Acres: portrait of a firm

Name: Acres International

Locations: corporate office recently located to Oakville, Ontario. Eleven offices across Canada, six in the United States, one in Iran

Number of employees: 1,000 approximately

Structure: 100% employee-owned

Sectors: (a) power (60% of business); (b) transportation and urban infrastructure; (c) mining and heavy industrial. Services include engineering, project and construction management, economics, environmental, facilities management and management consulting

Revenues: $77.4 million (1999); 40% Canada, 20% U.S., 40% overseas

Canadian affiliations: Acres & Associated Environmental, Acres Productive Technologies, Acres Management Consulting

Overseas affiliations: South Africa, Nepal, China, Chile, India, Iran

Senior executives: Oskar T. Sigvaldason, P.Eng. (president); Graham Williams, P.Eng., Tony Russell, P.Eng., Mike Krossey, P.Eng., Terry Waters, P. Eng., John Ritchie, P.Eng., Ron Thomas, P.Eng., Dave Pashniak, P.Eng., Bob Gill, P.Eng., Jeff Parr, Satish Bhan, P.Eng., Zak Erzinclioglu, P.Eng., Bruce McClennan, P.Eng., Ian Milne, P.Eng. (vice presidents)

Acres International was born from the larger-than-life exploits of its namesake and founder, Henry Girdlestone Acres. A civil engineering graduate in 1903 from the University of Toronto, H. G. Acres, as he was known, pioneered hydroelectric power in Canada. He was one of the first employees of the Power Commission of Ontario, which became Ontario Hydro, and was chief hydraulic engineer on the great Niagara Falls generating station at Queenston/Chippewa. The station was later renamed the Sir Adam Beck No. 1. The company’s largest office is still in Niagara Falls, though the corporate office is in Oakville, Ontario.

After completing the Niagara Falls station, Acres and his friend Dr. Richard Hearn started their own consulting company in 1924. By the 1930s, Acres was trudging over the Himalayas looking for possible sites for hydro projects. He was travelling with another friend, Sir William Stevenson, who became known as “The Man Called Intrepid.”

Since Acres died in 1945, the company has been employee-owned except for two short-lived periods. In the 1950s, the firm was sold to Fluor Corp, a Los Angeles company which was anxious to cash in on the oil field discoveries in Alberta. That relationship did not work out, so a team of engineers led by Norman Simpson bought the company back in 1960, and the firm went on to enjoy its boom period, expanding from 200 to nearly 1,000 employees in a decade.

Flushed with its success, the company went public in 1969 and became the darling of the Toronto Stock Exchange. Shares skyrocketed at a pace similar to today’s high-tech portfolios, from $2 to $22 in six months. A financier called Andrew Sarlos, who was also an employee, persuaded the company to acquire control of two financial companies, Traders Finance and Guaranty Trust. Sigvaldason believes this vision of marrying technology and finance “was a brilliant concept and served as a forerunner for several other consulting companies who pursued similar strategies a few years later.”

Acres’ excursion onto the trading floors lasted only a few years. in 1975 a group of employees again took back control and the firm has remained employee-owned ever since. It is now counted among Canada’s largest 20 consulting engineering firms.

The firm has worked in 111 different countries, doing airports, urban infrastructure, mining and heavy industry projects. It is mostly known for its work in hydro-electric power generation. It is, for example, doing ongoing work on the Karun River in Iran, where the firm has been active since 1977 (its office in Tehran stayed open even during the revolution). The firm is also involved in the $2 billion first phase of a water transfer project in the Lesotho Highlands in southern Africa, as well as in restoring war-damaged dams in Bosnia and Herzegovina, and in the 300-MW Ham Thuan hydropower project in Vietnam. In Canada, one of the largest hydroelectric projects the firm has been involved with is in reviewing the systems along the entire Churchill River in Labrador.

For a company that has staked so much on hydroelectric mega-projects, the future is bound to bring changes. These types of project are falling out of favour because of their social and environmental costs, which are often inevitable when water is diverted at such scale. Sigvaldason agrees that “the demand for those big hydro projects has dropped off very considerably over the last 10 years.” But, he adds, “We just adapt to the market as it is evolving.”

Building engineering skills in the rapidly expanding field of gas thermal power generation, for example, is one strategy the firm has adopted to look after its future. Another major thrust, Sigvaldason explains, is to develop a role in providing consulting services for existing infrastructure, as distinct from Acres’ traditional role of engineering for the construction of infrastructure. To this end, it has started two new companies: Acres Productive Technologies provides “a whole raft” of facilities management services, from capital budgeting, to safety management. Acres Management Consulting is devoted to helping public and private clients involved in privatizing infrastructure.

The firm’s plan is to grow by 15% per year, both by internal expansions and by mergers and acquisitions. “We recognized a while ago that a consulting firm either has to have a certain scale, or be in a niche,” Sigvaldason says. Asked if he thinks the acquisitions will be by Acres of other firms, rather than the other way round, he answers, “Correct.”

Currently 60 per cent of Acres’ revenue comes from power generation, but it plans to even out the spread of business by expanding its mining/heavy industrial and urban infrastructure divisions. Any diversification will be within the fields the firm already works in, rather than beyond. “It’s important not to dabble,” Sigvaldason says. CCE