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Kleinfelder Sees Downtown as Central Place to Expand Globally

The increasingly overlapping worlds of energy, transportation and the environment figure into the business expansion plans of San Diego-based Kleinfelder Inc., and they were also a factor in the recent move of its headquarters to downtown San Diego.

The provider of engineering, architectural and related construction consulting services decided to consolidate operations that were long scattered in five locations around the San Diego region, CEO Bill Siegel said. Another reason for the choice of the 550 Corporate Center high-rise, on West C Street, was its proximity to public transit for its current employees, as well as future workers who might want to be part of downtown’s emerging urban vibe.

“We picked the western part of downtown because we’re now close to the Santa Fe Depot,” said Siegel, referring to the hub station for local trolley and regional train services. “It also helps make us a more attractive place to recruit new people.”

In addition to taking up two full floors in the downtown building, where it now houses about 150 of its 2,000 global employees, Siegel said Kleinfelder is in the process of renovating a building on Convoy Court in Kearny Mesa, to house the company’s science laboratories and field personnel, who should have quick freeway access to clients they meet with regularly throughout Southern California.

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Hood Group Acquisition

The local evolution comes as the 53-year-old, privately held company continues to extend its global presence, most recently acquiring Hood Group, a Canadian provider of engineering and related construction management services, for an undisclosed price.

The purchase of Hood, with offices in Edmonton and Calgary, brought Kleinfelder’s global office tally to 71, as the company continues to build its profile in Canada’s burgeoning oil and gas industry after previously operating its own regional office in the Alberta province.

Much of Kleinfelder’s work — it had global revenue of more than $344 million in 2013, with about $40 million in local billings — involves infrastructure projects, such as oil and water pipelines, utility systems, bridges and other transportation components. In recent years, the company has sought to capitalize on growing global demand on all those fronts, acquiring 11 smaller companies in the U.S. and Australia since 2010.

Alberta is in the midst of a Texas-size boom in oil and natural gas production, Siegel said, and the Hood acquisition also will help Kleinfelder build its profile within Canada’s growing petrochemical and manufacturing sectors.

Demand in China

Australian companies have recently been flush with project work related to infrastructure upgrades happening on a massive scale across China, and Siegel said his firm is setting up strategic partnerships with Chinese contractors seeking insights on how to tackle numerous infrastructure and environmental challenges.

Europe has been a lower priority in recent years because of its sluggish economies, but Kleinfelder will be looking to play the rebound over the next three to five years. First up will likely be new offices in the U.K., to serve as a gateway to the larger European market.

“We’ve so far just dipped our toes in the water in Europe, but we’ll be looking to do more there eventually,” Siegel said.

In the shorter term, Kleinfelder is scouting future expansion elsewhere in Canada, including British Columbia and the Toronto market, and within the U.S. it is looking to bolster its presence in the Southeast and Midwest states.

Kleinfelder started in the early 1960s as a specialized firm focused on geologic and related scientific planning and consulting on projects. Its evolution over the years, Siegel said, has been toward more of a full-service construction consulting company.

In doing so, it has gone up against some giant global players involved in engineering and construction project management, such as Bechtel Group Inc., CH2M Hill Cos. Ltd., Jacobs Engineering Group Inc., and URS Corp.

Protecting Power from Disasters

Construction engineering services is now a $207 billion industry in the U.S., according to research firm IBISWorld Inc. The sector grew just 1.1 percent annually over the past five years and is on track for 4.1 percent growth in the next five years, thanks to general construction recovery and “strong activity” in the oil drilling and gas extraction industries.

Project management geared toward construction is now a $15.6 billion U.S. industry, growing 9.6 percent annually between 2007 and 2012 and expected to rise 3.3 percent annually through 2017, according to IBISWorld. Researchers said the sector has benefitted from the trend of continued outsourcing of project management by project owners and construction firms.

Siegel said the nation’s long-neglected problem of aging roads and bridges now appears to be heading to the front burner of public attention, and cities in the U.S. and globally are looking to boost efficiency in the handling of scarce water and energy resources.

Another budding field of work, the CEO said, is serving communities and corporations looking to protect power systems in the event of natural disasters. Concerns have been raised, for example, by serious weather-related events such as the devastating Hurricane Sandy on the East Coast and a recent global series of destructive earthquakes.

“The goal is going to be building those utility systems, so that when an earthquake or something else hits, the power can be put back on right away, without a lot of major delays,” Siegel said.

KLEINFELDER INC.

CEO: Bill Siegel

Revenue: $344.2 million in 2013

No. of local employees: About 200

Headquarters: Downtown San Diego

Year founded: 1961

Company description: Global provider of engineering, architectural and scientific consulting services, geared toward infrastructure and related construction projects

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