects in 60 countries.

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