HDR Inc.

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HDR Inc.

8404 Indian Hills Drive
Omaha, Nebraska 68114-4049
U.S.A.
Telephone: (402) 399-1000
Toll Free: (800) 366-4411
Fax: (402) 399-1238
Web site: http://www.hdrinc.com

Private Company
Incorporated: 1917 as the Henningson Engineering
Company Employees: 3,000
Sales: $450 million (2001 est.)
NAIC: 541310 Architectural Services; 541330 Engineering Services; 541710 Research and Development in the Physical, Engineering, and Life Sciences

HDR Inc. is America’s leading hospital and prison design firm. The venerable company ranks among the 50 largest architecture and engineering (A/E) firms in the United States. HDR, which completed an employee buyout in 1996, is known for its innovative, entrepreneurial culture.

Origins

Company founder H.H. Henningson was born in Jewell, Iowa. After sixth grade, he left school and worked as a cowboy in Montana. After a brief stint as a soldier during the Spanish-American War, he applied to Iowa State University. When his application was rejected, he successfully appealed to the governor of Iowa to allow him to attend the university based on his rights as a taxpayer. He graduated with a degree in electrical engineering in 1907.

Henningson then worked for Westinghouse for several years before taking a sales position with the Alamo Engine & Supply Company. In 1917, he established the Henningson Engineering Company in Omaha, Nebraska (at the corner of 12th and Harney Streets) to design municipal improvements to the rapidly evolving Midwest. Henningson also handled some of the construction of these facilities.

Henningson’s business grew rapidly in the 1920s and the firm earned a reputation for delivering on time and within budgets. H.H. borrowed money during the Great Depression in order to pay his workers.

In the 1930s, programs resulting from the New Deal led to a mass of new work for the firm, then called Henningson Engineering Company. The Rural Electrification Act (REA) had Henningson designing power systems for many districts across the Nebraska prairies. In addition to the work supplied by the alphabet agencies (REA, WPA, etc.), Henningson had a contract to design a winter training camp in Montana for the Army. The firm employed 40 people by the end of the decade and moved into new office buildings in 1937 and 1940.

Postwar Growth

Two employees became new partners in the firm after World War II. Willard A. Richardson, an electrical engineer, became secretary-treasurer, and Charles W. Durham was named vice-president, each taking a one-third interest in the company. The company was renamed Henningson, Durham & Richardson, Inc. in 1950. The same year, the company decided to build its own office building.

At the time, HDR employed 75 people and boasted annual revenues approaching $250,000. The company opened branch offices in Colorado Springs and Denver, where it was designing sewage systems, and in Phoenix, where it was designing the utilities for the Sun City community. An architectural department was established in 1955, and the company bought its first aircraft, to facilitate the long commute to Minot, North Dakota, where the firm had landed a contract to design an entire Air Force base. One significant postwar project was designing 500 miles of high-voltage power lines for the Northwest Missouri Electric Coop. The project was financed by an $18.5 million loan from the REA, the largest that agency had ever made.

By the end of the decade, HDR had already outgrown its new headquarters building. Its new home would be Kiewit Plaza, one of Omaha’s largest high-rises. HDR opened three more branch offices in the 1960s as employment rose to 200. The firm was then bringing in $3 million a year. A new office in Madrid, which specialized in irrigation projects, gave HDR an international presence. At home, the company built its first major medical facility, Omaha’s Methodist Hospital.

Other major projects abroad included a $105 million aqueduct in Rio de Janeiro, as well as municipal planning in Sudan, Korea, Vietnam, Libya, and Iran. The U.S. Air Force had the firm designing more air bases in Newfoundland and Greenland, as well as an expansion of the U.S. Air Force Academy in Colorado Springs. The firm also began designing post office facilities.

By 1970, HDR had grown to 300 employees. The firm was becoming more corporate, with a new Lear jet (a first among architectural-engineering firms) and another new headquarters building completed in 1972. Major building projects included the medical school at King Abdulaziz University in Saudi Arabia. A separate division dedicated to designing judicial buildings was established, and the company ventured into environmental services, beating out 400 rivals to win a joint venture contract to plan the Trident Submarine Base Support Site in Bangor, Maine.

HDR also grew by acquisition. It bought the Seattle architectural firm Durham Anderson and Freed in 1974. Los Angeles-based Stanton Stockwell followed soon after. HDR acquired Minneapolis-based Pfeifer and Shultz, which specialized in power plant design, in 1976. Between 1973 and 1978, HDR grew from 350 to 850 employees; annual revenues increased from $10 million to $35 million.

Nouveau Owners in 1983

Paris-based Bouygues S.A. (pronounced “Bweege”) acquired HDR in 1983 for $60 million. The owner, the largest construction company in France, gave HDR access to state-of-the-art European technology. France, after all, boasted a 200-m.p.h. train system, the tres grande vitesse or TGV. HDR soon designed such a system for the state of Texas, but the plans were scrapped. (Plans for a high-speed rail system linking Orlando, Tampa, and Miami in Florida proceeded throughout the mid-1990s, however.) In the 1980s, HDR expanded into waste and recycling services in the United States.

Annual revenues rose slightly to $182 million in 1994, though profits fell somewhat. HDR and Bouygues hoped to expand into providing waste disposal, transportation services, and water and power to some of the many communities across the country that were opening these functions up to private bidders.

Francis Jelensperger was named CEO of HDR in November 1994. He had first visited the United States in the 1960s, touring the country in a wood-sided station wagon. In 1967 he graduated from Hautes Etudes Commerciales in Paris. He returned in 1980 after working in France and Africa, and joined HDR in Omaha in 1987. A few months after becoming CEO, he moved to HDR’s 156-person Dallas office to work more closely on business in the southern United States and Latin America.

In the mid-1990s, HDR had 1,600 employees in 60 offices across the country. Annual revenues reached $300 million. The Internet changed the way the company worked, allowing personnel from 11 offices to collaborate on the $350 million Boston Central Artery Tunnel. Transportation was the company’s largest business sector; projects such as bridges and train and trolley lines accounted for $59 million of HDR’s revenue in 1995.

1996 Employee Buyback

An employee group bought HDR back from Bouygues in September 1996 for about $55 million. Even through more than a dozen years of French ownership, the independent, entrepreneurial company remained very much associated with Omaha. Yet, Bouygues had wanted to relocate HDR’s corporate headquarters to a higher-profile city such as Dallas.

Under the buyback plan, eligible employees were given more than 50 percent of the private company’s stock as the four Midwestern banks that financed the deal were paid off. Jelensperger was replaced as chairman by Richard Bell in August 1997.

The newly independent company’s growth accelerated after it bought its freedom. HDR soon had plans to double the size of its headquarters. In the five years following the buyback, HDR would add 20 offices (bringing its total to 60) and increase employment by two-thirds to 3,000 people, noted Steve Jordon in the Omaha World-Herald. His sources told him that HDR had failed to thrive under Bouygues, which wanted to integrate HDR’s own architecture and engineering services with the construction process. HDR was simply not strong enough in project management. Bouygues also failed to invest in HDR or fund acquisitions, said Chairman Richard Bell.

Company Perspectives:

MISSION—To be the preferred provider of a full range of superior professional architectural, engineering, planning, science and consulting services, to public and private clients. VISION—Shaping the future through creative solutions and visionary leadership.

In 1999, HDR opened a London office to capitalize on the anticipated privatization of the British healthcare system by designing modernized facilities. The company also was growing in the United States. In 1999, its HDR Architecture subsidiary bought Ehrlich-Rominger of Los Altos, California, a firm specializing in microelectronics and biosciences architecture. Ehrlich-Rominger had been founded in 1968 and boasted 125 employees and branch offices in Sacramento, San Diego, Tucson, and Boise. The previous year (1998), HDR had acquired Simpson Group, an architectural and engineering firm based in San Antonio, Texas that had an 80-year history. Two other acquisitions were made in 2000: Edward Consulting Engineerings, Inc., served the electronic and heavy industrial manufacturing sectors, and selected assets of Braun Intertec Corporation related to environmental consulting.

The purchase of Ehrlich-Rominger made that company’s leader, Robert D. Cavigli, HDR’s largest shareholder. In May 2000 Cavigli became president of the HDR Architecture subsidiary, which accounted for a quarter of the firm’s total billings. The engineering unit accounted for the other three-fourths.

In early 2001, HDR cut 60 jobs from its science and technology areas, which had suffered from weakness in the national economy. The company’s other divisions, however, continued their streak of uninterrupted growth begun after HDR’s buy-back from the French. Revenues were expected to reach $450 million in 2001.

Principal Subsidiaries

HDR Architecture, Inc.; HDR Construction Control Corporation; HDR Design-Build, Inc.; HDR Engineering, Inc.

Principal Divisions

Environmental and Resource Management Group; Healthcare Group; Interiors Group; Justice Division; Management Consulting Group; Planning and Development; Project Development; Science and Technology; Sustainable Design Group; Transportation Services; Water Group.

Principal Competitors

CH2M Hill Inc.; HNTB Corp.; The Louis Berger Group; Parsons Brinckerhoff Inc.; Sargent & Lundy LLC; URS.

Key Dates:

1917:: Henningson Engineering is founded to design infrastructure for Midwestern communities.
1937:: Henningson survives Great Depression through REA work.
1950:: The firm is renamed Henningson, Durham & Richardson after taking on two new partners.
1983:: French construction company Bouygues S.A. buys HDR.
1996:: Employees buy HDR back from Bouygues.
1999:: HDR buys high-tech design firm Ehrlich-Rominger.