Michael Baker looks to diversify in foreign markets

With most of its work in the U.S., engineering firm tries Middle East


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Michael Baker's decision to pursue business on a global scale was inspired by its major strength: delivering highways, bridges and other projects on time and on budget for clients in the United States.

In any given year, U.S. contracts account for 90 percent or more of the Moon engineering company's revenue. Of the remaining 10 percent or less of work that is performed overseas, most is funded by the U.S. government, and most of that comes from the Defense Department.

Then there's the fact that about 85 cents of every $1 in revenue Baker collects comes from government customers. With federal, state and local governments struggling with deficits, "That's not such a great place to be," said CEO and President Bradley Mallory.

"We needed to diversify," he said. "We needed to have more small pieces of pie to make up the bigger corporate pie."

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Baker is no stranger to doing business overseas. It built a pipeline in Saudi Arabia in the 1960s, when Saudi security routinely checked Western visitors' bottles of cologne to make sure they did not contain alcohol, Mr. Mallory said.

Baker's 2010 acquisition of LPA Group, a Columbia, S.C., transportation consulting concern, gave Baker its latest entree to the Middle East.

Mr. Mallory said LPA had two or three people pursuing business in the United Arab Emirates for two or three years before the acquisition. Baker was also prospecting there, mostly in Oman, where it has worked on feasibility and engineering studies for Omagine, a 245-acre beach front project that will feature luxury hotels, shopping, residences and entertainment facilities.

Omagine intends to hire Baker to manage the project once it gets approval from Oman's government. According to Omagine's securities filings, approval could come early this year.

Mr. Mallory said the Omagine project combined with the work LPA was doing was enough to justify opening an office in the region. Late last year, Baker put Senior Vice President David W. McFayden in charge of the initiative, opened an office in Abu Dhabi and hired an Abu Dhabi firm to be its agent in the region.

There are plenty of opportunities there. Qatar's winning bid to host the World Cup soccer championship in 2020 means the country is building or rebuilding roads, water and sewer systems as well as nine stadiums, Mr. Mallory said.

Baker submitted a bid on a water project in Qatar, but lost. Mr. Mallory said that's to be expected. Even in the U.S., a new entrant to an established market rarely wins on the first try.

But Baker is bidding on construction management and highway projects in the region and Mr. Mallory said he is "relatively confident one of these is a winner."

Although Baker only has a handful of employees in the region at any one time, "We could have 40 people there almost overnight" if Baker is selected for one of the jobs, Mr. Mallory said.

Living conditions are more accommodating than they were when Baker did business in the Middle East five decades ago, so he's not worried about finding volunteers.

After all, when Baker was hired to do reconstruction work in Iraq and Afghanistan, there was a waiting list of employees who signed up for those assignments, Mr. Mallory said.


Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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