Building Bechtel Projects and Partnerships Throughout Our History

1898–1940A Trombone, $10 and A Mule

The early history of Bechtel is a lesson in American ingenuity, entrepreneurship, and the changing face of transportation and civil engineering. It begins with W.A. Bechtel, a family man of innate engineering talent and a businessman committed to excellence. From railroads, highways, pipelines, and the San Francisco-Oakland Bay Bridge to the iconic Hoover Dam—this is a story of building America.

Experience 1898–1940

How We Began

By the late 1800s, Southern Pacific Railroad had laid 8,000 miles (12,875 kilometers) of track connecting the American West. Smaller carriers extended to more remote regions, including the Oklahoma Territory where W.A. Bechtel worked as a laborer building a frontier railroad. In , he packed up for Oregon with his wife, Clara; young sons Warren Jr. and Stephen; and younger brother, Arthur. Proving himself as a gang foreman, W.A. was offered a job with Southern Pacific's engineering department.

“I arrived,” W.A. recalled, “with a wife, two babies, a slide trombone, and a 10-dollar bill.”

W.A. Bechtel

W.A. Bechtel takes a railroad job in the Oklahoma Territory.

W.A. Bechtel takes a railroad job in the Oklahoma Territory.

By , W.A. was out of work and nearly out of money when he happened upon A.J. Barkley, a Southern Pacific manager who hired him as a gravel pit superintendent. “He seemed to me a natural engineer,” said Barkley. “I’ve always thought good engineers were born, not made”

W.A. insisted on learning how to operate the company’s latest piece of technology: a huge, clanking Marion steam shovel. Impressed, Silas Palmer, with an Oakland, California, inspector, offered him a job with his employer, E.B. and A.L. Stone. By 1904, W.A. was in charge of building the Richmond Belt Railroad and extending the Santa Fe Railroad into Oakland. In he earned his first opportunity at independent contracting when he and George S. Colley Sr. landed a subcontract to cut through limestone on a Western Pacific Line near Sunol, California.

Buying the Marion proved his determination to build a lasting organization using the latest technology. W.A. Bechtel Co. soon pioneered the replacement of horse-drawn freight teams with gasoline-powered trucks, Packards, and Alcos with chain drives.

Laying Tracks

In 1909, W.A. landed his first prime contract: grading the site of Western Pacific’s Oroville, California, station on the Oakland-Salt Lake City line. His finances were so thin that a friend had to guarantee his account with a wholesale grocer so he could feed his workers. He finished the job and managed to earn a small profit.

Horses and mules were a primary source of power on Bechtel jobs in the early 20th century.

Horses and mules were a primary source of power on Bechtel jobs in the early 20th century.

Southern Pacific began a construction program to capitalize on new traffic in the timber-rich Pacific Northwest. In , Bechtel won a subcontract for two sections on the California-Oregon line, with W.A. personally supervising the work. The project’s success left him with more money than he ever expected to have in a lifetime, and that attracted the attention of the Wattis brothers, owners of the Utah Construction Co., in .

W.A. had been pressing the Wattis brothers for subcontracts and has been bidding against them. “We might as well ask him in,” W.H. Wattis grumped to his brother, “as to have him nipping at our feet.” The collaboration proved to be transforming for W.A. He came to prefer working in partnerships, allowing him to share risk and take advantage of specialized resources and expertise. The Wattis’ relationship with Bechtel blossomed into numerous subcontracts over the years. It came to full circle in the Six Companies consortium that built Hoover Dam in 1933.

It’s Our Business

W.A. Bechtel was determined to pass on financial security and assets, along with a sense of responsibility as well as an obligation to employees and the enterprise. He took immense pleasure in the involvement of his younger brother, Art, and his sons, Warren Jr., Steve, and Ken. By their late teens, the sons were positioned to carry the business into the next generation.

W.A. Bechtel and sons Steve, Ken, and Warren Jr.

W.A. Bechtel and sons Steve, Ken, and Warren Jr.

Returning home from WWI, Warren Jr., Steve, and Ken supervised Bechtel projects and subcontracted small jobs. In 1923, when horse teams bogged down in the Oregon mud on a Southern Pacific job, Warren bought 60-housepower tractors, hitched trailers behind them, and moved heavy equipment and materials. Perhaps a construction industry first, it would become standard practice throughout the world.

In 1923, when Steve became project chief on Southern Pacific’s extension into Phoenix, his wife, Laura, went with him. Their commitment became a Bechtel policy of encouraging and paying for wives to travel on business. Ken’s interests tended toward administration and financial management, although supervising bridge construction in Sequoia National Park was the start of a lifelong commitment to natural history and the environment.

Laura Bechtel brings her children to an early work site.

Laura Bechtel brings her children to an early work site.

W.A. formally incorporated the company in 1925, with his sons and brother as officers. W.A. Bechtel Co. was now one of the largest and most respected construction firms in the West.

Bechtel built a 2-mile- (3.2-kilometer-) long, 12-foot- (3.7-meter-) diameter tunnel for Great Western Power, later part of Pacific Gas and Electric (PG&E)—the company’s first job for a large power utility and an introduction to PG&E, which would become one of Bechtel’s leading customers.

The Great Wide Open

As Europe edged toward the brink of war in 1914, railroads faced growing competition from automobiles, buses, and trucks. American transportation was diversifying, so Bechtel branched out into highway construction and eventually oil and gas production and transportation.

By , Henry Ford’s Tin Lizzie was the universal car. Four million Model Ts traveled dusty rural highways built for the horse and buggy. After the Federal Highway Act of 1921, the federal government entered the road-building business. Railway dominance was ending and the nation’s lifestyle was changing. Over the next eight years, the miles of surfaced roads nearly doubled, providing a stream of projects for construction companies.

In 1919, Bechtel won its first road-building contract: a stretch along the Klamath River in Northern California, to thread a road through the San Gabriel Canyon in Los Angeles County. This was the first California contract let by the United States Bureau of Public Roads. Later, Bechtel garnered two more contracts: to improve access to Sequoia and Yosemite national parks.

As highway construction became a substantial source of business, W.A. found an ambitious partner in Henry Kaiser. They met on a road job near Redding, California, in and joined in the operation of a rock plant in Oroville California, a forerunner of collaborations through the end of World War II.

Beautiful, arched Coos Bay Highway Bridge

Beautiful, arched Coos Bay Highway Bridge, a joint venture with Warren Brothers Construction Co., was Bechtel’s most ambitious highway-bridge project of this period. Completed in 1934, it was the longest of five new bridges connecting sections of the Pacific Coast Highway.

Pipe Dreams

In the late 1920s Bechtel entered a new field that would become a staple of the business for years to come: pipeline construction. Bechtel’s first pipeline carried natural gas 8 miles (12.9 kilometers) from Tres Piños, California, to Milpitas, California, and was built in partnership with Silas Palmer for PG&E in 1929.

Perhaps more than anyone else, Steve saw the potential in pipelines. As the business grew, he worked to convince Continental Gas to use a Bechtel-Kaiser partnership on an upcoming project. The youthful Western upstart shocked staid old Continental by bidding for the entire 400-mile (644-kilometer) line from Amarillo, Texas, to a point on the Missouri River south of Omaha, Nebraska. The men from Continental agreed to give Bechtel a 140-mile (225-kilometer) stretch.

Initially, W.A. and Steve had a tough time convincing their partner, Henry Kaiser, of the promise of pipelines. But soon a Bechtel-Kaiser partnership was laying thousands of miles of pipe for Standard Oil of California, Continental Gas, and PG&E. Bechtel engineers developed revolutionary techniques, including sideboom-equipped tractors to lay pipe and welding pipelines electrically in the field to reduce construction time.

Engineering the Extraordinary: The Hoover Dam

Beyond highways and pipelines, bigger things were in store. As the West developed, its thirst for water increased beyond nature’s supply. The mountains collected ample snow most years, but runoff rushed downriver to the sea in the spring thaw, often with devastating speed and volume. The solution was to dam rivers and create vast reservoirs behind them.

Bechtel completed its first dam in , for the Nevada Irrigation District. Bowman Dam was the second-largest rock-filled dam in the world and Bechtel’s most remote job site, in the center of California’s rugged landscape. “We were really cut off from civilization,” Warren Jr. recalled later. “We had to get everything in there to carry us from Christmas until the end of April.” It was a forerunner of many projects to come in remote outposts. The company completed the dam, even though the district ran out of money to pay for the whole job.

Although they were building projects on a huge scale, Western firms were still thought of as regional operators by the powerful, old-line Eastern construction companies and their customers. A consortium of Western contractors was quietly assembling a team to undertake the most challenging project ever built in the United States—damming the mighty Colorado River, something engineers had dreamed about for decades—and would come to fruition with Hoover Dam.

W.A. Bechtel Co. was barely 4 years old when the stock market crashed, plunging the nation into the Great Depression. In 1930, as the economy sank, Congress approved a public works project at Black Canyon, Nevada, the future site of Hoover Dam. The project would tame the flood-prone river, generate cheap electricity, and provide desperately needed jobs, from ditch digging to geology.

The Hoover Dam project was too big for any one company. So W.A. Bechtel helped form a consortium calling itself Six Companies, Inc. W.A. knew the heads of the consortium companies as friends and business associates.

Dozens of firms considered the mammoth job, but only five submitted formal bids. W.A. and his partners’ bid of $48,890,955 was $5 million less than the next highest bidder and just $24,000 more than the cost calculated by Bureau of Reclamation engineers. Six Companies of San Francisco would build Hoover Dam.

Sadly, W.A. didn’t live to see the historic work completed. In 1933, with construction activity on the dam at its peak, W.A. decided it was “a good time to see what the rest of the world is doing.” Leaving the nation’s most ambitious civil engineering project in capable hands, he and Clara accepted an invitation from the Soviet government to visit the just-completed Dnieprostroy Dam. On August 28, 1933, 15 days before his 61st birthday, he died suddenly in Moscow.

Hoover Dam was officially dedicated by President Franklin D. Roosevelt in September 1935. It became the birthplace of many of the great traditions of the present Bechtel organization.

Earth Movers

In 1933, with unemployment reaching 25 percent, President Roosevelt was committed to restarting the economy. Through the Works Progress Administration and other agencies, he launched billions of dollars’ worth of large-scale infrastructure projects, including the building of roads, bridges, and dams.

Bechtel, as part of the Six Companies consortium, was ideally positioned for the public works opportunities. The consortium’s monumental work on Hoover Dam demonstrated a construction prowess that few could match. “No group of Americans in history have spread themselves out on the scale of these westerners,” asserted the editors of Fortune magazine in a 1958 series called “The Earth Movers.”

Between 1934 and 1938, the partnership built Parker Dam across the Colorado River; operating as Columbia Construction Co., they corralled the waters of the Columbia River behind the concrete arches of Bonneville Dam and built Ruby Dam and Grays Harbor Jetties in Washington state; and as Six Companies of California, they constructed a section of the Oakland-Contra Costa Highway. Utah-Bechtel-Morrison-Kaiser Co. lined the Moffatt Water Tunnel and built Taylor Park Dam in Colorado.

Attempting the Impossible

Reaching across San Francisco Bay in two sweeping spans, the Bay Bridge would link San Francisco with the city of Oakland. Started in 1933, it made commuting between the two cities feasible and also connected the West’s financial center, San Francisco, with industrial Oakland.

Attempting the impossible became standard procedure, and the Bay Bridge is a perfect example. Plans called for bridge piers to be set deeper than anyone had ever attempted. And seldom had anyone confronted currents as unpredictable or winds as blustery as those on San Francisco Bay. The Bechtels formed Bridge Builders, Inc., allying themselves with Six Companies partner Henry Kaiser, one of W.A.’s most trusted collaborators. They added several old-line Eastern firms, including some of the most experienced deep-caisson builders Steve could find.

Bridge Builders won the contract for elements of the bridge’s eastern portion, and Transbay Construction, which included other Six Companies partners, won the contract for the western portion. A lively rivalry developed between the old Hoover Dam partners as they labored on opposite sides of the midpoint, Yerba Buena Island. Transbay at one point claimed the record for the world’s deepest pier, set at minus 246 feet. But Bridge Builders countered with one of its own. When it was over, the Bechtel combine had the world record, setting its deepest pier at minus 247 feet. The bridge was completed in 1936.

Perfect Timing

For several years, Steve’s interest in pipelines had been growing, along with his interest in a closely associated and increasingly important field: petroleum and its by-products. Neither W.A. nor Henry Kaiser shared his interest, and Steve spent hours trying to convince them of the promise of pipelines. Finally, they came around, just in time to catch a pipelining boom.

Steve’s prescience about pipelining was no fluke, and over the years his instincts would be proven right again and again. Bechtel combined technological leadership and innovative organization to drive the company into the pipeline industry’s top tier. The company was the first to use a sideboom tractor to lay pipe, allowing it to turn the traditional piece-by-piece method into a more or less continuous process that cut costs substantially. In 1936, Steve enhanced Bechtel’s edge by setting up a subsidiary called Industrial Engineering Co. to manufacture and apply a revolutionary new pipe coating, called Somastic coating. The process reduced corrosion and extended the normal 10-year life of a pipeline to 50 years.

In 1936, Steve and Ken reorganized the company. W.A. Bechtel Co. would continue to handle the traditional earthmoving work, and a new firm, S.D. Bechtel Co., was set up to pursue other lines of business—specifically, a broad-based firm in the West to provide engineering, management, and construction services for petroleum refining and processing.

S.D. Bechtel needed the best talent in the field. As director of purchasing for Hoover Dam, suppliers came to know Steve as “the man to see.” One of those who had been sent to see him was John McCone. A brilliant, hard-driving businessman, McCone had successfully bid for some of the steelworks at Hoover. “Steve and I shared a sense of imminent change,” McCone would recall, “of great projects about to break at last upon the West.” In May 1937, Bechtel and McCone then brought in a 43-year-old refinery designer from Chicago named Ralph Parsons.

Formed into Bechtel-McCone-Parsons Corp., BMP built its first refinery, a hydrogenation plant for petroleum refining, contracted by Standard Oil of California, in Richmond, California. Steve was so sure the petroleum industry needed a complete refinery engineering and construction firm in the West that he offered to do the job for free. By late 1941, BMP had 11 refineries completed or under way.

With Steve’s focus on petroleum, it was only a matter of time before looking at the Middle East. The area was awash in oil but required ocean transport. Steve carried with him a study showing shipbuilding was about to take off—but his former partners from Six Companies were reluctant to sign on without a guaranteed buyer in sight. One soon appeared.

1940–1945A Call to Arms

In the decade leading up to World War II, Bechtel had weathered the Great Depression and gained even greater expertise in engineering, design, and construction. When war dawned, the company made a massive contribution to the production effort, developing numerous innovations in manufacturing and leading the charge on ambitious construction projects.

Experience 1940–1945

A Bold Move

War engulfed Europe in September . The American industrial machine was poised to conquer Axis powers with airplanes, tanks, and ships—ships that Steve Bechtel aimed to build.

In the summer of 1940, Bechtel-McCone-Parsons won an order for five C-1 cargo ships when the British placed an urgent order for 60 more. The U.S. Navy offered Bechtel the opportunity to build 30 ships—but Steve insisted on bidding for all 60, despite never having built even a dinghy. With the Hoover Dam under Bechtel’s belt, he knew volume would work in his favor. “If we had all 60,” he said, “we could control the market for materials and equipment.”

The bold move won the contract for Bechtel—and created two of the most productive shipyards of World War II. First was Calship at Terminal Island in the Los Angeles harbor, cranking out cargo vessels, the speedy Victory ships, and tankers.

Barely three months after Pearl Harbor, the Maritime Commission Chairman urgently requested another shipyard. Across the San Francisco Bay in Sausilito, Steve’s brother Ken set up Marinship. The first vessel was built in just 126 days—twice as fast as other yards. Workers had barely celebrated when production shifted to T-2 tankers—larger and more technically exacting.

Driven by necessity, Marinship employed female workers and minorities, earning their first chance at these skilled jobs and working side by side for equal pay.

On May 16, 1946, Ken turned Marinship over to the U.S. Army Corps of Engineers, later writing, “Marinship as we knew it had become history.”

Shoring Up the War Effort

Bechtel’s war duty was not limited to ships. At the sprawling Aircraft Modification Center in Birmingham, Alabama, a Bechtel concern oversaw 14,000 workers modifying B-24 and B-29 bombers. The center also restored battle-fatigued jeeps, hiring a group of 600 men. With knowledge gained from shipbuilding and airplane modification, managers supervised the restoration and modernization of thousands of vehicles.

The Aircraft Modification Center in Birmingham, Alabama At the Aircraft Modification Center in Birmingham, Alabama, 5,000 battle-scarred jeeps were salvaged from the junk pile to be revived and modernized in only eight months.

In partnership with Standard Oil, Bechtel also operated for the U.S. Navy Pacific Tankers, a fleet of 90 ships and one of the largest oil movers in the world. And Bechtel built military bases, from the Naval Air Station at Corpus Christi, Texas, to Fort Ord near Monterey, California, and Elmendorf Air Base in Alaska.

Far and wide, Bechtel expertise shored up the war effort—at explosives plants in Missouri and New Jersey, copper mines in Arizona and Mexico, and the Oakland Army Depot, where munitions were shipped to forces fighting in the Pacific.

“I pray to God you will finish in time.” – General Douglas MacArthur

Bechtel was one of eight contractors working on the Pacific Naval Air Bases program to link a chain of bases and strengthen American air power. After Japan invaded Indonesia in 1941, Bechtel accepted the dangerous job of expanding facilities in the Philippines. Steve put his trusted lieutenant, Vice President George S. Colley Jr., in charge. But when Colley arrived in Manila, there were no blueprints and no site plans—just a list of jobs to build up defense at Cavite on Manila Bay and nearby Sangley Point.

Slipping a load of steel out of Hong Kong under the noses of the Japanese, Bechtel earned the attention of General Douglas MacArthur. “It does my heart good to hear about the plans you and Colley are carrying out,” he told the Bechtel team. “I pray to God you will finish in time—but I do not think you will.”

Sadly, MacArthur was right. Just after the surprise attack at Pearl Harbor, Japanese dive-bombers struck Clark Field and Manila, and destroyed Cavite and Sangley. It was a devastating personal loss for Steve Bechtel—with 35 Bechtel men dead or captured. The remaining crew sought refuge in Manila.

Colley, his wife, and his crew traveled by night through enemy waters. Reaching Borneo, they hid out in a swamp where Colley encountered a crocodile, scrambled up a tree, and was plucked down by a Japanese patrol boat. After three years in prison camps, Steve Bechtel joined them in Manila for a moving reunion. “We sat up most of the night,” recalled Colley, “piecing together some of the last four years.” Among the stories Steve recounted was the awe-inspiring Canol pipeline.

Below the Arctic Circle

A secure oil supply was essential to defending Alaska—even more critical after Japan invaded the Aleutian Islands. The United States feared shipping in the north Pacific would be crippled.

So in the spring of , Secretary of War Henry Stimson ordered joint-venture Bechtel-Price-Callahan to build the 1,430-mile (2,301-kilometer) Canol pipeline spanning portions of Alaska, the Yukon, and unmapped portions of the Northwest Territories, where “the mountains are nameless and the rivers all run God knows where.”

Canol was a top-secret project, known only to a small circle of senior officers and defense officials. The pipeline began below the Arctic Circle and ran 580 miles (933 kilometers) southwest to a refinery supplying fuel to 10 airfields. Bechtel made the region habitable by building roads, airstrips, housing, and communications centers. It was a logistical nightmare, requiring branch lines, pumping stations, and a refinery, not to mention equipment and personnel. Using a system of inland waterways, Bechtel moved food and equipment north, building a chain of airfields to hop up and down the line.

Winter brought snow and ice with subfreezing temperatures; summer was three months of continuous daylight, accompanied by mud, dust, and mosquitoes. Twenty thousand people were recruited to maintain a workforce of 4,000 needed to finish the job.

During nearly two years of construction, Steve became a subarctic commuter to remote outposts. The travel, seven-day weeks, and dozens of complex projects took their toll. By the time peace came in the fall of 1945, Steve was physically exhausted. Bechtel’s great burst of adrenaline-fueled wartime production came to an abrupt end.

1945–1959Bringing Energy to the World

In a time of rapid global change, Bechtel transformed as well. Boldly entering global markets and exploring innovative technologies, the company never shied away from risk. Bechtel restructured itself to become a modern business for modern times, leading the way in a new age powered by oil and nuclear power.

Experience 1945–1959

Powering Up

As World War II ended, Steve Bechtel finally had his opportunity to relax and retire. In , he did just that—but only after liquidating most of the company’s wartime operations. Bechtel-McCone and W.A. Bechtel Co. were consolidated, and a single enterprise was organized in its place: Bechtel Brothers McCone Co. (BBM). It was headed by Bill Waste, a company veteran and the first leader from outside the Bechtel family.

In Steve’s absence, BBM quickly made a breakthrough move with its first major power work for Southern California Edison (SCE). The power company was converting its frequency from 50 cycles to the U.S. standard of 60 cycles, and BBM was able to whisk the job away from Eastern firms. Under the brilliant management of John Kiely, this was a huge victory and the first of many jobs for SCE.

Bechtel pipeliners continued to advance technology, pioneering semiautomatic welding, high-strength pipe, and gamma-ray photographs to spot-check welds. There was heavy activity in chemical plants and petroleum refining, a breakwater, canal siphon, tinplate mill, steel mill, printing plants, and the nation’s first coal hydrogenation plant producing synthetic motor fuel from coal.

But after only a few months of retirement, Steve was eager to return. Jerry Komes, a vice president at the time, recalls “Bechtel Brothers McCone was viable, but not on the scale the partners were used to. They wanted Steve to come back.” Steve formally returned as president at a directors’ meeting on October 8, 1946.

“My chosen field has been and is engineering and construction,” he told the directors. “It is the most interesting, most stimulating, and in my opinion, one of the finest professional and business fields.”

Steve Bechtel Sr.

Setting Sights Across the Pacific

During his brief “retirement,” Steve thought carefully how to restructure the company and where it would operate. Ken, Warren Jr., and John McCone agreed that BBM should be a more structured entity with divisions overseeing various lines of work and run by professional managers, whether family or not. Steve devised new corporate structures, a set of spokes with himself at the hub.

Bechtel’s strategic focus would be service—with no big capital outlays or heavy borrowing. The company would travel light and finance its work with payments from customers who paid their bills on time. They would be selective about customers, pursuing only the best. They also decided to concentrate on big, high-impact work that attracted industry attention, jobs that Bechtel would conceive and design as well as build.

The new Bechtel would seek half its work overseas in order to smooth out inevitable peaks and valleys of the construction business; when one market was slow, another would pick up. Bechtel would diversify into targeted fields as a further hedge against cyclical swings of construction.

In January Steve headed off to Saudi Arabia to sort out details of the new organization. Steve’s first postwar sales trip produced a bonanza within weeks as Bechtel contracted to build a major portion of the Trans-Arabian pipeline, called Tapline, linking oil fields of the Arabian Gulf to the Mediterranean.

Into the Desert

When a small group of Bechtel workers arrived in eastern Saudi Arabia in July 1947, they beheld a large expanse of sand bordering the sea. No vegetation. No freshwater. And about 120 degrees Fahrenheit (49 degrees Celsius) in the shade—had there been any shade. Saudi Arabia’s forward-looking monarch, King Abdul-Aziz Bin Saud, had created a rich culture in the desert nation, but it had only a rudimentary infrastructure. The king dreamed of a country that could match any in the world with highways, utilities, airports, and the other signs of modernity—exactly the things Bechtel was in the business of building.

Bechtel had already worked in the Middle East in 1943. During the war, Bahrain Petroleum Co. Ltd. (Bapco) had needed to double the capacity of its refinery to 65,000 barrels per day and build a fluid catalytic cracker to produce 100-octane aviation fuel.

Bapco Refinery. No. 4 vacuum crude unit

Bapco Refinery. No. 4 vacuum crude unit showing main pipe trench.

Now Bapco needed additional storage tanks and a pipeline 33 miles (53 kilometers) across the Straits of Bahrain to the Saudi port at Ras Tanura. Bechtel was called upon to enlarge the Bahrain refinery, build the cracker, and construct associated facilities. In the same year, Bechtel received a contract from the Arabian American Oil Co. (Aramco) to replace a small refinery at Ras Tanura with a modern one.

Bechtel was building the foundations of a partnership with Saudi Arabia that would last for decades. In 1946, Bechtel began the task of constructing a modern nation in the Arabian Desert.

It built part of a 350-mile (563-kilometer) railroad from the Arabian Gulf inland to the capital at Riyadh, a power plant to electrify the capital, a deepwater pier on the Red Sea in Jiddah, radio stations, and still more power plants.

So closely was the company associated with the supply and distribution of electricity that in some newly connected Saudi households, family members would ask to “turn on the Bechtel.” Later, there would be modern airports at Riyadh and Jiddah, and a new highway linking Jiddah with the holy city of Mecca.

By 1947, four years after Bechtel first set foot in the Middle East, Saudi Arabian oil production had reached 250,000 barrels a day and was climbing steadily. Much more was available, but the country’s ability to move its primary source of revenue was limited. That crucial stream would flow from the Arabian Gulf to the Mediterranean Sea through a 1,068-mile (1,719-kilometer) Trans-Arabian pipeline called Tapline—and Bechtel would help build most of it.

850 Miles to Jordan

Tapline would reroute oil to Europe through the Mediterranean. Up until that time, Middle East oil moved south by tanker through the Arabian Gulf, through the Indian Ocean to the Red Sea, and then north through the privately owned Suez Canal. The 3,500-mile (5,633-kilometer) trip could take 12 days and cost oil companies 18 cents for every barrel that passed through the canal, or about $40,000 for each modern tanker. Tapline would deliver oil at a fraction of the cost.

It was a pipeliner’s dream. “This 30-inch (1,368 kilometers), 400,000-barrel-per-day line will be the mightiest pipeline ever laid,” Steve announced with pride, “bigger than any oil line yet completed and almost as long as the Big Inch line running from Texas to New York … potentially the biggest development of natural resources ever undertaken by American interests.”

In July 1947, work commenced. The pipeline began at the rich Abqaiq field, where 18 wells churned out 200,000 barrels of oil every day. Bechtel was responsible for 850 miles (1,368 kilometers) of Tapline, from the Arabian Gulf to Jordan. From Jordan, it continued to the city of Sidon, on Lebanon’s coast.

Technical innovations developed by Bechtel field engineers included the first overwater use of a cableway “skyhook”—borrowed from loggers in America’s Pacific Northwest—to transport pipe and supplies from ships anchored in deep water nearly 3 miles (4.8 kilometers) offshore.

Fueling the Energy Boom

The 1950s was an age of unrelenting demand, for everything from baby carriages to power plants. America’s love affair with the automobile was rekindled, and Congress laced the nation with interstate highways. In Europe, demand for petroleum products doubled with the shift from coal to oil. And developing nations around the world began tapping their own rich oil reserves in response.

Bechtel launched a series of major projects reflecting the diversified look that would characterize it for years to come—building power plants in South Korea, rail tunnels in New Zealand, and oil pipelines across Iraq and Syria for Iraq Petroleum Co. Increasing demand for oil kept Bechtel busy expanding projects in Saudi Arabia and Kuwait.

Canadian Bechtel Limited was established in , with the Interprovincial pipeline linking the oil fields of Alberta with the Great Lakes and the world’s deepest underwater pipeline at 238 feet (73 meters) beneath the Straits of Mackinac. Natural gas pipelines included the 2,300-mile (3,701-kilometer) Trans-Canada system serving Ontario and Quebec, the Westcoast Transmission line supplying British Columbia, and the Tennessee Gas Transmission lines serving the eastern and midwestern United States.

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Westcoast Transmission line: Heater for melting snow and warming pipe ahead of dope gang. North of Prince George.

Bechtel expanded into new fields, building its first aluminum plant and providing project management services to InterContinental Hotels worldwide. Venezuela’s Orinoco iron ore project was the largest facility of its kind in South America and opened a new source of high-grade iron ore.

Conquering Canyons, Summits, Rivers, and Cliffs

One of the company’s most dramatic projects on the North American continent was the $93 million, 700-mile (1,127-kilometer) Trans Mountain pipeline. Begun in , it was built to carry crude oil from Alberta and, after climbing to an elevation of some 3,600 feet (1,097 meters) across the Canadian Rockies, deliver it to the Pacific Northwest.

It was a grueling job with formidable natural barriers: rock-walled canyons, cascading rivers, and slide-prone cliffs. Concern about disrupting the environment further complicated the construction. But finally, this sweeping high-rise pipeline was completed, and in the first delivery of Alberta crude was made in Vancouver.

The Trans Mountain Oil Pipe Line Co. was formed with Steve Bechtel Sr. as its first board chairman and Robert Bridges as president. It was the first major engineering management job in which Bechtel functioned as the owner’s representative with overall responsibility for design, engineering, procurement, and management of construction. In addition, Bechtel inaugurated a new concept in management, with the company handling the financing, making the executive decisions, and developing an operating organization.

Making Cold Calls for International Business

Bechtel established itself as manager of virtually every phase of a project from conception to completion. “We took an overall role as the right arm of the owner,” said then-Vice President Jerry Komes. “We developed a technique of management that allowed the client to run his own business while we took care of his construction.” It was a wise technique where national pride was touchy, especially with Europeans and Japanese who felt quite capable of building. Bechtel assumed a management position and left construction to the locals.

Steve Bechtel began to hopscotch the world, dropping in on heads of state and international businessmen to chat about their concerns. He and Jerry Komes would fly to London for lunch with longtime friends from British Petroleum or pay a courtesy call on the head of Imperial Chemical Industries. In Paris, they discovered J. Paul Getty was staying in the same hotel and met to talk about world business—Getty’s concession in Kuwait, for example.

When Bechtel moved into Europe, the company was virtually unknown. People asked, “Beshtel? Who is this Beshtel that you call yourself?” It didn’t take long to find out. The Pipeline Division welded its way across continental Europe and Saudi Arabia, working out of a London office opened to handle the Aden refinery, completed in 1954. When oil was discovered in the North Sea, Bechtel’s London presence helped it secure contracts for the first North Sea offshore oil production facility for Hamilton Brothers. In the late 1960s, Bechtel won the Prestige de la France diploma, one of the highest honors awarded industrial firms operating in France. Any questions about who this “Beshtel” was had been answered.

A New Way of Thinking

If W.A. Bechtel’s breathtaking risk on Hoover Dam set the tone in the 1930s, the commitment to nuclear power did the same in the postwar decades. Soon after World War II, Steve Sr. became convinced that nuclear energy would revolutionize electric power generation, and he wanted to be part of it.

When the Atomic Energy Commission (AEC) Act of 1954 allowed private companies the right to build and operate nuclear power plants, the scramble for contracts led to Bechtel’s aggressive “Triple Ten” strategy. Bechtel committed 10 percent of pretax profits and 10 percent of management and engineering capability for 10 years to learning the technology of nuclear power.

Bechtel joined with Pacific Gas and Electric and six major eastern and midwestern utilities to form the Nuclear Power Group (NPG). By , the group completed a functional design for a nuclear plant. To build it, the group would have to incorporate—and Bechtel had to commit $1 million cash. Steve decided the company could not afford to miss the opportunity.

In 1955, the NPG went to the AEC with plans for Dresden-1, a 180-megawatt boiling water reactor, the world’s first large, privately financed, all-nuclear commercial power station. GE offered to fix the entire plant cost at $45 million if Bechtel would fix its portion at $33 million.

Addressing doubts among the directors, Steve argued passionately that Bechtel must be at the forefront of this revolutionary new technology.

Steve prevailed. Construction on Dresden began in early 1957 and completed in . Bechtel soon won contracts to build plants for PG&E in California and Consumers Power of Michigan.

“Dresden did more to establish commercial nuclear power than any other single project,” Steve Bechtel said.

1960–1969Passing the Baton

For Bechtel, the 1960s was a time of unparalleled growth at home and abroad. A new generation took leadership on projects ranging from pipelines to nuclear power plants, hotels, and the renowned San Francisco BART system. Professional staff more than tripled, reaching around 14,000. As the decade closed, the company was working on about 100 major projects in 60 countries.

Experience 1960–1969

A New Age

Steve Bechtel Sr.’s most important creation was not a physical structure but 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, his son, Steve Jr.

Steve Jr. began his career with Bechtel in the field

Steve Jr. began his career with Bechtel in the field, pipelining alongside some of the company's most respected veterans.

Stephen D. Bechtel Jr. was just 35 years old when he became president of Bechtel. His education, experience, and temperament made him ideal to oversee Bechtel’s corporate transition to a new age of organizational complexity.

The nation was just recovering from a modest recession and about to embark on a period of robust economic expansion. In 1960, Bechtel’s revenues were more than double those of 1955, and the salaried workforce was at an all-time high of nearly 4,000.

Energy use was on the rise, fueling strong demand for petroleum products, natural gas, and electric power—along with production, processing, and transportation facilities. New projects were bigger and more venturesome. Anything seemed possible in the golden age of space flight. The markets never looked better, and Bechtel was in an excellent position to respond.

A Hand Off and A Welcome Gift

As a “welcome gift” to his son, Steve Sr. commissioned another soon-to-retire executive, Finance Chairman John L. Simpson, to review Bechtel policies, philosophies, and practices. He wanted Simpson to articulate what made Bechtel successful and how to continue on that road.

Leadership, said Simpson, was key to Bechtel’s achievements. Steve Jr. should uphold an entrepreneurial spirit and sense of individual involvement and responsibility. Simpson also encouraged him to maintain Bechtel’s flexibility and readiness to deal with new developments.

But with Bechtel’s growth, Steve Jr. needed to create a more sophisticated, tightly woven management structure to manage complexity and risk. At the same time, he needed to preserve continuity in a business characterized by repeated beginnings and endings, driven by immediate accomplishment rather than long-range planning and personnel development. The company had a larger number of major projects and was no longer dominated by a handful of key customers. 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 a major overhaul. Generational change spread throughout the company, with a gradual management shift to a seasoned team of younger executives. He simplified the organizational structure, clarified lines of responsibility, and strengthened top management, which boasted proven leaders with Bill Waste, Perry Yates, John Kiely and Jerry Komes.

Pipelines and Chocolate

As Bechtel management was evolving, everything from pipelines to energy plants continued to be built throughout the world. It was a time of landmark international projects.

Bechtel completed Western Europe’s first international crude oil pipeline, the Rotterdam-Rhine, in June 1960. Built when Europe was converting from coal to petroleum, the pipeline was the sign of an 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 of the time.

When Bechtel completed a saltwater conversion plant on St. Thomas in , 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. The new plant supplied 275,000 gallons (1,041,000 liters) a day of fresh drinking water from the Caribbean Sea.

Bechtel built the world’s first long-distance iron-ore slurry line, the 53-mile (85-kilometer) Savage River project in Tasmania, completed in 1967. Construction required throwing a 1,200-foot (366-meter) suspension bridge over the nearly inaccessible Savage River. This 9-inch (23-centimeter) slurry pipeline used a pioneering method of transporting iron ore and other solids.

One of the most modern petrochemical projects of the time, the Chocolate Bayou plant, in Texas, was built by Bechtel and featured online digital computer controls. The project was completed in September 1962 for Monsanto.

Growing Reputation for Complex Projects

Although Bechtel was diversifying into new arenas, pipelines continued to be core to the business. One of the most challenging projects was the Trans-Alpine pipeline, a system traversing Italy, Austria, and Germany. Completed in , 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 (483 kilometers) of 40-inch (102-centimeter) pipe, from the Gulf of Trieste over the Alps to central Bavaria.

Bechtel pipeliners also built the 1,400-mile (2,253-kilometer) Alberta-California natural gas pipeline. Planning began in 1956, with the pipeline completed in 1961, expanded in 1965, and again in the 1990s. The project enhanced Bechtel’s growing reputation for managing large, complex undertakings.

Another European pipeline was begun in 1961, the 470-mile (756-kilometer) Southern 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 Power Finds Its Niche

From 1960 to 1965, Bechtel watched its early lead in nuclear power slip away. Building nuclear power plants was a daunting technological feat in the 1950s, but it wasn’t long before numerous companies could do it. To complicate matters, turbine and generator manufacturers such as GE and Westinghouse were anxious to protect their huge investments in nuclear energy. Bechtel began to compete with these companies, leading to a showdown at Turkey Point, a nuclear facility for Florida Power & Light.

Bechtel found itself working largely as a subcontractor. To head off the other old-line builders, Harry Reinsch responsible for many of Bechtel’s power plant developments, offered an unprecedented multiproject contract, on a lump-sum basis.

Reinsch knew the deal would lose money for Bechtel, so he walked away from it. Back in San Francisco, a stunned John Kiely, senior vice president at the time, said, “Harry, you’ve gotta go back and get that job.” He argued that making it a loss leader would guarantee Bechtel a future in the nuclear business.

Bechtel took a $20 million loss on the Turkey Point plants, but it cost the clients less than the reactor manufacturers ever had. Bechtel lost money but made the industry a viable sector.

By 1968, Bechtel built the San Onofre, California, nuclear power plant, then the largest single-purpose nuclear power plant in the United States. The company completed or was at work on 27 nuclear-fueled generating units, with a backlog of work to 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.

Innovation with Microwaves and Hot Water

The nuclear experience proved two things: the demand for new technology is constant, and shifts occur quickly. In response, Bechtel expanded the Scientific and Nuclear Development Department. The department conducted applied research and development, including critical work for the U.S. space program and the Argonne fast breeder reactor. Bechtel’s research on applying microwaves to industrial processes led to the design and construction of the first non-Bell microwave communications system.

New technologies became practical applications, such as those developed for the Great Canadian Oil Sands (later named Suncor) project at the Athabasca tar sands built between 1962 and 1964. Here, Bechtel helped develop the first successful plant to process tar sands into high-grade synthetic crude using hot-water separation. The tar sands in this remote region south of the Arctic Circle contained twice as much oil as in all the world’s known conventional petroleum reserves. No one had figured out an economical way to separate the oil from the sand until 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.

Going Metal

The 1960s brought a new era for the metals industries with new recovery processes, many of them enhanced by Bechtel engineers. The Carol Lake iron ore beneficiation project in the lake region northeast of Montreal was one of the largest beneficiation plants in the world. Its location was so remote that the project initially required the development of a town site, airport, and railroad. The project paid off, processing more than 15 million tons of ore annually.

In South Africa, from 1963 to 1972, the company worked on Palabora, one of the world’s largest open-pit copper mines. Designed by Bechtel, Palabora 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.

No body of ore was too remote or inaccessible for Bechtel. A few miles from the highest peak in Irian Jaya, in Indonesia, at an elevation of 11,000 feet (3,353 meters), Bechtel started the West Irian copper project in 1968 and completed it in 1973. Helicopter transport was used extensively during construction, and three aerial tramways were needed to provide access from the mine site to the concentrator, 2,300 feet (701 meters) below.

Room at the InterContinental

In the late 1950s, Pan American World Airways Chairman Juan Trippe urged Steve Sr. to take over the construction of several hotels for the airline’s InterContinental Hotels subsidiary. 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 InterContinental Hotels were to be built—including 10 countries that neither Steve Jr. nor his well-traveled father had ever visited, much less worked in. They agreed that Bechtel take on two hotels and see how they turned out, hoping they would be a valuable entrée to newly emerging nations and bigger projects.

Things turned out very well, indeed. In Zambia, Bechtel’s InterContinental Hotel was the country’s first of its kind ever completed on time and under budget. Mightily impressed, Zambian officials asked Bechtel to build a new airport—and then a refinery. In the years that followed, Bechtel built 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.

Bechtel’s hotel-building program began in 1958 and grew rapidly during the early 1960s. By 1967, 22 hotels had been completed or were under construction in 14 countries.

Cracking the Code to LNG

Beginning in the 1950s, Bechtel began to expand its market development studies. Both Steve Jr. and Steve Sr. often launched research to investigate inspired hunches rather than wait for work. They found that bringing well-conceived projects to potential customers could create new business.

Bechtel researchers were keenly aware that energy supplies were critical to industry. But which countries needed them most—and who had excess energy to spare? And how do you connect the two? These questions led Bechtel to liquefied natural gas (LNG), which is held in a liquid state by lowering the temperature to minus 260 degrees Fahrenheit (minus 162 degrees Celsius). Alaska had a plentiful supply of natural gas and Japan needed energy. 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 on the island of Trinidad for customer Atlantic LNG.

Making History: BART

San Francisco Bay Area planners had no doubt: Something had to be done to relieve increasing traffic congestion for the area to continue to grow and still remain a thriving, livable region. 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 BART system. Three years later, 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 (115-kilometer), double-track line that passed through three counties and 14 cities with the key link of a 3.8-mile- (6.1-kilometer-) long tunnel underneath San Francisco Bay. The rapid transit system has since been extended.

From Tragedy to Triumph

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.” North of Newfoundland, this remote region is barren year-round and locked in ice more than six months of the year. But it also has huge amounts of untapped energy in the form of water pouring 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 devise and build 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, . A corporate jet belonging to CFLCO flew into a hill while approaching Wabush Airport on a heavily overcast day. Bechtel’s general manager, Fred Ressegieu, 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.

But the joint venture did not cease. They carved out of solid rock the world’s largest underground powerhouse, 972 feet (296 meters) long and 154 feet (47 meters) high. They built 300 miles (483 kilometers) of new roads, six huge concrete spillways, and one of the world’s largest switchyards. With Churchill Falls, Bechtel 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.”

Twin jumbo drilling rig

Twin jumbo drilling rig is used to excavate the east tailrace tunnel heading. This is one of two tunnels which will return water from the surge chamber to the lower Churchill River. Each will be 45 feet wide, 60 feet high and more than a mile long.

1970–1979No Job Is Too Big

The rules began to change in the 1970s. To be successful, a company needed to be socially aware, politically savvy, and totally flexible—a company different from what Bechtel had been. And so began a decade of new ideas, new leadership, and massive projects ushering in a needed evolution.

Experience 1970–1979

Good Stewards of the Environment

Signs of the times were clear. Public support for more-stringent environmental safeguards was affirmed by the first Earth Day in April . Regulatory teeth were added when President Richard M. Nixon created the Environmental Protection Agency.

In global business, nations in the Organization of Petroleum Exporting Countries (OPEC) raised oil prices by more than 100 percent in 1973, creating instant inflation in the world’s developed nations. Bechtel executives found themselves in a drastically altered business milieu.

An avid outdoorsman, Steve Jr. already had personal concern for the environment. “When we did the Trans Mountain pipeline in the early 1950s,” recalled Steve, “it was the first pipeline across the Rockies, and our environmental concern was major.”

Bechtel managers saw tougher environmental regulations as a business opportunity. Steve Jr. put the focus on building up expertise and capacity to help clients meet environmental considerations in siting, designing, and building facilities. An environmental laboratory in Belmont, California, laid the groundwork for involvement in hazardous-waste handling and treatment. Decontamination and decommissioning Three Mile Island (TMI) would be the most visible of such assignments.

With the U.S. economy about to go through hard times, Bechtel made a prophetic decision to expand international business and go after big jobs.

Taming of the Sea

As crude rose to about $40 a barrel, untapped deposits of oil and gas in the North Sea became the world’s most promising area. Signing a contract to develop the Argyll field in 1972, Bechtel entered North Sea history. It was not the biggest or most complex job Bechtel had ever undertaken, but Steve Jr. considered it a landmark affirming Bechtel’s role as a leader in petroleum production technology.

Bechtel’s oil platform work began in the early 1950s with Saudi Arabia’s Safaniya field. But one Bechtel marine specialist said, “Those platforms were dwarfs compared to the 40,000-ton giants in the North Sea.” Within three years of Argyll, Bechtel was at work on the Occidental Group’s companion Piper and Claymore fields off Scotland’s coast. Never before recovered from thousands of feet beneath a seabed, the prize was light, easily processed crude.

Major breakthroughs evolved in the North Sea, with Argyll the first anchored semisubmersible drilling rig acting as a production platform. Piper was the largest offshore structure ever launched from a barge. Claymore was linked to Piper by a 30-inch (76-centimeter) submarine pipeline to work in coordination.

Many thought the potential was even greater in the Norwegian sector, including Israel Leviant, former Bechtel vice president and veteran European consultant. “The Norwegian offshore,” he said, “is comparable to Saudi Arabia. They are just beginning to scratch the surface of it.” A Bechtel joint venture helped provide project planning, engineering supervision, and construction on the unwieldy Gullfaks “A” oil and gas platform, part of Norway’s multibillion-dollar development of its North Sea petroleum resources.

Never Before Attempted

As oil prices skyrocketed in the 1970s, Canada resolved to fully develop its abundant domestic energy reserves. Syncrude Canada Ltd. enlisted Canadian Bechtel Ltd.’s help to extract synthetic crude oil from the Athabasca tar sands—a desolate 21,000-square-mile (54,340-square kilometer) area in northern Alberta, where Bechtel had helped develop the Suncor project in the early 1960s.

img alt text Two huge bucket-wheel excavators gobble more than 100,000 tons per day of oil-soaked sand.

Skilled tradesmen from every Canadian province preassembled modules and component parts on a scale never before attempted. Massive preassembly of more than a million linear feet of pipe was a key reason the project team completed the $1.8 billion Syncrude complex within budget and four months ahead of schedule.

Completed in 1978, the Syncrude facility was one-third larger than any other mining operation in the world, the biggest plant of its kind in the world, with the largest fluid cokers ever erected. Essential to Canada, it produced up to 125,000 barrels of high-grade synthetic crude oil daily—nearly 10 percent of the country’s total oil production.

A City Rises from the Sand: Jubail

Never has there been anything like Saudi Arabia’s Jubail Industrial City: a self-contained complex with infrastructure to accommodate 370,000 people. It began when Steve Sr. proposed a way to leverage the excess natural gas under Saudi Arabia’s oil fields. “My initial concept was for the design and construction of an industrial complex in the Eastern Province of Saudi Arabia, to include refineries, petroleum and petrochemical plants, and steel, fertilizer, and aluminum production facilities.“

The best location was Jubail, an undeveloped fishing village of around 7,000 people. A deep-draft port could handle ore carriers for the proposed steel mill and bulk cargo carriers needed during construction and operation.

Steve Sr. presented his plans for the plant to King Faisal on June 4, , in Geneva. The planned city would provide housing and residential amenities, a power plant, a ready supply of cooling water, and pipelines.

Dr. Jameel Al-Jishi, the first director general of Jubail, asked, “If all we get is the buildings and the infrastructure, and then you leave, what will we have?” Every department or project manager had a Saudi counterpart, and, at some point, the Bechtel employee would no longer be needed.

The Saudi government signed a contract on June 2, 1974, calling for Bechtel to oversee a long-range industrialization program showcasing the company’s ability to manage complex projects.

On June 24, 1976, a 20-year agreement for the development of the Jubail region was signed in Riyadh. Today, Bechtel continues work on Jubail.

Entering A New Phase of Our Evolution

By the mid-1970s, Bechtel had evolved into a full-service engineering and construction company, but it often served as project manager, representing the owners. A shift began with Bechtel’s involvement in the massive James Bay hydroelectric project in a remote region of Quebec, Canada. Bechtel’s main role on the 13-year project was to help manage the activities of a workforce numbering some 12,000 people and help oversee the supply of hundreds of thousands of tons of equipment and materials to a site more than 400 miles (644 kilometers) from the nearest town.

In 1975, the company was at work on 119 major projects in two dozen countries with estimated values totaling $40 billion. Bechtel was clearly entering a new phase in its evolution, with cash reserves needing to be invested.

In , the company began its first non-real estate equity investment, as part of a consortium buying Peabody Coal Co., then in 1979 Welltech, Inc., an oil-well-servicing business in Houston, followed by Dual Drilling Co. and investments in oil and gas exploration and development. Said Steve Jr., “We want to get into things where we have more to bring than just money, things that won’t confuse our primary business.“

As the decade progressed, major new enterprises were created including Saudi Arabian Bechtel Co., Bechtel National, Inc., Bechtel Financing Services, and Nuclear Fuels Operation. Over the following decades, Bechtel would continue to adapt to constantly evolving business environments with new collaborations and services.

New Talent Tackles Tough Times

Between 1967 and 1977, 12 of 15 board members retired. A new generation of leaders entered the scene with no experience in the construction business but impressive backgrounds in public administration, academics, and private enterprise.

Chief among that group was four-time cabinet officer George Shultz, whom Steve Jr. first met while giving a speech in Washington, D.C. In May 1974, Shultz left his role as secretary of the treasury to become executive vice president of Bechtel Corp. A year later, he would become president. More than ever, the new committee served as a high-level forum for review, discussion, and formal decision-making.

Bechtel needed their considerable talents, as 1979 started badly and then got worse. The lack of a U.S. energy plan, a slowdown in the demand for electricity, and increased financial restraints led to an epidemic of project cancellations and delays. Then, on March 28, an accident occurred in a nuclear plant at Three Mile Island, near Harrisburg, Pennsylvania. It terrified the nation and contributed to the demise of the market for nuclear power plants in the United States. Later, Bechtel would take on the cleanup of Three Mile Island—a facility in which the company had no prior involvement.

Bechtel was, by tradition and competence, a direct construction company, yet project management, engineering, and construction management now accounted for two-thirds of all revenues, up from 40 percent in 1970. The triumvirate of companies that bore the Bechtel name still ranked No. 1 among U.S. engineering and construction firms, but a very difficult decade lay ahead.

1980–1989Powering Through

In 1981, the economy slid into the sharpest and deepest recession of the post-World War II era. The construction market was hit hard, and Bechtel had to respond to changing times. New leaders, smaller projects, and the high-profile cleanup of Three Mile Island carried the company through a challenging decade.

Experience 1980–1989

The Perfect Storm

The new decade began with a roar. In , Bechtel posted $11.3 billion in new bookings — more than double the previous year. Crews were at work on 132 major projects in 20 countries. With new work at an all-time high and a new management team in place, the future looked bright. But tough times lay ahead.

Many business leaders, Steve Bechtel Jr. among them, worried that the economic difficulties of the early 1980s were exacerbated by a rising tide of regulation that increased project costs at every turn. For the construction industry, this potent mix of political forces in the midst of a worldwide economic downturn was devastating.

Patience Pays Off

To meet the challenges, a new holding company, Bechtel Group, Inc., was formed. Steve Bechtel Jr. assumed the title of chairman and CEO, and George Shultz was named president. Shultz made his own major contributions to changing the way Bechtel viewed its business. Since his arrival, he had been educating the senior managers at Bechtel, convincing a tight-knit group of project-oriented executives to work as hard at managing their cash flow and financial investments as they did at managing their construction projects. He helped reorganize Bechtel’s investment schemes, including Sequoia Ventures, which was active in real estate and energy projects. Calling them “little acorns,” Shultz said, “We can afford, as a private company, to make investments we have to be patient with.”

Shultz returned to government as secretary of state in 1982, setting off a fresh round of media speculation about Bechtel’s influence in Washington. Steve reflected on the attention brought to Bechtel:

“It bothered me for awhile, particularly the insinuations about our supposed influence with the government. It’s unfortunate that we don’t have all the power it’s alleged we have. If we did, we could help fix some of the problems that exist around the country.”

The following May, after Shultz’s departure, Steve announced that Alden Yates would succeed him as president of Bechtel Group, Inc. and a member of Bechtel’s executive committee. “A partner in the company ever since he got out of school,” is how Steve introduced Yates, whose father, Perry, was a close associate of Steve Sr. and an original executive committee member.

The Global Effect

The economy continued to wreak havoc on Bechtel business. BART and the Washington Metro jobs had led to a few major construction management contracts, but no big transit projects followed. Hotel construction tailed off, and the power market, which had been Bechtel’s biggest moneymaker, collapsed. New utility awards fell dramatically, and not a single new U.S. nuclear power plant had been ordered since 1973.

Bechtel’s power workload plummeted as Three Mile Island, and later Chornobyl, heightened public concern about nuclear power, and increasing government regulations sent capital costs through the roof. At the same time, North Sea oil, the Alaska pipeline, and price-sensitive conservation measures combined to reverse the rise in oil prices and doom a variety of alternative energies and synthetic technologies. Finally, a host of less-developed countries had become so mired in debt that taking on new projects was out of the question. Future growth for Bechtel would come from smaller, more diverse projects such as cogeneration, toxic cleanup, and power plant maintenance.

As the U.S. recession spread to the global economy, Bechtel faced tougher competition for overseas work from non-U.S. firms. The industry suddenly had new players, new companies, new countries, and new governments that wanted to take on work themselves.

Senior managers who had spent years doing business around the globe understood they were outsiders and had to help develop the countries where they worked. Bechtel increased its number of foreign nationals and opened regional offices to develop local engineering competency.

“We have to approach projects as a multinational organization with a multinational staff and multinational sources.”

Steve Bechtel Jr.

Cleaning Up: Three Mile Island

Few megaprojects were in the offing, so Bechtel established bailout teams—flying squads of engineers, scientists, and other specialists who could be rapidly deployed to emergency situations. The teams were an outgrowth of the company’s decontamination and cleanup business, which expanded after the company took on the billion-dollar cleanup of the nuclear accident at Three Mile Island.

Initial studies of the reactor revealed that radioactive isotopes had been flushed from the reactor vessel into the basement. Levels of radioactivity in the 600,000 (2.3 million liters) gallons of floodwater were higher than in the water of the reactor vessel. The atmosphere had to be cleared, water cleaned out, and surface decontamination performed. Despite an extensive decontamination effort, it was 16 months before a person could venture into the building. By 1987, engineers from Bechtel and TMI owner General Public Utilities had succeeded in decontaminating the site, lowering radioactivity levels to establish a stable and secure facility.

A Sign of Hope

Despite an overall decline, Bechtel was still winning important projects in the U.S. market and around the world. Bechtel Energy Corp., specializing in public power projects, continued to make appreciable gains, as did Becon Construction in open-shop construction. New power contracts included:

  • A coal-fired plant for Gulf States Utilities, near Lake Charles, Louisiana.

  • A massive oil-fired generating complex for CADAFE, a government-owned utility company, on Venezuela’s Caribbean coast.

  • A coal gasification combined-cycle plant for Southern California Edison and Texaco, near Barstow, California.

Increasingly, new work resulted from Bechtel’s technological prowess:

  • In New Zealand, the world’s first commercial facility for converting natural gas to gasoline was built.

  • A refuse-to-energy plant at McKay Bay, near Tampa, Florida, was the first to employ Danish combustion technology for converting waste to energy.

  • SEMASS, a Rochester, Massachusetts, waste-to-energy plant incorporated innovations in cooling-tower technology to reduce water consumption.

  • A California plant was the first to use coal-derived gas to drive gas and steam turbines in tandem.

  • The first production-scale laser-isotope uranium enrichment facility was developed by Bechtel.

Prudhoe Bay Seawater Treatment Plant

Two of the more demanding projects of the period were the design and construction of an offshore seawater treatment plant for ARCO (Atlantic Richfield Co.) and a low-pressure separation facility for Sohio (Standard Oil Co. of Ohio). Both projects boosted crude oil recovery at Prudhoe Bay on Alaska’s resource-rich North Slope.

The $600 million low-pressure separation plant consisted of a series of prebuilt modules, some the size of 10-story apartment buildings. The modules were built in Richmond, California, loaded onto barges, and shipped to Alaska. Once installed and operational in 1984, the facility separated gas and water from crude oil recovered from Sohio’s Prudhoe Bay oil field.

Because the harsh weather conditions at Prudhoe Bay made on-site assembly prohibitively expensive, each module had to be a fully constructed, enclosed building before being shipped to Alaska. Timing of the shipments was crucial, as the waters around Prudhoe Bay are navigable for only a few weeks each summer; they are completely frozen over the rest of the year.

Into the Jungle

In , Bechtel continued to find other mountains to climb, or mine—like the $1.5 billion Ok Tedi gold and copper project in Papua New Guinea. It was a massive logistical problem, but taming hostile environments had been the company’s work since its earliest days. The problem in this case was getting supplies and equipment into the isolated region. So remote and forbidding was its geography that the local people had had no contact with the outside world until 1963.

Bechtel’s job was to build a gold processing plant and mine the gold and copper ore atop and beneath Mt. Fubilan, more than a mile (1.6 kilometers) above sea level. Despite wretched conditions and unprecedented drought, which evaporated Bechtel’s 500-mile (805-kilometer) river-based logistics route, gold and copper ore were harvested in May 1984.

Tighter Markets? No Problem

While interest rates soared, plummeting energy and commodity prices continued to reduce demand for major oil, gas, and mineral projects. Developing new markets and carving new niches in old markets became major concerns. With utility construction stalled, Bechtel vigorously pursued operations, maintenance, cogeneration, and geothermal work. With nuclear power construction withering on the vine, the company helped troubled power plants find third-party financing to complete construction. Bechtel upgraded its nuclear fuel to compete for toxic waste management projects, decontamination work, and advanced engineering for military and space programs.

Promoting technical excellence, Bechtel established a fellows program in to advise senior management on policy issues and key developments—from geophysics and hydraulic engineering to computer animation and environmental remediation. New efforts were made to fine-tune competitiveness and pare prices to maintain market share. In a period of prosperity for the construction industry from the mid-1960s until the early 1980s, the customer’s major incentive was to get the job done as quickly as possible, with a laissez-faire attitude toward total project cost.

Now, in the mid-1980s, construction was entering a new fixed-price era as markets tightened, and Bechtel found it could compete better by controlling the costs of labor and material.

Prelude to the Future

Through much of the 1960s and 1970s, business came to Bechtel not because of major sales development efforts, but because Bechtel had available a very large, very effective system to get work done.

“People looked at us as doers,” said Harvey Brush. “That reputation was deserved, and we capitalized on it.”

But in the 1980s, markets were adjusting—with more infrastructure work in the Third World. And in places like Algeria and Indonesia, emphasis was shifting from industrial projects like oil and gas to human needs such as agriculture, water, and housing. In Saudi Arabia, a new five-year plan (1986-90) shifted emphasis from civil engineering to social development, from spectacular physical accomplishments to equally important human needs.

Bechtel clearly had to be more aggressive in its marketing. Once again, past was prelude. Steve Sr. had so many times cast his eye around the globe to see what was needed, and then shaped the job accordingly. In the 1980s, this practice was renewed with vigor. Said one executive: “If we don’t have a client, we find one. If there’s no project, we assemble one. If there’s no money, we get some.” But even that approach could not protect the company from the declining world markets. Bechtel, like many other companies, would add a word to its vocabulary: downsizing.

Linking Two Continents

Turkish highways were often so jammed with cars and oxcarts that food and produce were perishing in transit, a loss ill-afforded by an economy half-built on agriculture. In 1986, the Turkish government commissioned Bechtel and a local partner, Enka, to build a section of a high-speed toll road across the Republic of Turkey as part of a transcontinental highway system linking Europe with Asia. The new roadway would contribute immeasurably to Turkey’s economic development, permitting the transport of goods to Middle Eastern markets and to its own people. In October 1992, Bechtel and Enka completed the first phase of their work, a 70-mile (113-kilometer), six-lane road connecting Gerede with Ankara. The second phase, a 70-mile (113-kilometer) ring road around Ankara, was completed in 1998.

Navigating A New Normal

On May 27, 1986, Steve Bechtel Jr. announced an organization-wide realignment. Seven new operating companies were created, and the London division was made a separate subsidiary called Bechtel Limited. The technical manager of the London operation became managing director of the new subsidiary. His name: Riley P. Bechtel.

Over the next two years, Bechtel continued adjusting to a more competitive world. Steve said in 1988, “There are fewer megaprojects, more small projects, and tougher competition. And we anticipate the tough competition is going to last for several years, maybe longer.” Even so, there were still the bell-ringer projects:

  • In 1983, Bechtel received a last-minute plea to complete the venues for the Los Angeles Summer Olympic Games. Bechtel helped pull off the impossible after the process had begun to lag dangerously. At one site, workers had only 33 days to renovate an entire stadium.

  • Bechtel constructed the Colombia Pipeline on an extraordinary schedule in 1986. The 300-mile (483-kilometer), 24-inch (61-centimeter) pipeline stretches across the Andes, through some of the most rugged terrain in South America. Engineers also had to construct an offshore loading terminal in the Caribbean while stationed on a converted supertanker. When completed, the pipeline provided a much-needed boon to Colombia’s economy, tapping approximately 1 billion barrels of crude—enough to transform the nation from an oil importer to a major oil exporter.

The Spirit. The Vision The Will.

In , tumultuous change in the business world was reflected in a pair of significant internal events that once again affirmed Bechtel’s ability to adapt to change. The year was not even three months old when, on March 14, Stephen D. Bechtel Sr. died at the age of 88. A builder for more than 70 years, he had shaped the worldwide enterprise that his son now managed. Two weeks after the death of its senior director, Bechtel named a new president and chief operating officer. At the age of 37, Riley Bechtel became the fourth generation of his family to serve as president of the 90-year-old international engineering and construction firm.

“Riley has grown up in our organization on job sites around the world and comes to this position having served throughout the company for a number of years,” said Chairman of the Board and Chief Executive Officer Stephen Bechtel Jr. “I know he has the spirit, the vision, the will, and the capacity to lead our operations into the next decade.”

With that endorsement, Riley Bechtel took charge of the family firm in his mid-30s, as had his father and grandfather before him.

1990–1999Leading the Way

As global economies changed, Bechtel would change as well. In the midst of slow growth, the company remained dedicated to its founding philosophy and traditions, while pushing for structural changes and continuous improvement. From a hostage situation in Iraq to new strategic partnerships, it was a landmark decade.

Experience 1990–1999

World Wide Web of Change

The 1990s were a time of vast market change. Telephone, utility, and other nationalized companies were being privatized. Europe was reducing economic barriers and integrating its economies. With the collapse of communism, there was the potential for vast new infrastructure projects in Eastern Europe and the former Soviet Union. The People’s Republic of China was attracting foreign manufacturing and investment in infrastructure and tourism, and the “tigers” of the Association of Southeast Asian Nations (ASEAN) were racking up impressive economic growth.

But the more developed nations, particularly the United States, continued experiencing the low-growth, low-inflation stagnation of the late 1980s. Viable projects were deferred or even canceled while prices for natural resources such as coal and oil were decreasing for the first time since the Great Depression.

Quality-of-life issues became important to employees asked to move around the world, especially to remote job sites. Bechtel moved talented people (often with their families) to work sites more frequently, as projects were increasingly smaller and took less time to complete. Information technology improvements had begun to make it possible for design work to be done remotely. These were fundamental changes in Bechtel’s approach to its work and required significant corporate visioning and investment without measurable near-term returns.

The 1990s were a decade of intense change, with floating exchange rates, integrated international capital markets, and improved communications weaving Bechtel into a global economic web in which competition was becoming acute. Meanwhile, the broader industry uptick in spending for plants, equipment, and infrastructure that construction analysts had been projecting turned out to be slow in coming.

Cut to the Core

Riley Bechtel and his senior team resolved to meet demands of the global economy and the listless business climate by managed change. Across the globe, the team focused on sustaining and promoting a spirit of teamwork and collaboration across business sectors and regional markets.

They began a series of initiatives designed to improve the company’s delivered value: continuous improvement and changes in work processes; refining the company’s mission and strategies; restructuring the operating matrix to meet the needs of a complex global economy; and improving leadership, strategic thinking, and market analysis.

During the dramatic industry-wide downturn of the 1980s, Steve Bechtel Jr. placed significant emphasis on reexamining and sharpening Bechtel’s continuous improvement methodology. Riley and his 1990s management team would take the same approach.

Managers in the 1990s were asked to identify what a company truly does best—its “core competencies” was the jargon—and focus its activities on them. There was never any doubt about Bechtel’s essential mission. Riley told one interviewer, “Most conglomerates ultimately falter for lack of a central purpose or core business … To me, designing and building projects is, and always will be, the spine of our business. We will never be a conglomerate. At least, not on my watch.” Bechtel’s essential mission was to be “the engineer-constructor of choice for customers, employees, and key suppliers in every industry market we serve.”

While Bechtel set about important process changes, world events were following their own course. In early 1991, the Gulf War tested Bechtel under the most challenging conditions imaginable.

Held Hostage in Iraq

On August 2, , Saddam Hussein’s Iraqi troops invaded neighboring Kuwait, threatening to touch off a wider war in the Arabian Gulf. The conflict created uncertainty in international oil markets, setting off a worldwide economic slump. A host of new projects was put on hold.

Something bigger than any engineering project was unfolding in northern and central Iraq. Within days of the attack on Kuwait, Iraq took 109 Bechtel employees and their dependents hostage.

In September, 10 Bechtel employees—three Americans and seven British nationals who had taken refuge in their respective embassies along with their colleagues still trapped in Iraq—were snared by Iraqi immigration authorities, who lured them out by insisting that they appear personally to secure exit visas for their wives. When they left the embassy compounds, these 10 were immediately swept up, taken to a facility on the outskirts of Baghdad, and held there. Meanwhile, their families and colleagues remained in their embassies, some camped outdoors, with winter approaching.

Riley Bechtel essentially camped out in his office for the duration. He kept a low profile and quietly organize activities to help the Bechtel employees held hostage. In the end, every Bechtel person was safely out of Iraq before the Allied Coalition launched its assault to liberate Kuwait.

Snuffing Out the Kuwait Fires

As the Desert Storm offensive took shape in nearby Saudi Arabia, Bechtel met quietly with Kuwaiti officials in London to lay plans for the restoration of their economic engine. Bechtel’s three-person advance team landed in Kuwait early in March 1991, within days of the war’s conclusion. The destruction that confronted them was beyond imagination. Before retreating, Iraqi troops had methodically devastated Kuwait’s prized oil fields—750 wells were damaged, and 650 of those blazed ferociously. An estimated 70 million barrels of thick crude spewed onto the desert floor, forming lethal lakes.

Some experts estimated it would take as long as five years simply to control the fires. Under Bechtel’s guidance, an army of workers did the job in eight months.

Targeting Mars

Bechtel took on the job to help prepare for the launch of the Mars Observer probe in Cape Canaveral, demolishing and rebuilding most of the other support facilities at Launch Complex-40, where the Observer's Titan III launch vehicle would blast off. The time frame: just 24 months, in time to launch Mars Observer in the fall of , when Earth and the Red Planet would be ideally aligned. The launch window would not open again for five years. Planet alignment, noted Bechtel Executive Vice President Bill Friend, is not something you can renegotiate if you fall behind schedule.

More than 150 change orders would double the scope of work on the mobile service tower. Bechtel pulled out all the stops, sending design engineers from San Francisco to follow their work modules to the Cape from design through construction through start-up engineering. At one point, 1,000 workers swarmed all over the complex, laboring in two 10-hour shifts, seven days a week. In the end, Bechtel met its schedule, and so did the Mars Observer probe, lifting off on September 25, 1992.

Planes, Trains and Automobiles: Transforming Transportation

The early 1990s saw an economy on the mend. New work enjoyed healthy gains, topping $9.4 billion in 1993, a 10-year high and nearly doubled from 1990. Bechtel was at work on high-profile projects in dozens of countries on six continents.

The Boston Central Artery/Tunnel project, the largest public works effort in the United States, included a freeway beneath the middle of Boston and the Ted Williams Tunnel beneath Boston Harbor to Logan Airport, earning the Outstanding Civil Engineering Achievement Award from the American Society of Civil Engineers.

In 1990, Bechtel Executive Vice President John Neerhout Jr. was named project chief executive of Eurotunnel, a consortium of five British and five French companies building the Channel Tunnel between England and France. A small team of Bechtel veterans was charged with turning around the enterprise’s faltering engineering and construction effort. The $14.7 billion, 32-mile (51-kilometer) high-speed rail link had huge cost overruns and delays. Bechtel helped manage the enormously intricate project to completion in 1994, restoring the trust of investors and financial institutions.

Also in 1990, Bechtel’s skills were called on to help manage Hong Kong’s International Airport, a $20 billion program to build a new airport facility and rail and road systems, the largest civil infrastructure program in the world.

Bechtel and Turkish partner Enka designed and built a 140-mile (225-kilometer) segment of Turkey’s transnational highway system. Bechtel also was busy on seven new airports from Dubai to Dallas, the first commercial nuclear power plant in the People’s Republic of China, and major environmental cleanups for the U.S. government.

Yet still, Bechtel’s management team recognized the need for profound change if the company were to function as effectively and efficiently as it needed.

Leaping Forward

For decades, the company’s focus on improving performance centered on what Riley Bechtel summarized as “dedication to excellent results, management of quality, and quality of management.” It was time for a more rigorous, formal approach.

In mid-1992, Bechtel leadership supplemented its continuous improvement model with a corporate business model comprising seven critical processes. Led by “homegrown” continuous-improvement coaches, employees formed teams across the company to formalize and clarify what had come naturally to some but was still unclear to many.

The essence of continuous improvement is dissecting a process, improving it, measuring progress, and so on—with no end. But the nature of continuous improvement is that it yields only incremental gains. And, as Riley would note, this inherently inch-by-inch approach would in itself not be enough. In some places, a sea change was needed. “Reengineering is more than continuous improvement. It isn’t about fixing something, it’s about leaping forward,” observed Riley. Bechtel, he said, had to fundamentally rethink and redesign its work processes without destroying the underlying principles and values that had made the company great.

Intensive education about eliminating corporate waste helped crystallize the notion that breakthrough improvements were not only attainable but essential. Bechtel people enhanced their ability to cut costs, accelerate schedules, and maximize customer satisfaction.

Placing Bets for the Long Term

By the , it became clear that Bechtel’s continuous improvement and reengineering initiatives should be complemented by better marketing and strategic skills.

In 1995, a special task force of marketing leaders combined their understanding of Bechtel’s business with continuous improvement and reengineering knowledge to produce in two months a blueprint for sharpening the company’s marketing and business development efforts.

Over the years, Bechtel had proven it could respond to customers’ needs faster and better than any other engineer-constructor, perhaps most dramatically in Kuwait from 1991 to 1993. Now the company needed to improve its ability to decide much earlier how, when, and where to place its bets—in terms of human and financial resources.

Efforts included conducting extensive strategic assessments of local markets thought to be attractive; making planning and budgeting processes more dynamic, substantive, and disciplined; and promoting longer-term relationships with customers, prospects, and partners.

Financing the Future

In a world long on infrastructure needs and short on private capital and government funding, Bechtel’s financial leverage and entrepreneurial touch proved to be powerful competitive tools.

Bechtel Enterprises grew out of Bechtel Financing Services, Inc., formed in 1969 to help customers with project financing by assembling international export credits and commercial bank loans. Bechtel Enterprises did all this plus develop projects and take equity positions, creating a number of joint-venture companies, starting in the power sector. These capabilities help differentiate Bechtel from its competition, provide innovative world-class ownership teams, and create attractive investment opportunities for Bechtel and its partners.

Bechtel had been involved in independent power generation for some time when, in 1989, Bechtel Enterprises formed a strategic partnership with PG&E Enterprises called U.S. Generating Company (USGen). When the U.S. Energy Policy Act of 1992 made it easier to build and finance independent power plants, USGen took off, successfully developing more privatized power plant capacity than any other independent power company in the country. InterGen, another joint venture with Shell, started in 1995. As power privatization expanded globally, work got under way in the United Kingdom, the Philippines, Mexico, and Colombia.

In , the two companies agreed to specialize and separate their progeny, with Bechtel buying PG&E’s share of InterGen and PG&E buying Bechtel’s share of USGen. Bechtel later sold 50 percent of InterGen to Shell. Among InterGen’s projects was Quezon Power, the first large-scale independent power project in the Philippines to be financed, built, owned, and operated by a private entity without requiring the sovereign backing of the national government.

Turning the Page: The Next 100 Years

Celebrating its 100th anniversary in 1998, Bechtel had a history to be proud of—and an exciting future ahead. “What may be unique about Bechtel at 100,” said Riley, “is the extraordinary bond of commitment, competence, and integrity we’ve been able to forge—with customers, with key partners and suppliers, and with each other as colleagues in pursuit of great accomplishments.” That bond has helped Bechtel thrive in a punishing industry in which few companies survive more than half a century.

“We know that continuing to lead this industry for another century requires the will and the skill to be the best of the best,” Riley said. “That’s the only way to succeed on our scale and at our level in a world of accelerating change and rising expectations. To lead its industry for another hundred years, any company operating today will have to be exponentially better than it already is.”

Building a Century

2000–PresentEngineering the Next Century

At the dawn of a new century, Bechtel continued to diversify its portfolio and deliver landmark projects around the world.

Experience 2000–Present

Strength through Diversity

With a diverse business portfolio, Bechtel could pursue work in the fastest-growing industry sectors while protecting the company from downturns in other sectors. Liquified natural gas is one good example. In the late 1990s and early , worldwide demand for power led to new natural gas-fired power. As the power-generation market peaked, demand for raw energy skyrocketed, leading to Bechtel building new production facilities for liquefied natural gas. In 2005, the company also began working on one of the first LNG receiving terminals built in the United States in a generation.

Petrochemical and refining projects also took center stage, including the huge Jamnagar oil refinery on the western coast of India and the massive CSPC Nanhai petrochemical complex in southern China—the largest Sino-foreign joint venture undertaken to that point.

Pipelines continued to contribute to the bottom line with challenging projects, including one in Thailand that required laying pipeline in rain-soaked marshland, while in Algeria workers contended with sand dunes and searing heat. On Trinidad, a pipeline with the largest diameter in the Western Hemisphere was built to transport natural gas across the island.

Bechtel’s mining and metals business also grew, as the company built or expanded massive copper mines in Peru and Chile. Leadership in aluminum production was strengthened with large smelter projects in Canada, Bahrain, and Oman. The company’s first project in Iceland, the Fjarðaál smelter, won acclaim for its safety and environmental record.

also entered Bechtel’s portfolio in a big way as the company helped large carriers expand their wireless networks and upgrade equipment for high-speed voice and data.

Reliving History

Civil infrastructure was a major part of Bechtel’s business from the beginning. As the company turned 100, this business took off. Fresh from salvaging the Channel Tunnel project linking England and France in the 1990s, the company engaged in a series of new rail projects in the UK: the expansion of London’s Jubilee Underground line in time for the country’s millennium celebration; the modernization of the busy West Coast Main Line from London to Scotland; the renovation of three Underground lines; and the historic High Speed 1 line (originally called the Channel Tunnel Rail Link). Britain’s first high-speed rail line, it completes a high-speed link between central London and the European continent.

In Greece, work was completed on a major extension and renovation of the Athens Metro in time for the 2004 Olympic Games. Other rail jobs included a light-rail line in Portland, Oregon, and a high-speed rail line in South Korea.

Other civil work included airport projects in Saudi Arabia, Peru, Curaçao, and Qatar (where the Hamad International Airport was built—the first to accommodate superjumbo jets), and new motorways in Croatia, Romania, Albania, and Kosovo. In 2007, a Bechtel joint venture completed the new Tacoma Narrows Bridge south of Seattle, Washington—the longest new suspension span built in the United States in four decades.

Charging Ahead

The power market staged a comeback in 2004 and Bechtel took the lead. The company built or expanded coal-fired plants, including the massive Oak Creek Power Plant Expansion (formerly the Elm Road Generating Station) in Wisconsin and an expansion of the Springerville power plant in Arizona.

The company continued its role as top choice for renovating and modernizing existing nuclear power plants, replacing aging steam generators and reactor pressure vessels at a number of U.S. facilities. At the Comanche Peak project in Texas, Bechtel set a world record by replacing four steam generators and a reactor head during a planned outage that lasted just 55 days—eight fewer days than the previous best.

img alt text The Browns Ferry nuclear power plant.

With the completion of the historic Browns Ferry Unit 1 reactor in Alabama, dormant for 22 years, Bechtel helped kick-start the rebirth of the nuclear power industry. The company was well positioning itself to help utilities build the next generation of safe, efficient nuclear power plants.

Rise from the Ruins: Iraq and Katrina

Two of the highest-profile projects in Bechtel’s history unfolded in the first years of the . Following the Iraq conflict of early 2003, the company helped the U.S. government in a broad-based effort to rebuild vital infrastructure in Iraq. The work came with daunting security risks yet resulted in improvements to schools, roads and bridges, telecommunications, and power and water systems. Despite that success, the work was marred by violence, which claimed the lives of 52 employees of Bechtel subcontractors.

When Hurricane Katrina ravaged the U.S. Gulf Coast in August 2005, the Federal Emergency Management Agency turned to Bechtel to help provide temporary housing for Mississippi residents. Bechtel teams were on the ground within days installing the first mobile housing units. In less than six months, the company delivered and installed more than 35,000 temporary housing units, providing shelter to more than 95,000 people. It was the fastest housing operation of its kind in history.

Bechtel also helped create Gulf Rebuild: Education, Advancement, and Training, an initiative with a goal of training as many as 20,000 workers in skills needed to rebuild the Gulf Coast.

Making the World Cleaner and Safer

Bechtel solidified its position as a leading service provider to the U.S. government, building a missile defense test site on Kwajalein Atoll in the South Pacific and constructing an installation for the nation’s Ground-based Midcourse Defense system in Alaska. In the Nevada desert, early work was completed on the proposed Yucca Mountain national repository for nuclear waste. The company worked to eliminate stockpiles of chemical weapons at several U.S. defense sites, as well as helped states of the former Soviet Union destroy their stockpiles.

At a former nuclear production site in Washington state, Bechtel began building a massive Waste Treatment Plant to treat hazardous waste left over from the Cold War. And in Ukraine, the company played a major role in preparations to permanently enclose the Chornobyl reactor damaged in history’s worst nuclear accident. Bechtel made a name for itself by managing and operating large, complex, and diverse government facilities, among them the Nevada Test Site and the Idaho National Engineering and Environmental Laboratory.

In 2006 and 2007, teams led by Bechtel and the University of California began managing and operating Los Alamos National Laboratory, in New Mexico, and Lawrence Livermore National Laboratory, in California. The two labs are the premier U.S. institutions for national defense and scientific research, monitoring the nation’s nuclear stockpile and turning swords to plowshares with breakthrough research in medicine, physics, astronomy, and other areas of science.

Do It Right the First Time

When Bechtel adopted Six Sigma in , it became the first major engineering and construction company to implement this data-driven approach to improving efficiency and quality. Although Six Sigma was developed for manufacturing companies, Bechtel realized it also could work for a big and fast-growing services organization. Within three years, it was rolled out in offices and on projects throughout the company.

Performance-Based Leadership also came to the fore as Bechtel strove to sharpen the people skills of management personnel. Bechtel had long embraced a philosophy of teamwork, but its rapid growth into a multinational company created a generation of leaders excelling at engineering and cost control but less effective at managing a workforce. Performance-Based Leadership seminars and online courses provided tools to manage and motivate staffers, boosting both efficiency and morale.

The Sun Never Sets

Geographical distances and different time zones posed new challenges for multinational companies in the new global economy. So Bechtel opened offices in key locations worldwide, permitting engineers to work on projects 24/7. For example, when designers in Frederick, Maryland, finished their day, they could hand off work to their counterparts in Brisbane, Australia, where the day is just beginning. By 2007, Bechtel had engineering hubs in Australia, Canada, China, Taiwan, India, Poland, the UK, and the United States.

Software made it possible for workers in far-flung offices to collaborate in real time. And online reverse auctions allowed Bechtel to get the best prices for commodities and other materials.

As smartphones, tablets, and other mobile devices gained popularity with consumers in 2010, Bechtel discovered its business advantage as well—especially on project sites. iPhones and iPads became an increasingly common sight at several projects—from California to Australia to Qatar.

The company developed its own applications so that employees could enter hours worked directly from the field, improving accuracy and reducing the overall time updating back-end systems. In addition to entering time, workers could enter safety, quality, and daily inspection checklists directly onto electronic forms on the iPad, instead of jotting them on paper to enter manually later in a project office. This improves productivity, reduces the margin of error, and reduces fuel use as well as the chances of an accident in transit.

BIM, Building Information Modeling

Safe and Sustainable

to safety—long a top priority—now grew into a crusade. Employees at every level embraced a Zero Incidents philosophy that deemed every accident avoidable. It paid off with a safety record ranking Bechtel at the top of the industry—year in and year out—even with large and complex projects in remote locations and bad weather.

As a business-to-business company, does not set policy for environmental protection and sustainability—its customers do that. Yet Bechtel makes sure that every project meets all environmental regulations, while helping customers meet sustainability goals.

Weathering a Tough Economy

A global economic downturn began in and businesses around the world struggled. But Bechtel continued to take on challenging new projects, delivering a solid performance by sticking to central tenets: Ensure diversification in industries and regions; maintain a focus on the basics; provide service to customers; execute fundamentals across the enterprise; do what is needed. By the end of 2011, the approach clearly paid off, as Bechtel grew its backlog of work with a record level of new awards.

After hitting a peak, the commodities markets softened and customers delayed decisions on large capital expenditures. Instead, they began looking more critically at their existing operations. This was the perfect opportunity for Bechtel to shine, with a proven ability to adapt quickly and help customers achieve greater efficiencies from existing operations.

Vision to Reality: Transforming Gabon

Along Africa’s west-central coast, Gabon government officials embarked on an ambitious national infrastructure plan in 2010. They selected Bechtel to support the country’s progressive vision to spur economic growth.

Bechtel and the government of Gabon worked to develop a $25 billion national master plan to achieve Le Gabon Émergent—the national vision for sustainable growth and shared prosperity. The master plan and its 15-year implementation plan is based on Gabon’s strategic priorities: to increase industrial capacity and process more raw materials locally; to carefully and sustainably manage the country’s natural resources and biodiversity; and to create prosperity from higher-value jobs and better services for Gabon’s 1.5 million people.

The plan spans education, housing and urbanization, transportation, water and power, medical resources, and more. The Bechtel-led team has completed a range of infrastructure projects, including:

  • 5,000 public housing units

  • Gabon’s first community wastewater treatment plant

  • two stadiums, hotels, and roads for the 2012 Africa Cup of Nations football tournament, hosted by Gabon

  • design and feasibility study for a new port, marina, and conference center in Libreville

Bechtel is helping workers improve their abilities so they can achieve international standards for quality, ethics, and safety. Some 40 contractors completed more than 200 courses―from how to conduct environmental risk assessments to maintaining facilities.

In the coming decade, teams will build or upgrade more than 1,000 miles (1,600+ kilometers) of roads and more than 500 miles (800+ kilometers) of rail lines. The Gabonese government aims to provide citizens with better transportation, housing, water and sanitation systems, schools and universities, and medical facilities. Bechtel is a key part of this major transformation in Gabon.

Big Boost to Australia’s Economy

It’s the greatest concentration of Bechtel projects anywhere in the world and the largest private capital investment in Australia’s history.Three giant liquid natural gas (LNG) plants on Curtis Island will provide a huge economic boost for Australia, particularly for communities in Queensland, on the country’s east coast.

On such a complex group of projects, Bechtel relied on two principal methodologies: consolidation and modularization. Services were consolidated to streamline processes and combine resources in a very competitive market. Perhaps more important, the company built massive modules for all three plants at separate yards throughout Southeast Asia to offset shortages of construction labor.

The side-by-side plants will process Australia’s enormous reserves of coal seam gas for export and form a new hub to service the Asian energy market with natural gas harnessed from the nearby Surat Basin. Gas will be exported primarily to parts of Asia.

Building three massive plants on one island has transformed the economy for 35,000 residents of Gladstone. More than $1 billion in local wages have been paid, $697 million in purchase orders and contracts spent, and 20,000 contracts awarded since construction started in 2010. In addition, more than 5,000 local employees work at the projects. In 2011, Bechtel committed to take on 400 apprentices for the LNG projects, the single largest intake of apprentices in Australia’s history. In 2014, working closely with the Australian government’s National Apprentice program, Bechtel achieved that goal.

Taking On Europe’s Most Ambitious Rail Project

Crossrail, one of the largest infrastructure projects in Europe, will connect over 35 stations east to west and make travelling in and around London quicker and easier. When completed, it is expected to eliminate more than 300 million vehicle miles (nearly 485 million kilometers) each year.

The project team is constructing a new tunnel beneath central London, building 10 train stations, rebuilding or overhauling other stations, and upgrading track on a busy existing rail network. These efforts will reduce transport headaches, easing travel congestion for hundreds of thousands of commuters.

After estimating that 15 percent of the project’s life-cycle carbon emissions would be attributable to construction, Bechtel set out to reduce the carbon footprint by 5 percent—all without increasing costs—and exceeded this goal by cutting emissions by nearly 10 percent. Our team used diesel-electric hybrid excavators that consume 25 percent less fuel and produce 30 percent less carbon emissions than conventional excavators. We also reduced particulate emissions by 85 percent and subsequently recognized as the first infrastructure project in the United Kingdom to adopt stringent emissions controls across all work sites.

Here Comes the Sun

In California’s Mojave Desert, Bechtel provided engineering, procurement, and construction services for the Ivanpah Solar Electric Generating System. It is one of the most important first-of-a-kind renewable energy projects to date. Ivanpah nearly doubled the amount of commercial solar thermal electricity produced in the United States.

Bechtel’s team applied innovation every step of the way on this project. First, a modular approach was used to erect three steel towers, each roughly 34 stories tall. A 2,200-ton boiler―roughly the weight of 1,500 cars—was placed on top of each tower. Then team members safely installed 173,500 software-controlled heliostats at a rate of 800 per day during peak construction, exceeding the daily goal of 500. The heliostats reflect and concentrate sunlight onto the boilers, where water inside is heated to create high-temperature steam. The steam spins turbines that generate electricity. The result: enough clean, sustainable energy to power more than 140,000 homes.

Time for Peace

The National Nuclear Securityhired a Bechtel-led joint venture to manage national defense sites: the Pantex Plant near Amarillo, Texas, and the Y-12 National Security Complex in Oak Ridge, Tennessee. Both sites have rich histories critical to the broad story of U.S. national defense dating from World War II and the Cold War through the most recent war on terrorism.

As the United States reduces the size of its arsenal, Pantex and Y-12 play a central role in decommissioning weapons systems and providing weapons material for peacetime uses. Their efforts are key to nuclear nonproliferation treaties aimed at stopping the spread of nuclear material. These two sites are leaders in implementing technology and training to ensure that materials are protected with the highest degree of confidence.

“Our role is to improve performance at both sites while ensuring an uncompromising focus on safety, security, quality, and cost-effectiveness,” says Jim Haynes, a Bechtel senior executive and president who served as chief executive officer of the Bechtel-led Consolidated Nuclear Security. “Focusing on these essential elements while improving efficiencies and work processes makes it possible to reinvest in our people and facilities, and provide a benchmark for transforming other facilities in the Nuclear Security Enterprise.”

Moving 400,000 Passengers Daily: Riyadh Metro

In late 2013,Bechtel was awarded the largest engineering, procurement, and construction project in its history: Riyadh Metro Lines 1 & 2, Saudi Arabia.

Riyadh is one of the world’s fastest-growing cities, with a population expected to increase 50 percent by 2035, to 7.5 million. To respond to such rapid growth, the High Commission for the Development of ArRiyadh prepared a 25-year strategic plan, which began in 2004. Riyadh Metro is the transportation centerpiece of that plan. The 109-mile (176-kilometer) driverless network, designed to serve 400,000 passengers daily, will be Saudi Arabia’s first metro rail system.

The metro system comprises six new lines connecting Riyadh’s commercial, residential, and educational centers through 85 stations, including a terminal at King Khaled International Airport. The Bechtel-led consortium, known as BACS, will design and construct two of the most challenging lines, with a total of 39 stations, two of them iconic major interchanges.

All six lines are being constructed concurrently through 2018, presenting logistical and resource challenges in an already congested city. The BACS consortium has diverted traffic from key zones, begun construction on four viaducts, and is preparing the first two tunnel-boring machines for excavation.

Along Line 2, the 1.3-mile (2.1-kilometer) tunnel is being excavated with the New Austrian Tunneling Method. Permanent works have commenced along several cut-and-cover tunnel and at-grade sections. Teams have mobilized at more than half of the stations on both lines, and utility diversions are in progress in advance of foundation construction.

Freshwater from Sea to Summit

Mines require large amounts of water to operate—for transporting and processing materials, suppressing dust, and cleaning equipment. Maintaining a sustainable water supply without depleting local systems, however, is a challenge. This is especially true in South America, where regulatory requirements and societal concerns over competing demands for water continue to grow.

Our solutions provide better alternatives for the mining industry. One example is our work on the Escondida copper project in Chile’s Atacama Desert, one of the driest places on Earth. There, the average annual rainfall is six-tenths of an inch, or about 15 millimeters. We are developing one of the largest desalinated water supply systems in the world to secure a reliable water supply for two copper concentrators and preserve Chile’s scarce groundwater. Water from the Pacific will be pumped and processed to separate the brine and filter minerals and other biological content, then transported approximately 112 miles (180 kilometers) across the Atacama Desert to the mine’s reservoir, 10,500 feet (3,200 meters) above sea level.

Generating Zero Greenhouse Gases: Watts Bar

In 1985, construction was halted at the Tennessee Valley Authority’s (TVA’s) Watts Bar Unit 2 nuclear power plant in Spring City, Tennessee. The plant was about 60 percent complete when projections showed a decrease in demand for nuclear power.

In 2007, the power demand increasing, TVA decided to finish construction and awarded the project to Bechtel. Completed in 2015, Bechtel brought the plant up to all current engineering standards and earned Watts Bar Unit 2 the distinction of being the first new nuclear reactor since 2000 to be authorized with an operating license from the U.S. Nuclear Regulatory Commission. In June 2015, Watts Bar became the first nuclear power plant in the United States to complete safety upgrades and meet NRC regulations established after a earthquake and tsunami struck Fukushima Daiichi Nuclear Power Station in Japan.

Expected to come online in 2016, the unit will add nearly 1,200 megawatts to TVA’s power system—enough electricity to power some 650,000 homes—without generating greenhouse gases. On the first inspection, work on the reactor achieved a 98 percent quality-control acceptance rate.

Unit 2 helps replace older, costlier and less efficient coal units and helps meet the demand for electricity in the Tennessee Valley with low-cost, carbon-free electricity. One nuclear unit can make as much electricity as five to 10 coal units without carbon emissions. Experts estimate that Watts Bar Unit 2 will help TVA avoid coal-fired emissions of between 6 million and 8 million tons of carbon dioxide a year.

Over the years,Watts Bar Unit 2 has created economic impact for the Tennessee region, employing nearly 3,200 workers during construction, about 250 permanent workers to be added in operations, and bringing further positive impact to the area through regional purchases of supplies and services.

Engineering the Next 100 Years

Global megatrends—from the projected population surge to the scarcity of resources—are changing the way Bechtel designs, constructs, and operates critical structures and systems. Ultimately, it is Bechtel customers and societies around the world who benefit.

From the earliest days, sustainable engineering has been embedded in the Bechtel way of doing business. One of the most promising opportunities to advance sustainability in the 21st century is through Big Data. Satellites, drones, and sensors now provide historical and predictive data and analytics—about weather patterns, integrity of existing infrastructure, population movements, traffic patterns, erosion, and more. This information determines how projects are planned, designed, and managed—all leading to greater reliability, resiliency, affordability, and sustainability.

Bechtel delivers physical assets to customers and societies, but also to environments that benefit our world long term. Whether for public safety or environmental protection, Bechtel helps modernize procedures, systems, and institutions to build local capacities and generate sustainable outcomes.

The art of the possible transcends the complex projects Bechtel delivers. The company remains committed to taking on the next century’s toughest sustainability challenges. This drive and determination is at the heart of founder W.A. Bechtel’s belief that:

“No job is too big if you work hard and simply refuse to fail.”