The Shaw Group is one of the world's largest power plant engineering and construction contractors, as well as a top environmental services firm. Offering vertically integrated services, Shaw's three business units support and complement each other through every stage of an industrial plant project -- from concept, design, prefabrication, building, and construction to maintenance, modification, operations, decommissioning, and decontamination. The company serves the global energy, chemical, environmental, infrastructure, and emergency response industries across the Americas, Europe, Middle East, and Asia. Chicago Bridge & Iron (CB&I) is buying Shaw for some $3.2 billion.
Change in Company Type
The proposed combination of CB&I and Shaw will create one of the world's largest engineering and constructioncompanies focused on the global energy industry.
Shaw was formerly organized into seven reportable business segments, but today it operates through three primary business units: Power, Environmental & Infrastructure (E&I), and Fabrication & Manufacturing (F&M). To pay down debt, Shaw sold its struggling Energy & Chemicals (E&C) business to Technip for approximately $290 million in August 2012. Shaw sold another segment, its 20% investment in Westinghouse Electric, in early 2013 to Toshiba for ¥125 billion (about $1.4 billion), boosting Toshiba's stake in Westinghouse to 87%.
The company's Power and E&I segments are its largest segments, each generating about one-third of Shaw's revenues (E&I generates the most earnings). The Power group offers design, EPC (engineering, procurement, and construction), technology, and consulting services primarily to the fossil and nuclear power generation industries. The E&I group provides environmental and infrastructure services to government and private-sector clients globally. Its service capabilities include design/build, engineering and construction, program and project management, sustainability and energy efficiency, waste management, emergency response, and disaster recovery.
Shaw's smallest segment, F&M, specializes in pipe bending technology, with offerings that include piping, structural steel, and duct panel prefabrication, module assembly, and fabricated pipe products. It operates pipe fabrication facilities in the US and through joint ventures in the United Arab Emirates and Brazil. It has structural steel fabrication operations in the US and Mexico. Demand for this segment's products is driven by capital projects in industries that process fluids or gases, such as the electric power, chemical, and refinery industries.
Sales and Marketing
Shaw has an in-house sales force, and it uses independent contractors to market to clients in certain geographic markets. The company's customers are mainly multinational and national oil companies, industrial corporations, regulated utilities, and US government agencies.
Stricter government regulations are compelling Shaw to focus more on the environmental side of its business. As a result of new and evolving clean air regulations, Shaw is working with owners of fossil-fueled power plants to develop responsive compliance strategies. Already, it is under contract to provide air quality control services for 22 coal-fired units in Ohio, Pennsylvania, and West Virginia. Such opportunities are expected to increase as emissions standards continue to tighten. In 2012 Shaw's Power group teamed up with NET Power, Exelon, and Toshiba begin developing a new gas-fired power generation technology called NET Power that will produce cost-effective electric power with little to no air emissions if successful.
In other areas of its business, Shaw's E&I group has a contract with the US Department of Energy to design and construct a mixed oxide fuel fabrication facility in South Carolina to process weapons-grade plutonium into fuel for nuclear power generating plants. The F&M group is beginning to see an increase in volume of work and corresponding profits as production continues to increase on nuclear power plant work subcontracted from the Power group.
Year over year, Shaw's fiscal 2012 revenues crept up a mere 1% to $6 billion, mainly due to volume increases in its Plant Services and F&M segments, partially offset by a decline in the Power segment. In fiscal 2011 Shaw saw revenues decrease 15%, mainly due to declines in activity in the E&C and E&I segments. Shaw likewise saw a net loss of $175 million in 2011, but in 2012 it managed to turn that figure around, reporting a profit of $199 million in 2012. – less