International Business Entry Success

Stantec: Achieving Success in the United States and Internationally

Date: March 14, 2019

Introduction

This paper will explore the history, growth, and market entry strategies (both for the United States and internationally) for Stantec. In its 65-year history, the firm has grown from being a one-man environmental engineering operation in Edmonton to be a global engineering, architectural, and project management company (Stantec, 2017a). Over the course of their history, they have opened branch offices to expand into new markets. However, their main growth and market entry strategy has been through the acquisition of other companies in the same or similar fields, including 66 businesses based in the United States or with an office in the United States since 2000 (Stantec, 2019a).

What is Stantec

Stantec is a publicly traded international design firm with over 22,000 employees (Stantec, 2017a). They currently offer 104 different services including architecture, buildings engineering, landscape architecture, process engineering, and urban planning & design (Stantec, 2017b). Currently, they operate in 22 countries on 6 continents including Ethiopia, Australia, USA, Canada, Turkey, Germany, Peru, Bahrain, Italy, India, Chile, and China (Stantec, 2017c).

How the Company Started and How They’ve Grown

Stantec was originally founded in 1954 as D.R. Stanley Associates in Edmonton, Canada by Dr. Don Stanley, an environmental engineer (Stantec, 2017a). The firm initially operated within western Canadian and in their first decade of operation grew to 30 employees (Stantec, 2017a). They continued to concentrate on upgrading the water systems in the small communities within Alberta and British Columbia, but also grew to include transportation engineering (Stantec, 2017a).

In 1967 the company obtained its first international project in Malaysia, a sewage system in the capital of Kuala Lumpur, and with the increase in international projects that soon followed they created an international group within the company to concentrate solely on overseas projects (Stantec, 2017a).

In 1976 the firm acquired an urban land consultancy, marking its first acquisition of many and adding to its list of services (Stantec, 2017a). Between 1984 and 1993 the company continued to diversify its services, adding interior design, structural engineering, and pavement management (Stantec, 2017a).

In 1991 they acquired a company in Phoenix, Arizona, marking their first acquisition outside of Canada and foray into the US market (Stantec, 2017a). Since 2000 they have acquired or merged with 66 companies that are either based in or have an office in the United States (Stantec, 2019).

The company was listed on the Toronto Stock Exchange in 1994 and the New York Stock Exchange in 2005 (Stantec, 2017a). In 1998 the company created a single brand ‘Stantec’ to bring all previous business names and acquisitions under the same brand name for easier recognition (Stantec, 2017a).

How Stantec Became Successful

Much of Stantec’s growth took place between 1998 – 2009, with their annual revenue increasing from $200 million CAD to more than $1 billion CAD (Staples, 2018). The company has made it through the economic boom-and-bust cycles by looking for business outside of its immediate area, first across Canada and then into the United States and internationally, as well as in different business sectors (Staples, 2018). During the 2008 financial crisis, Vice President of Buildings Engineering at Stantec Greg McPhee, P.E., stressed that it’s important for a company to have diversity in their clientele, types of projects, and geographical locations in order to survive economic downturns (Consulting-Specifying Engineer, 2009). “We have been fortunate in that the combination of the market sectors where our highest volumes of work occur (healthcare, higher education, and sports and leisure) have remained fairly robust, our geographic locations across North America have coincided with regions that have stronger economic health,” (Consulting-Specifying Engineer, 2009).

Much of the company’s growth seems to be from acquiring established companies in new markets that operate in either the same or similar industries as them. By entering new markets through acquisitions or mergers, they will immediately have an established local company with an existing clientele and experienced staff with local knowledge. Although it initially costs more to enter a new market this way, the company saves time and money in the long run when compared to starting with a Greenfield or Brownfield FDI strategy.

In 2009 the company continued to pursue their growth through acquisition under the guidance of the new President and CEO Robert Gomes (Stantec, 2017a). They added new offices in Canada and the US as well as India, the United Arab Emirates, and England, and by 2013 the company had grown to 12,000 employees (Stantec, 2017a). In 2016 they acquired MWH Global, their largest acquisition to date, a 6,800-person consulting, engineering, and construction management firm (Stantec, 2017a) based in Colorado with 187 offices in 26 countries (Canadian Consulting Engineer, 2016).

The Numbers

In 2018 Stantec’s gross revenue was $4.283 billion dollars CAD and was split as follows: 30% Canada ($1.275 billion dollars CAD), 54% United States ($2.334 billion dollars CAD), and 16% in the rest of the world ($673.4 million dollars CAD) (Stantec, 2019b). They also had 8,000 employees in Canada, 9,000 employees in the US, and 5,000 employees in the rest of the world (Stantec, 2019b). Their gross revenue continues to increase in the United States due to organic revenue and acquisition growth, and they were recently appointed as the lead designer for a Chicago Transit Authority project and the lead engineer for the design-build rail expansion for the Long Island Rail Road (Stantec, 2019b).

Reasons for Success

A key element of the company’s business model is diversity in both services offered and geographic location, which allows it to adapt to market conditions (Stantec, 2019b). Their strategy, as outlined in their 2019 annual report, states: “We will grow through strategic acquisitions to meet the needs of our clients and strengthen our ability to improve the communities, sectors, and geographies we serve“ (Stantec, 2019b, p. 10).

The company’s business objective is to continue being a global top tier design and delivery company; they leverage their knowledge (local as well as international) and relationships to meet their clients needs no matter what that need is (Stantec, 2017d).

Conclusion

Through a diverse strategy of acquisition, Stantec has grown from its creation in Edmonton to be a global design firm offering 104 services on six continents. Their first expansion outside of Canada was into the United States when they acquired a company in Phoenix in 1991. Since then, their growth through acquisition strategy has turned the company into a billion-dollar global design firm with approximately 22,000 employees in 400 locations spanning the globe.

Bibliography

Canadian Consulting Engineer. (2016, March 30). Stantec to acquire MWH Global. Retrieved from Canadian Consulting Engineer: https://www.canadianconsultingengineer.com/companies-people/stantec-acquire-mwh-global/1003402273/

Consulting-Specifying Engineer. (2009, August). Growth despite recession. Consulting-Specifying Engineer, 46(2), p. 22. Retrieved March 10, 2019, from http://0-search.ebscohost.com.orca.douglascollege.ca/login.aspx?direct=true&db=bth&AN=44224375&site=eds-live&scope=site

Guzzon, J. (2016, May 5). Stantec Builds By Growing. Retrieved from ENR Southwest: https://www.enr.com/articles/39398-stantec-builds-by-growing

Stantec. (2017). About. Retrieved from Stantec: https://www.stantec.com/en/about

Stantec. (2017a). Our Evolution. Retrieved from Stantec: https://www.stantec.com/en/about/company-overview/our-evolution

Stantec. (2017b). Services. Retrieved from Stantec: https://www.stantec.com/en/services

Stantec. (2017c). Find a Stantec Office. Retrieved from Stantec: https://www.stantec.com/en/offices/office-finder

Stantec. (2017d). Company Overview. Retrieved from Stantec: https://www.stantec.com/en/about/company-overview

Stantec. (2019). Acquisition History. Retrieved from Stantec: https://www.stantec.com/en/about/company-overview/our-evolution/acquisiton-history

Stantec. (2019a). Acquisition History. Retrieved from Stantec: https://www.stantec.com/en/about/company-overview/our-evolution/acquisiton-history

Stantec. (2019b). Stantec Annual Report 2018. Retrieved from Stantec: https://www.stantec.com/content/dam/stantec/files/investor-relations/2019/STN-Annual-Report-2018.pdf

Stantec. (n.d.). Stantec Investor Fact Sheet – Q4 and Full Year 2018. Retrieved from Stantec: https://www.stantec.com/content/dam/stantec/files/investor-relations/2019/CO-IR-Q4_FactSheet-022818-2.pdf

Staples, D. (2018, September 19). How Tony Franceschini and Stantec reached for the sky. Retrieved from Edmonton Journal: https://edmontonjournal.com/opinion/columnists/david-staples-how-tony-franceschini-and-stantec-reached-for-the-sky

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