Friday, 3 June 2011
CASE 304 - KBR (Kellogg, Brand, and Root)
KBR, Inc. (formerly Kellogg Brown & Root) NYSE: KBR is an American engineering, construction and private military contracting company, formerly a subsidiary of Halliburton, headquartered in Houston. The company also has large offices in Arlington, Birmingham and Leatherhead, UK. After Halliburton acquired Dresser Industries in 1998, Dresser's engineering subsidiary, The M. W. Kellogg Co., was merged with Halliburton's construction subsidiary, Brown & Root, to form Kellogg Brown & Root. KBR and its predecessors have won many contracts with the U.S. military, including during World War II, Vietnam War and Operation Iraqi Freedom.
KBR is the largest non-union construction company in the United States. The company's corporate offices are in the KBR Tower in Downtown Houston
KBR Tower, the headquarters of KBR and a part of Cullen Center, with the Downtown Houston YMCA ahead
500 Jefferson, also a part of Cullen Center, has additional KBR offices
KBR offices on Clinton Drive, within the boundaries of the East End and the Fifth Ward. It is the former headquarters of Brown & Root. As of December 2010 KBR no longer operates this office
In 1901, Morris Kellogg founded The M. W. Kellogg Company in New York City. The company was incorporated in 1905 and its headquarters was moved to Jersey City, New Jersey. Initially Kellogg’s main business was power plant construction and fabrication of power plant components, but the development of hammer forge welding techniques helped ready the company to move into refining as the petroleum industry developed. Kellogg was announced the number one construction company for years 1993 to 1995. This is mainly due to their work in the Dulles Greenway.
Kellogg’s entry into process engineering initially focused on the Fleming cracking process, but in the 1920s Kellogg partnered with The Texas Company (Texaco) and Standard Oil of Indiana to purchase the Cross thermal cracking process. Kellogg set up one of the first petroleum laboratories in the country in 1926 to commercialize and then license the technology. This led to Kellogg building some 130 units in the U.S. and abroad.
In the 1930s and '40s Kellogg worked with leading refiners on various technologies. For the war effort, these developments led to the construction of six hydroreformer units twenty fluid catalytic cracking units and the only complete refinery built during World War II. Even bigger than the refining work was K-25, the gaseous diffusion plant at Oak Ridge, Tennessee built as part of the Manhattan Project. This period also included the development of the Benedict-Webb-Rubin (BWR) equation of state which has since become an industry mainstay and provided the basis for Kellogg’s lead in cryogenics.
The 1950s Kellogg technology expanded into steam pyrolysis, Orthoflow fluid catalytic cracking, phenol-from-cumene and coal-to-synthetic fuels technologies and the '60s saw the growth in helium recovery, ethylene and the development of Kellogg’s ammonia process.
In 1970 Kellogg moved from New York City to Houston, Texas and in 1975, they completed the move by relocating the research and development lab as well. The '70s saw Kellogg become the first American contractor to receive contracts from the People’s Republic of China. Kellogg’s international work expanded with the major ammonia complexes in China, Indonesia and Mexico as well as LNG liquefaction plant in Algeria and 2 receiving terminals in the U.S., the world’s largest LPG plant in Kuwait and four fluid catalytic cracking units in Mexico. The '80s saw continuation of global activity in LNG and ethylene with millisecond furnaces starting up in the U.S.
Brown & Root
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Brown & Root was founded in Texas in 1919 by two brothers, George R. Brown and Herman Brown, with money provided by their brother-in-law, Daniel Root. The company began its operations by building roads in Texas.
One of its first large-scale projects, according to the book Cadillac Desert, was building a dam on the Texas Colorado River near Austin during the Depression years. For assistance in federal payments, the company turned to the local Congressman, Lyndon B. Johnson. Brown & Root was the principal source of campaign funds after Johnson's initial run for Congress in 1937, in return for persuading the Bureau of Reclamation to change its rules against paying for a dam on land the federal government did not own, a decision that had to go all the way to President Franklin Delano Roosevelt, according to Robert A. Caro's book The Path to Power. After other very profitable construction projects for the federal government, Brown & Root gave massive sums of cash for Johnson's first run for the U.S. Senate in 1941. Brown and Root reportedly violated IRS rules over campaign contributions, largely in charging off its donations as deductible company expenses, according to Caro. A subsequent IRS investigation threatened to bring criminal charges of illegal campaign donations against Brown & Root, as well as Johnson and others. Roosevelt himself told the IRS to back off and allowed Brown and Root to settle for pennies on the dollar.
During World War II, Brown & Root built the Naval Air Station Corpus Christi and its subsidiary Brown Shipbuilding produced a series of warships for the U.S. Government.
In 1947, Brown & Root built one of the world's first offshore oil platforms.
According to Tracy Kidder's Pulitzer Prize-winning book Mountains Beyond Mountains, Brown & Root was a contractor in the Péligre Dam project. The project was designed by the U.S. Army Corps of Engineers and financed by the Export-Import Bank of the United States.
Following the death of Herman Brown, Halliburton Energy Services acquired Brown & Root in December 1962. According to Dan Briody, who wrote a book on the subject, the company became part of a consortium of four companies that built about 85 percent of the infrastructure needed by the Navy during the Vietnam War. At the height of the anti-war movement of the 1960s, Brown & Root was derided as "Burn & Loot" by protesters.
In 1989, Halliburton acquired another major engineering and construction contractor, C. F. Braun & Co., of Alhambra California, and merged it into Brown & Root.
From 1995-2002, Halliburton KBR was awarded at least $2.5 billion to construct and run military bases, some in secret locations, as part of the Army's Logistics Civil Augmentation Program (LOGCAP).
The extent of their services included a vast array of logistical operations historically under the jurisdiction of the military. Such operations included laundry services, meal services (dining halls), entertainment (Internet and cable access), and recreation (basketball courts and gym equipment).
In September 2005, under a competitive bid contract it won in July 2005 to provide debris removal and other emergency work associated with natural disasters, KBR started assessment of the cleanup and reconstruction of Gulf Coast Marine and Navy facilities damaged in the aftermath of Hurricane Katrina. The facilities include: Naval Station Pascagoula, Naval Station Gulfport, the John C. Stennis Space Center in Mississippi, two smaller U.S. Navy facilities in New Orleans, Louisiana and others in the Gulf Coast region. KBR has had similar contracts for more than 15 years.
Formation of KBR, Inc.
Halliburton announced on April 5, 2007, that it had finally broken ties with KBR, which has been its contracting, engineering and construction unit as a part of the company for 44 years. The move was prefaced by a statement registered with the United States Securities and Exchange Commission on April 15, 2006, stating that Halliburton planned to sell up to 20 percent of its KBR stock on the New York Stock Exchange (NYSE). On November 16, 2006, KBR shares were offered for the public in an Initial Public Offering with shares priced at $17. The shares closed up more than 22 percent to $20.75 a share on the first trading day.
On May 7, 2008, the company announced that it would acquire Birmingham, Alabama-based engineering and construction firm BE&K for $550 million. BE&K plans to remain headquartered in Birmingham.