Business model of Fluor

Customer Segments

Fluor provides a range of engineering and procurement services to commercial and public clients operating across multiple sectors. The Company offers solutions primarily to companies and organisations in the following sectors:

• Energy and Chemicals, including onshore and offshore oil and gas producers, biofuel companies, gas treatment and processing companies, and petroleum refiners;
• Power, including renewable energy providers, nuclear energy companies, and energy transmission providers;
• Infrastructure, including rail and transit companies, aviation companies, and telecommunications groups;
• Mining and Metals, comprising mineral and metals miners, and mining processing companies;
• Life Sciences and Advanced Manufacturing, including pharmaceutical and biotechnology companies, water distribution companies, and maintenance solutions providers; and
• Government, including nuclear remediation and waste disposal operations, design-build projects, and disaster and emergency response projects.

Fluor’s largest clients are the US Government and Exxon Mobil, which accounted in 2015 for 12% and 11% respectively of the Company’s total revenue.

Fluor’s principal operating jurisdiction is its home market of the US, which accounted for more than 40% of the Company’s total revenue for 2015. The Company, however, also serves a number of clients across Canada, Asia Pacific, Europe, Central and South America, and the Middle East and Africa.

Value Propositions

Fluor provides value to its clients in the following ways:

• Its industry standing and reputation, with the Company being one of the largest companies of its kind worldwide, and having a track-record for high-quality performance that has attracted notable clients such as Exxon Mobil and the US Government;
• Its technical expertise and experience, with the Company employing highly-trained employees across its five operating segments and technically experienced leadership staff;
• Its global breadth and operating presence, with the Company serving clients and working on projects across the Americas, Europe, Asia Pacific, the Middle East and Africa,
• Its range of services and target industries, with the Company providing tailored services to clients across multiple industries, including the oil and gas, infrastructure, and energy sectors.

Channels

Fluor operates a website at www.fluor.com, which provides customers with information pertaining to the Company’s various services, operating locations, projects and markets. The complex nature of the Company’s operations, however, does not allow for the operation of an online sales channel.

Fluor deals with its customers through direct sales teams organised by operating segment and geographic region. The Company operates a broad network of offices that enable the Company to do business locally across all of its operating regions, including offices in the Us, Canada, Brazil, India, Indonesia, China, Kazakhstan, Puerto Rico, Kuwait, Spain and the UAE.

In some jurisdictions, Fluor also provides services via local alliances, and joint-ventures such as ICA Fluor in Mexico and CFPS Engenharia e Projeto in Brazil.

Customer Relationships

Fluor does not offer any services to clients on a purely self-service basis. The Company, instead, consults directly with its clients in order to establish an accurate brief of their individual needs, allowing them to provide an entirely bespoke service on a project-by-project basis. Fluor actively pursues relationships with new clients, and attempts to build upon its long-term relationships with existing clients, with the aim always to encourage recurring business and longstanding relationships.

Fluor works closely with its clients throughout its projects, and provides a range of ongoing support and maintenance services. The Company includes contact details for its various offices and departments on its website, with potential and existing clients able to contact the Company directly with sales enquiries, supplier and contracting queries, and general support and enquiries. Clients can also interact directly with Fluor through its social media accounts with Twitter, Facebook, YouTube, and LinkedIn.

Key Activities

Fluor operates as a holding company. Through its numerous subsidiaries and joint-ventures the Company provides engineering, procurement, construction, fabrication and modularisation, commissioning and maintenance, as well as project management services across multiple industries.

Fluor organizes its activities into five business segments, divided largely by target market: Oil and Gas, which serves oil and gas production, processing, and chemical and petrochemical industries; Industrial and Infrastructure, which provides design, engineering, procurement, construction, operations and maintenance, and project management services; Government, which provides engineering, construction, logistics, and environmental and nuclear services; Global Services, which provides a range of solutions to support projects across Fluor groups; and Power, which provides a range of services to the gas-fueled and solid-fueled markets.

Key Partners

Fluor collaborates with a range of partners throughout the process of delivering its engineering, maintenance and management solutions. The Company frequently collaborates with industrial partners, participating in consortium project bids and joint-venture operations. Fluor has, in recent years, collaborated on projects with Brazil’s CFPS, Netherlands-based Heijmans, Jersey-incorporated 3i Infrastructure, and the UK’s Cavendish Nuclear.

Fluor also functions as the preferred global engineering partner of BASF, and collaborates with a network of suppliers and contractors, including providers of architectural services, logistics services, processing equipment, courier services, piping and fitting products, and structural products and services.

Key Resources

Fluor’s key resources are its technology and intellectual properties, its physical infrastructure – including its network of fabrication yards, its equipment and machinery resources, its supply chain and supplier and contracting partners, its sales channels, its logistics facilities, and its personnel.

Fluor holds a range of patents and licenses for certain items that used in its operations, including those held by the Company’s operating subsidiary NuScale. While these patents and licences are material to the Company’s operations, Fluor does not consider any one to be so essential that its loss would materially affect its business.

Cost Structure

Fluor incurs costs in relation to its research and development activities – primarily through NuScale, the maintenance and development of its physical infrastructure, its acquisition of resources and equipment, the management and operation of its supply chain and logistics channels, and the retention of its personnel.

Fluor accrues substantial corporate general and administrative costs – including the payment of salaries and benefits to its workforce of more than 38,700 employees worldwide – which amounted to $168 million in 2015. The Company also accrues a comparable amount in rental expenses – relating principally to the lease of office facilities, and equipment used in connection with long-term construction contracts – which in 2015 reached $169 million.

Revenue Streams

Fluor generates revenue through the sale of various engineering and maintenance services across its five operating segments. These services are typically provided on a project-by-project basis under contracts categorised as follows:

• Cost Reimbursable; and
• Fixed-Price, Lump–Sum and Guaranteed Maximum

In 2015 Fluor generated revenue in the amount of $18.11 billion, a decrease on the $21.53 billion recorded by the Company in 2014. The Company derived the majority of its revenue from its Oil and Gas segment, which generated $10.04 billion in revue for the year.

The only other segments to record more than $1 billion in annual revenue were the Company’s Industrial and Infrastructure, and Government segments, which generated $4.07 billion and $2.56 billion respectively.