J. Scott Ogilvie recently returned from four years in Hong Kong and Singapore to become president of the Bechtel Fossil Power Global industrial Unit (GIU). In this role, he is responsible for Bechtel's worldwide activities in fossil fuel power generation, including maintaining Fossil Power's global relationships, strategic planning and marketing. He oversees the development of Fossil Power's personnel resources, project execution and achievement of its business plan. He also oversees the management of Bechtel's Fossil technology group and new product development and optimization.
Bechtel Fossil Power GIU was once part of Bechtel Integrated Energy, but it became an independent unit when the larger group was restructured, also freeing a Petroleum and Chemicals unit and an Offshore unit. Fossil Power's headquarters are in Frederick, Md. Ogilvie grew up in New Jersey and was trained as an engineer at Rutgers University. He joined Bechtel in 1976, has always worked for them and always on the power side of the company. He has worked as a planner, lead field cost engineer, manager of management information, project developer, manager of power (Southeast Asia), and just before his present position, the general manager of the Power Regional Unit in Hong Kong overseeing the company's power projects in the Asia Pacific region. Ogilvie says that although there is a significant resurgence of interest in fossil power in the U.S., he is not concentrating just on the American market. Rather he says he will keep his vision global. "One reason I was asked to return to the U. S. was to help the Fossil Power organization maintain its international focus. Bechtel now does 2/3 to 3/4 of its business outside the U.S. Even though the U. S. is picking up and is going to be strong in '99, we expect 2/3 of our power generation business to remain outside the U.S."
"Asia," says Ogilvie, "is a wonderful, but a tough, market. There is a lot of competition and it has some of the best pricing in the world. Everyone sees it as a strategic market because of its tremendous potential, notwithstanding the recent financial crisis."
When the local currency devaluated, the utilities' revenues were then insufficient to meet their PPA commitments, putting the squeeze on both parties. Projects under construction and planned projects are being deferred."
"If you are in the U.S., you see the U.S. as a great market, but I see the U.S. as a part of our global business," Ogilvie says. "The U.S. has been sleepy and is now on the rise so it seems all the more dramatic. But we'll do plants worldwide. We have good people overseas so we don't think of the U. S. as a main part of our business, but try rather to see the whole, including good opportunities in the UK, Spain and the Middle East. We just started a major coal project in China. In fact, I see Asia, Europe and South America as important to us as the U.S. I see significant opportunities in these places.
"Currently, suppliers of equipment are in a good position and are able to raise prices around the world. All the players have a global strategy. What you saw in early 1995 - low prices, an oversupply in the combustion turbine business, and margin pricing-led people to sell equipment just to keep in business and then sell services later. What we see today is that suppliers have their shops full; delivery dates are stretching out and prices of components will likely rise. This should change the global market for the next 12 to 18 months."
Ogilvie says that the increase in demand often takes the form of need for replacement and merchant plants, which, he believes, have to be the low-cost producer. High-tech turbines and low gas prices allow investments in new plants to achieve a low cost per kilowatt and this is helping drive the replacement power business. This is happening in the U.S.; some would call it a displacement power market. There is real acceleration in the restructuring of this market, he says.
"We think that we can do well in this environment," Ogilvie continues. "We can provide more value than our competitors. For one, we're not married to any technology, manufacturer or product. That's good, because we feel that none works in all circumstances. We can work with any suppliers worldwide. We can work with them or team with them or use their equipment where it's right for a customer. We want to be systems integrators and constructors where we can create value and work with owners to achieve low tariffs in the business."
Ogilvie says that Bechtel has been partnering with some OEMs. They can lead or Bechtel can lead. Ogilvie says that this is generally how work is done in Europe and Asia. In the U.S., the A/E is often the lead, purchases the equipment and carries the project through. Then Bechtel can provide the turnkey wrap. "Frankly, he says, "we had to adjust when we went overseas, but we have done well. We'll be the point man or work side by side, whatever it takes."
Ogilvie notes the trend of OEMs moving to be turnkey providers. But he has a response to this new kind of competition. "First, as an A/E we see all technologies, and we are not committed to one supplier or one technology as the best solution in every situation. Instead we can pick the right technology for the customer needs. Thus we are unique from the OEMs.
"We've been in the EPC business a long time. It's our focus. We don't make equipment. We are systems integrators. We take the best parts and put them together. Our focus is on a delivery model, on certainty of outcome and the fact that a customer can count on any plant we build as working as promised.
"Second, we have been making a successful investment in PowerLine. We invest in PL to improve plants, lower costs, reduce quantities, shorten schedules and develop new models. We look at delivery and performance. They look to improving plants, not delivery. Only by delivering value and performance are you going to get repeat business. We've been able to do that and so we've been able to compete with OEMs. You can see that by noting that our awards have been growing each year.
Ogilvie makes another couple of points about PowerLine. It is Bechtel's suite of reference or model plants. It now has 13 models, and we will add two more this year.
"We are continually working to improve these model plants," he says. "Then, once plants are delivered in the field we put teams through them and report on where they can be made better. We put through Operations and Management teams and ask them how they would improve layout and access. We put through design teams. We scrutinize for redundancies. We work very hard to plow back ideas into designs for new model plants.
"High value and low cost-that's what PowerLine and our Fossil Power is all about. High value and low cost-these are what we are always working toward. We do it well. We're going to do it better."
