Annual Report 2008 - Skanska

The United States
The American construction market is the world’s largest
and Skanska is one of the leading companies in nonresidential
building construction and civil construction in
this market.
Strong market for water and wastewater treatment plants
Civil construction, which is mainly tax-financed, was
affected to an increasing degree by declining tax revenue.
To some extent, state and local government bodies are trying
to offset this by raising fees, for example on shippers,
and by introducing new or higher road tolls.
During 2008 the market for expansion water and wastewater
treatment facilities was strong. Because of both
demographic trends and environmental standards, waterrelated
projects will probably remain in great demand
during the coming years. Skanska has the know-how and
experience to implement new projects in this field.
Due to financial market turmoil, there is increasing
interest in public-private partnership (PPP) solutions.
Meanwhile this sector has naturally been adversely affected
by the difficulty of obtaining financing. There are
numerous possible projects, but only a few states already
have the legal structure required to enable privately financed
infrastructure to go forward.
Major new civil contracts awarded to Skanska during
2008 included water treatment projects in Westchester
County, New York, and Miami, Florida as well as a third
contract for Newtown Creek in Brooklyn, New York. Others
were two highway contracts in California and a bridge
project over the Indian River in Delaware.
Gas pipeline in Amazonas
In 2009, gas will begin flowing to Manaus and other cities
in Amazonas, northern Brazil. Skanska has built a 180 km
(112 mi.) long stretch of the new gas pipeline between the
Urucu gas field and Manaus. To minimize its impact on the
sensitive environment and protect plant and animal life,
Skanska took extra precautions during construction.
The project was also inspected and monitored very closely
by both national and state environmental agencies.
Skanska USA Civil competes with a few large national players,
among them Kiewit, Fluor, Bechtel and Granite, as well
as with numerous players in local geographic markets.
Hospitals, schools and office buildings
As for building construction, during the first half of 2008
activity was intensive in product segments important to
Skanska USA Building − hospitals, educational facilities
and office buildings − while the second half was characterized
by a slowdown.
The business unit received large hospital contracts
in California, Ohio, Michigan, Tennessee, Virginia and
Washington State.
Skanska’s concept for energy-efficient data centers
resulted in a green construction assignment for one of
the largest companies in Internet trading.
At the national level, Skanska USA Building competes
mainly with companies like Turner (a subsidiary of
Germany’s Hochtief) and Bovis Lend Lease, as well as
with numerous local players in their respective geographic
markets.
Upgrading of infrastructure
Developments during 2009 will depend greatly on whether
the credit market will start functioning again, so that private
customers can obtain loans for their projects. This is
crucial if new building construction projects are to start up.
The new U.S. president and Congress will allocate federal
funds for expansion and upgrading of infrastructure. Projects
which have been on hold due to a lack of financing
may get off the ground, and necessary upgrades of roads,
bridges, railroads and other infrastructure may be accelerated.
Among major projects that are ready for a quick startup
are new phases of the Second Avenue Subway project
in New York City, which Skanska is currently involved in
building, as well as the extension of the No. 7 Subway Line.
Construction of a third tunnel under the Hudson River can
also begin once financing is resolved.
Latin America – Brazil the biggest market
Skanska’s Latin American operations are dominated by
assignments in oil, gas and other energy sectors. The market
was strong during 2008, and Skanska Latin America
reported its highest sales to date. The business unit
achieved its “Outperform” targets for the year.
Brazil is now the biggest single market at Skanska
Latin America. One of Skanska’s most important customers
there is the state-owned energy company Petrobras.
The company’s assignments mainly concern expansions
of refineries in order to boost their efficiency and capacity
as well as improve their environmental performance. Even
though competition for construction contracts is expected
to increase in Brazil, Skanska will be able to benefit from
having been selected as a supplier to the governmentowned
energy company Petrobras.
One attractive segment is the initial construction of
facilities for alternative energy production. In Chile, for
example, Skanska has signed new contracts to build wind
farms.
The Latin American economies have been affected by
financial market turmoil, which is also expected to persist
during 2009, but Skanska’s business related to operating
and maintaining oil and gas production facilities is expected
to remain strong. In a longer perspective, however,
low world market prices for oil may decelerate the rate of
development of new oilfields and related facilities
in Latin America.
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