CH2M Hill to Restructure, Cut Staff by 1,200

Adjusting to changing market realities, CH2M Hill Cos. Ltd. will cut back its 26,000-person global staff by 5 percent ? about 1,200 positions ? as part of a restructuring it will implement over the remainder of 2014 and early 2015, the Colorado-based firm disclosed in a U.S. Securities and Exchange Commission filing this month.

The firm said the staff reduction will be implemented through workforce cuts, voluntary retirements and facility consolidation but it did not disclose global locations or market sectors of the jobs to be cut.

?From time to time, good companies adjust their businesses to the needs of their clients, their markets and their aspirations,? said company Chairman and CEO Jacqueline Hinman. ?We?ve done this ourselves many times over the years.? Hinman described the move by CH2M Hill as ?staying true to our values.?
However, the firm had announced earlier this year a $12.8 million loss for its first quarter, related to cost overruns on a fixed-price northeast US power project, which it attributed to labor productivity, subcontractor performance and weather issues.

But it said the loss “was partially offset” by higher-margin volume on new domestic energy projects and settlement of a dispute on a water sector program management project in the Middle East. CH2M Hill also filed a lawsuit last month against DynCorp International seeking about $26 million in profits the Colorado company claims it is owed as a subcontractor on a logistics contract in Afghanistan for the U.S. Defense Dept. that the two firms have been involved in since 2007.

DynCorp disputes that total, claiming that about $6 million it owes CH2M Hill has been paid. CH2M Hill says Dyn Corp is in contract breach and is asking the court to appoint an independent monitor of contract financial records.

Meanwhile, Neil Reynolds, head of the firm’s 2,400-employee Middle East, North Africa and India region, told one on line publication on Sept. 16 that the firm still plans to double that region in size by 2020, with 400 new hires this year.

CH2M Hill is program manager for construction of facilities for Qatar’s 2022 World Cup and is managing major sewerage projects in Doha and Abu Dhabi.

It also appears to be in the lead, along with Bechtel Group, to win contracts as managed service providers to the U.K. defense ministry in running its estimated $23-billion procurement and support function, according to a report in DefenseNews. Contract values were not disclosed but are expected to total between $327 million and $654 million, said the publication.

CH2M Hill said the restructuring, announced in the Sept. 8 filing, will result in pre-tax charges of up to $120 million and a goodwill write down of between $30 and $80 million. But CH2M Hill said the restructuring would save the firm about $100 to $120 million a year.

“The corporate structure and overhead of the company has grown in anticipation of a future state that did not materialize,” the company says. “In response, the company is right-sizing its overhead structure in all global operating units to align with the company?s strategy.”

?We continue to win significant new work and deliver excellent work for our clients every day,? Hinman added. ?We intend to retain our industry-leading position and provide long-term, sustainable growth that benefits our clients, employees and stockholders.?

CH2M Hill also announced on Sept. 16 a five-year collaboration with The Nature Conservancy to develop “innovative and integrated engineering and environmental solutions” in areas such as climate change, fresh water source protection and urban conservation, focused on four regions in North America: the West Coast, the post-Superstorm Sandy areas along the East Coast, the Gulf of Mexico and? Upper Mississippi-Great Lakes. No contract value was disclosed.

It also announced award of a five-year program management contract extension, for an undisclosed amount, on the $9.6-billion Rapid Transit Implementation program in greater Toronto for Metrolinx. The firm said the program is Canada’s largest public transit investment.

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