Stone & Webster
|Founded||1889 (Boston, Massachusetts)|
|Headquarters||Stoughton, Massachusetts, U.S|
Stone & Webster was an American engineering services company based in Stoughton, Massachusetts. Stone & Webster was founded as an electrical testing lab and consulting firm by electrical engineers Charles Stone and Edwin Webster in 1889. It was acquired and integrated as a division of The Shaw Group in 2000, then by Technip in 2012. The company provides engineering, construction, environmental services, and plant operation and maintenance. The company has long been involved in power generation projects and has worked on most American nuclear power plants. In the early 20th century, Stone & Webster was also known for operating streetcar systems in many cities across the United States; examples include Dallas, Houston and Seattle.
Charles A. Stone and Edwin S. Webster first met in 1884 and became close friends while studying electrical engineering at the Massachusetts Institute of Technology. In 1890, only two years after graduating, they formed the Massachusetts Electrical Engineering Company. The name was changed to Stone & Webster in 1893. Their company was one of the earliest electrical engineering consulting firms in the United States.
Stone & Webster's first major project was the construction of a hydroelectric plant for the New England paper company in 1890. Stone & Webster not only had valuable insight into developing and managing utilities but they also had keen intuition for businesses to invest in. Through the panic of 1893, Stone & Webster were able to acquire the Nashville Electric Light and Power Co. for a few thousand dollars and later sold it for $500,000.
Throughout the next ten years, Stone & Webster acquired interest in large number of utilities while offering managerial, engineering and financial consulting to a number of independent utility firms. Even though Stone & Webster were not a holding company, their financial and managerial presence meant that they had considerable influence in policy decisions. They would often be paid in utility stock.
By 1912, the company divided itself into three specialized subsidiaries:
- Stone & Webster Engineering
- Stone & Webster Management Association
- Stone & Webster Investments
In 1927, Stone & Webster expanded the investments business, merging its securities subsidiaries with the investment banking firm of Blodgett & Co. founded in 1886, to form Stone & Webster and Blodgett Inc. In January, 1946, the name of the business, was changed to Stone and Webster Securities Corporation. Stone and Webster Securities was one of the 17 U.S. investment banking and securities firms named in the United States Department of Justice's antitrust investigation of Wall Street commonly known as the Investment Bankers Case.
Stone & Webster, Inc., has since offered its customers in the United States and the world engineering, design, construction, consulting, and environmental services to build electric power plants, petrochemical plants and refineries, factories, infrastructure, and civil works projects. Stone & Webster helped build substantial portions of the nation's power production infrastructure, including coal, oil, natural gas, nuclear, and hydroelectric plants constituting around 20 percent of U.S. generating capacity. The company played a significant role in the nation's defense efforts during World War I and II and afterwards, helping develop the A-Bomb, constructing large shipyards, and creating alternate means of production of strategic materials such as synthetic rubber. Much of the world's capacity in petrochemical and plastics development was also developed as a result of Stone & Webster efforts.
By 1908, Stone & Webster listed thirty-one railway and lighting companies under its management including five located in Washington. They were:
- Puget Sound Electric Railway
- Puget Sound International Railway and Power Co.
- Puget Sound Power Co.
- The Seattle Electric Co.
- Whatcom County Railway and Light Co.
Stone & Webster was sensitive to the concerns of large utility holding companies and were careful to emphasize the complete independence of these utilities. In 1916, J.D. Ross, superintendent of Seattle City Light issued a critical report pertaining to Stone & Websters presence in Seattle and effectively showed that there were 49 companies under Stone & Webster's management.
Stone & Webster was also involved in Puget Sound area street railways. In 1900, they had controlled and merged eight small rail lines in Seattle. Soon after, they also took over the street railway systems of Tacoma and Everett.
Due to the promise of Washington's natural resources for hydroelectric power and seemingly limitless development opportunities brought companies like Stone & Webster. Edwin Webster believed that outside capital was crucial to develop the resources of Washington, and chided those who thought otherwise. In 1905, Stone & Webster bought out the power and lighting properties that were once owned by the Bellingham Bay Improvement Co. These included the York Street Steam plant and the partially built Nooksack Falls Hydroelectric Power Plant. Stone & Webster took over construction operations and on September 21, 1906, Bellingham received power from the plant via a 47 mile long transmission line.
1940s to present
America's entry into World War II brought a dramatic increase in demand for all types of engineering and construction, and Stone & Webster became intensely involved in the war effort. According to former Stone & Webster president Allen, "Few elements of war production were not impacted in a significant way by Stone & Webster." Typical Stone & Webster wartime assignments included the design and construction of cartridge case plants, a complete steel foundry, a plant to produce bombsights and other equipment, a plant furnishing fire-control instruments, a facility producing aircraft superchargers, and three TNT-production plants, in addition to meeting demands for infrastructure and power facilities. The company was also called upon to engage in more creative projects.
Perhaps the most creative Stone & Webster wartime effort was its involvement in the Manhattan Project, which devised the atomic bomb. Beginning in early 1942, company efforts resulted in the establishment of a completely separate engineering organization employing 800 engineers and draftsmen in order to examine ways to obtain large quantities of fissionable uranium-235. Stone & Webster also built an electromagnetic separation plant and constructed a city in Oak Ridge, Tennessee, that ultimately housed 75,000 workers.
Postwar growth and the nuclear power industry
Immediately after the end of the war, demand for Stone & Webster services rose rapidly among U.S. public utilities. Under the leadership of Texan George Clifford, the company began to build interstate gas pipelines and compressor stations and also became the largest single stockholder in the Tennessee Gas Transmission Company (Tenneco).
The company was also retained on tasks that helped shift the nation's economy from a defense to a civilian basis, such as estimating the costs of deactivation and stand-by maintenance of defense plants and shipyards, providing technical advice and services on Japanese reparations, evaluating the mobile equipment that remained in overseas theaters, and continuing work at Oak Ridge.
1950s and 1960s
Stone & Webster was perhaps the most significant engineering company to be involved in the nation's developing nuclear power industry. Chosen after a competition with 90 other companies to build the nation's first nuclear power plant in Shippingport, Pennsylvania, Stone & Webster was subsequently selected to design and supervise the construction of a large accelerator at the Brookhaven National Laboratory, design the neutron shield tank for the nuclear-powered merchant ship N.S. Savannah, and engineer and construct a prototype atomic energy power plant for the U.S. Army.
The steady demand for electric power generation also meant an increase in construction contracts for more conventional power plants. By the early 1950s, Stone & Webster had built 27 separate hydroelectric plants constituting 5 percent of U.S. capacity, steam power plants aggregating six million kilowatts in capacity, and some 6,000 miles of power transmission lines. During this time, the company also obtained a variety of chemical process contracts in the United States, Canada, Japan and other countries to meet the worldwide demand for plastics.
As the 1960s drew on, however, Stone & Webster's petrochemical and plastics activity began to slow as U.S. refinery capacity caught up with customer demand and declined accordingly. To smooth the impact of these fluctuations, the company diversified its process interests, developing, for example, a more extensive relationship with the paper industry. During the decade, the company designed the first commercial mill to make pulp from hardwood trees. Slowing business activity also resulted in some conceptual restructuring within the company, including an effort to standardize designs in areas of proven success and placing a greater emphasis on the use of project work teams that combined staff with differing specialized skills. The increased emphasis on teaming fit well with Stone & Webster's need to address problems that developed in the energy supply sector in the mid- to late 1960s and was used in the design of synthetic natural gas plants, a liquified natural gas distribution center, and demonstration projects in coal and oil gasification.
During the 1970s, major world events—including the OPEC (Organization of Petroleum Exporting Countries) oil embargoes of 1973 and 1979, uncertainty in the chemical process industry with respect to feedstock supplies, increasing opposition to the use of nuclear power, and a growing public awareness of environmental issues—brought difficulties as well as new business opportunities for Stone & Webster.
The high prices that followed the embargoes, for example, constrained energy demand and thus reduced the need for new electric generating capacity. Utilities looked into every possible alternative to meet demand, short of constructing major new baseload stations, resulting in "one of the severest drop-offs in building in the history of the engineering-construction industry," according to former Stone & Webster president William Allen in Public Utilities Fortnightly (July 20, 1989). An equally severe, simultaneous downturn in international construction compounded the problem.
The investment banking affiliate, Stone & Webster Securities, had attempted to grow by acquiring two smaller, regional brokerage houses in 1968: Hayden, Miller & Co., based in Cleveland, and Atlanta-based Wyatt, Neal & Waggoner. That increased the number of offices of the firm from nine to 28, but cultural and style differences between the parent company's traditional engineering management and retail brokerage management led to an exodus of key employees, and the Securities firm closed its doors in 1974.
Challenges in the 1970s-1980s
Stone & Webster's difficulties with constructing conventional power plants were matched by its problems in nuclear construction. By the late 1970s, the company had attained a central role in the nuclear power industry—a significant portion of all nuclear energy in the United States was being generated at plants designed and generated by Stone & Webster. In 1975, the company had been selected to construct the Clinch River Breeder Reactor. However, increasing public opposition to the construction of nuclear plants, lengthy delays brought by challenges before public utility commissions, and corresponding increases in plant construction costs, capped by the incident at Three Mile Island in 1979, brought about a moratorium on the construction of large nuclear plants and the cancellation of many existing orders.
The company began to respond to these challenges during the remainder of the 1970s and into the early 1980s. Stone & Webster met its clients' reluctance to build by improving engineering and construction efficiencies through the use of computer-assisted design and innovative working agreements with contractors and the building trades unions, as well as by providing services that kept plants operating safely, efficiently, and for a longer time than originally intended. To further survive in this complex business environment, Stone & Webster began to more intensely solicit government and international business, increase its activity in the area of environmental protection and alternative energy production, continue its activity in extending the lives of existing power plants, and develop other areas of diversification as long as they did not distract from the company's core business—engineering. Stone & Webster also began to phase out those parts of the company that were unrelated to its core activities and no longer considered financially viable, such as its securities subsidiary.
In the 1990s, Stone & Webster faced a business environment in which its core activities of power plant and petrochemical plant construction were lagging, and new areas targeted for growth had not yet fulfilled their potential. As a result, company stock performance was sluggish, and in 1992 a stockholder group headed by corporate gadfly Bob Monks attacked Stone & Webster management, asserting that the company had not exploited its assets to keep its stock price high and inquiring as to growth plans the company intended to institute in order to raise stock value.
In 1994, the company registered a net loss of $7.8 million despite revenues of over $818 million. Recognizing that a need existed to improve its financial picture, Stone & Webster opted for a further change in its traditional marketing strategy. The company centered its hopes for future growth on a broader expansion of its core businesses into global markets, a cutback in its dependence on power generation, and the expansion of its environmental and transportation efforts.
Stone & Webster's infrastructure and transportation activities during this time included the engineering and design of railway and other large transit systems, including part of the Washington, D.C. metro; major airport improvements in Denver and Miami; bridge construction, such as the eight mile-long bridge linking Prince Edward Island to the Canadian mainland; and roadway upgrading, including work on the New Jersey Turnpike. Moreover, the company's advanced computer applications efforts included the use of three-dimensional models; expert systems which monitored, diagnosed, and recommended solutions in areas from equipment vibration to chemical plant processing; and advanced controls that continuously monitored all plant operations.
Changes in leadership in the 1990s
Despite its challenges, Stone & Webster appeared to retain considerable strengths on which to draw. Once the impact of strategies responsive to the business environment of the 1990s had been put in place, company officials and outside observers seemed reasonably optimistic about the company's prospects as it moved on into its second century.
There was little sign that anything was wrong at the company in the late 1990s. Stone & Webster announced it was selling some buildings in Boston in 1997 but claimed that this was only because the company had an excess of real estate. Stone & Webster also moved its corporate headquarters out of New York City and back to Boston, and sold or subleased office space in New York and New Jersey. Whatever was actually the case in 1997, by 1999 Stone & Webster had serious cash flow problems. Company executives later charged that chairman Smith had consistently underbid on projects in order to win business, putting Stone & Webster on shaky ground.
The company collapsed in 2000 after a major bribery scandal. It had attempted to pay $147 million to a relative of Indonesian President Suharto to secure the largest contract in Stone & Webster's history. But the plan went bad, and the company fell along with it.
Subsequently, Stone & Webster filed for Chapter 11 bankruptcy protection in 2000 because of cash flow problems. It was bought at auction by the Shaw Group for US$150 million. The Shaw Energy and Chemicals division integrated Stone & Webster branded technology. Shaw's E&C division attempted to compete with other more successful engineering contractors such as Bechtel, Foster Wheeler, Jacobs and Technip. Since the Shaw buyout, the Power group performed record business in engineering and construction of coal-fired power plants and power plant environmental control retrofits including FGD and SCR technology. Due to Shaw's alliance with Westinghouse, Stone & Webster technologies and engineering were again very active in the developing nuclear power industry.
In 2002, it won a contract for managing a construction project for gas works for the Abu Dhabi Marine Operating Co. in the United Arab Emirates. It secured work on a power project in the United States and began other projects in the Middle East, Turkey, and China in the early 2000s. The company finally emerged from bankruptcy in late 2003. Under the Shaw Group, Stone & Webster was part of a global leader with revenue of over $3.3 billion. The Stone & Webster subsidiary retained 5,000 employees, working on construction and engineering projects, hazardous waste management, and environmental services across the world.
In 2008, ENR ranked Stone & Webster as a Shaw Group subsidiary as ranked first in revenue for Power EPC, and fifth by Revenue in Process & Petrochemical EPC.
Technip announced on August 31, 2012, the completion of the acquisition of Stone & Webster process technologies and associated oil and gas engineering capabilities, as a new business unit of Technip. This transaction was originally announced on May 21, 2012. It allowed Technip to :
- Enhance its position as a technology provider to the refining and petrochemicals industries.
- Further diversify its onshore/offshore segment, adding revenues based on technology supply.
- Expand in promising growth areas such as the U.S., where downstream markets will benefit from the supply of unconventional gas.
- Add skilled resources, notably in U.S.-based research, and engineering in the U.S., the U.K. and India.
Technip paid cash consideration of about €225 million from existing cash resources, which was subject to customary price adjustments.
- "Nooksack Falls Hydroelectric Plant; HAER WA-18". Historic American Buildings Survey/Historic American Engineering Record. Library Of Congress. p. 7.
- "Nooksack Falls Hydroelectric Plant; HAER WA-18". Historic American Buildings Survey/Historic American Engineering Record. Library Of Congress. p. 8.
- United States of America, Plaintiff, Against Henry S. Morgan, Harold Stanley, Et Al., Doing Business as Morgan Stanley & Co., Et Al., Defendants
- "Nooksack Falls Hydroelectric Plant; HAER WA-18". Historic American Buildings Survey/Historic American Engineering Record. Library Of Congress. p. 9.
- p. 288 "Stone & Webster 1889-1989" Keller, David Neal ISBN 0-9623677-0-2 1989.
- Steve Bailey (March 15, 2006). "'The Bribe Memo' and collapse of Stone & Webster". Boston Globe; Business.
- "COMPANY NEWS; STONE & WEBSTER TO SELL ASSETS AND FILE FOR CHAPTER 11". The New York Times. May 10, 2000.
- "BIDDING FOR STONE & WEBSTER". The New York Times. July 8, 2000.
- Emily Pickrell (May 22, 2012). "Technip to pick up Shaw technologies". Houston Chronicle.
- Emily Pickrell (August 31, 2012). "Technip completes acquisition of Stone & Webster". technip.com.
- Stone and Webster papers at University of Texas El Paso regarding the El Paso Trolley system.
- Stone & Webster Inc. — Company History at FundingUniverse.com
- Stone & Webster, Inc - Stoughton, Massachusetts (MA) – Company Profile at Manta