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OHL USA Inc. Glimmers After Move Into Sunshine State

Fri October 24, 2008 - Southeast Edition
Jeff Brooks

Florida motorists, especially those living near the coast, know the toll the elements take on the roadway system. Hurricanes, erosion, salt from the ocean and ordinary wear-and-tear keep contractors and the Florida Department of Transportation (FDOT) hustling to keep the roads drivable.

Because of the work being done by OHL USA Inc., a subsidiary of Madrid, Spain-based OHL, drivers headed to the Florida Keys soon will have a much smoother ride.

Community Asphalt Corp. of Hialeah, Fla., which was acquired by OHL in 2006, was awarded a $110.8 million contract to rebuild U.S. 1 in the Keys. FDOT accepted Community’s unsolicited bid in March 2007.

Construction began in 2008 and is scheduled to be complete by 2010, four years ahead of FDOT’s schedule. The project will be completed through a financing structure in which the contractor obtains the money to complete the project from an outside source, avoiding the traditional pay-as-you-go process for these types of construction projects.

“The innovative financing structure is in the form of an up-front loan from Spanish bank Caja Madrid, a bank with a presence in Miami since 2002. An unsolicited proposal is one in which the interested party can offer to construct projects that are within the budget of the local department of transportation — in this case FDOT — in a five year period from the date of the proposal, offering construction and financing up-front, allowing for jobs to be completed more quickly and efficiently,” said Ignacio Halley, Community’s executive vice president.

“So FDOT gets a good price and we can demonstrate our strong experience in design-build-finance projects.”

Founded in 1980, Community is an asphalt paving and general road construction contractor. The company works on projects from Titusville to Key West, focusing on all aspects of highway construction development, primarily for state and local authorities.

“Community Asphalt is a civil works company,” said Lauro Bravar, CEO of OHL USA. “We own three asphalt paving plants in Vero Beach, West Palm Beach and Hialeah. From those three locations, we deliver services of paving and associated construction jobs throughout South Florida.”

OHL, which operates in 18 countries and has more than 13,000 employees, entered the U.S. market in 2006 when it purchased Community and The Tower Group, a Davie, Fla.-based company that specializes in vertical construction.

“This market is different from many others,” Bravar said. “We had to understand how the market works. Actually, this is a process that went on before the acquisition and we ended up concluding we were better off with the support of local managers. This is why we finally decided to complete the acquisition. We have the support of managers who have long experience working in Florida and we are developing the strategy for the market.”

Though it has only been in Florida for two years, OHL USA is already having an impact, not only with the U.S. 1 project, which Bravar said is Community’s largest road job. The Tower Group is in the center of West Palm Beach’s downtown revival with the City Palms project, a 10-story residential housing project featuring 288 condominium units.

The $77 million structure is the first joint venture of Tower and Miami-based H&H Development Co.

City Palm’s pre-construction phase alone was a four month process, including the demolition of eight onsite buildings and the temporary provision of power and other utilities to several neighbors, including the Arthritis Foundation.

And in March, Community landed a $196.3 million design-build-finance project that includes improvement and expansion of a section of existing four-lane Interstate 95 to a six-lane highway from the south of SR 514 to the south of SR 519 Fiske Boulevard and the construction of a new interchange at the Pineda Causeway Extension.

Project work includes new pavement, drainage system improvements, bridge widening, bridge replacements, noise and retainer wall construction, ITS modifications, median barriers, signing and pavement markings, milling and resurfacing, and lighting. Roadway work encompasses new asphalt pavement and milling and resurfacing of the existing pavement as well as acceleration and deceleration lanes that meet FDOT requirements at all ramps.

“We look forward to applying the ample experience Community Asphalt Corp. has acquired to date in the area where the project is to take place and handle all the involved processes,” Bravar said.

Bravar said Community owns most of its equipment, which includes pavers, rollers, dozers, trucks, all the standard paving fleet. Tower operates primarily through subcontractors and doesn’t own any equipment. OHL USA employs approximately 1,000 people in Florida.

“Our work on U.S. 1 down to the Keys is one of the nicest projects we’ve had,” Bravar said, “also because of the financing component, which was quite novel for Florida.”

Bravar said the U.S. 1 project offers “all sorts of challenges,” including environmental and safety issues.

“Safety is an issue because of the traffic that goes on,” Bravar said. “There’s heavy traffic and little space to work. We’ve got to do it safely.”

In the last two years, Bravar said the firm has been staying busy, even in a slow economy.

“We stay very busy, but it’s true that the slowdown has impacted Tower,” Bravar said. “We’ve seen a tremendous slowdown in our private customers who can’t find financing for condos or developments, therefore that segment has gone down. In the case of Community, we have seen no slowdown. The public authorities actually are trying to push the projects and accelerate them to compensate for the private sector.”

Prior to becoming OHL’s top executive in the U.S. and Canada, Bravar was business development director of the international division of OHL. Bravar searched for strategic opportunities for the company in areas and markets where OHL lacked presence and successfully helped increase by tenfold the international activity of OHL in less than seven years.

Before joining OHL, Bravar worked in a similar position for several years for another large Spanish construction firm, Ferrovial. He also managed the international division of Eptisa, an engineering firm, with activities in Latin America, Eastern Europe and Africa.

“I’ve been working in construction for 17 years,” Bravar said. “I’ve seen lots of changes. I have gone through all sorts of [market situations]. The market is different here. Working in Spain, when they joined the European Union, there was a tremendous boom in construction activity. Here, it’s different in the sense [that] you still have a need for developing infrastructure, however you have a country which already has a very well-developed network of highways, bridges, airports.

“There’s a need for new development, but a tremendous need for maintenance and improvement of old facilities. I think it brings even a very rich and prosperous country such as the USA to consider new and different forms of financing infrastructure.”

Currently, OHL USA is looking at ways to grow in America.

“Something’s coming,” Bravar said. “We are working hard to expand our business here. We find ourselves very comfortable working in the U.S. We are very happy with the way things are going. We do plan to expand, hopefully in the near future. We are going to do this through organic growth in the company, which we are already doing. It’s quite good for us to be here right now. The future is bright.”

Part of that future includes the $350 million Orange Line Connector project in Miami.

“Both companies — Community and Tower — are going to be involved in constructing an elevated train going to the airport and construction of stations as well,” Bravar said. “We have a great job in front of us. We’re doing it the best we can and we’re very satisfied with it.” CEG

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