Arcadis NV

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Arcadis NV

Utrechtseweg 68
P.O. Box 33
6800 LE Arnhem
The Netherlands
(31) 26 3778911
Fax:(31) 26 3515235
Web site: http://www.arcadis.nl

Public Company
Incorporated: 1888 as Nederlandsche Heidemaatschappij [Heidemij]
Employees: 6,471
Sales: NLG 1.27 billion (US$647.9 million) (1997)
Stock Exchanges: Amsterdam NASDAQ
Ticker Symbol: ARCAF
SICs: 8711 Engineering Services

Arcadis NV is an internationally operating engineering consulting and project firm with an emphasis on environmental and infrastructure fields. Known as Heidemij (pronounced as “hy-de-my”) before changing to the more pronounceable Arcadis in 1998, this Netherlands-based company is one of the largest engineering consultants, with some 7,000 employees and projects in more than 100 countries. Arcadis’s chief areas of competence include waste management; soil, groundwater; air quality, and geo-technical information services; infrastructure activities, including public utilities development and implementation; urban and rural development projects, and real estate consulting.

While the Netherlands represents a large percentage of the company’s annual sales—as much as 47 percent in the late 1990s—the United States, through U.S. subsidiary Geraghty & Miller, represents an increasing proportion of annual revenues, at 24 percent of the company’s sales. The rest of Europe, particularly Germany, France, Belgium, and Spain, add 22 percent of company sales. The company has also been building its presence in the Asian and South American markets, which combined to form just seven percent of total sales in 1997. The nature of Arcadis’s market focus means that the company’s principal clients typically are local, regional, and national governments. In the 1990s, however, Arcadis has been looking more and more to the private market for expanding its client base.

In the five years between 1992 and 1997, Arcadis more than tripled its sales, reaching NLG 1.27 billion (US$647.9 million) in 1998, for a net profit of NLG 43.2 million (US$22.4 million). A chief source of revenue growth has been the company’s steady acquisition drive, including the August 1998 acquisition of Mainz, Germany-based Grebner GmbH. That acquisition gives Arcadis a position as one of the top five engineering consulting firms in Germany.

Nonprofit in the 1880s

Dutch farmers of the second half of the 19th century were hit by a grain crisis, as cheaper imports from the Americas and Russia cut the price of wheat by half. Unable to support themselves, farmers were abandoning the farmlands for the urban centers. Although the crisis would later prove beneficial—many farmers began searching for more profitable crops, turning to potatoes, sugar beets, or to dairy products, and in this way expanded the country’s production—its immediate impact raised concern among the country’s notables. The Markenwet of 1886, which liberalized public lands for private ownership, inspired the formation of a new association, the Nederlandsche Heidenmaatschappij, later known as Heidemij. The “heide” referred to the Netherlands’ vast tracts of undeveloped marshland, particularly in the country’s eastern provinces. Heidemij, formed on January 5, 1888, was to be a nonprofit organization with a dual purpose: to reclaim and promote the development of the Dutch soil and to provide work opportunities as a means to prevent the depopulation of the provinces.

Heidemij’s initial activity revolved chiefly around the giving of advice and instruction for the reclaiming of marshlands, the reforesting of fields, irrigation, and other agricultural activities. Through Heidemij, the Dutch farmer was encouraged to seek out and adopt technological advantages that would enable increasing yields at lower cost. Before long, Heidemij also became involved in building and maintaining the country’s all-important system of dikes as well as in the burgeoning fisheries market. By the turn of the century, Heidemij had transformed itself from a consulting association to an organization committed to all phases of various projects, including the sale of supplies, tools, and other equipment. The association had grown from a benevolent association of notables to a quasi-governmental organization with a near-monopolistic grip on its market.

This market continued to expand in the early years of the 20th century, as Heidemij added to its areas of competence, moving into road design and construction, fruit production, and the digging and maintenance of the Dutch canal system. The association also was active in education, operating schools and courses in its specialized areas. In the 1920s Heidemij became involved in one of its more important roles, that of overseeing much of the country’s ruilverkaveling (roughly, “exchanging parcels”)—in a country known for conquering the ocean, it was perhaps inevitable that the Dutch would next turn to reconquering the land. Ruilverkaveling involved redividing land to make it productive, while also improving its connection to the country’s canal system. Although its origins were primarily agrarian, the concept of ruilverkaveling later would expand to involve a more general concept of land use policy.

Ruilverkaveling became especially important with the economic crisis years of the late 1920s and 1930s. As part of the country’s public works program, ruilverkaveling was used increasingly for fending off unemployment; by the early 1930s Heidemij, operating as the government’s principal arm in this area, was overseeing as many as 70,000 workers in the country’s fields, forests, dikes, and waterways, as well as at the municipal levels. In this way, Heidemij oversaw, for example, the building of many or most of the nation’s public swimming pools. By then Heidemij long had been identified closely with the Dutch government at the local, regional, and national levels; these bodies would remain Heidemij’s main, even sole, client, and Heidemij would consider itself an unofficial branch of the civil service.

This close association with the government would lead to Heidemij’s involvement with the Nazi occupation government during World War II, including the establishment of work camps, which later would be accused of operating slave labor and concentration camps. In 1998 Heidemij, now known as Arcadis, admitted to its actions during the war and agreed to pay restitution to some of its victims.

Postwar Transformation

Heidemij would remain a nonprofit organization until 1972. Yet, in the postwar years, the association had already begun adopting a more businesslike approach, while searching for new areas to operate. In this Heidemij had little choice. In the early 1950s the Dutch government moved to end its longstanding work creation programs. Heidemij also was facing the end of its involvement in other public areas. In the mid-1950s Heidemij’s educational activities were being called into question, and by the mid-1960s pressure had mounted to the extent that the association was forced to end its longtime control over many of the country’s principal agricultural training academies. Having for so long relied on the government for its revenues, Heidemij had to learn to seek work in the private domain. The association charted a new course for its interests, broadening its primarily environmental focus to include infrastructure projects, such as urban planning, traffic control, and recreation.

These new areas could not be enough for the company to maintain its revenues as well as its large payroll, in which salaries continued to be adjusted according to the same scale as government civil servants. Heidemij needed to look elsewhere for work. In keeping with the association’s “good works” principles, Heidemij found its new market overseas in the developing countries, especially the Netherlands’ former and soon-to-be former colonies. Heidemij’s foreign activities began in 1952, with cooperation on a project in Syria. To limit the financial risks for the association, its Third World operations were brought under a separately operating firm, Imlo, and its daughters Ilaco (consulting) and Lareco (project operations). The move into developing countries also provided the association, tainted as a wartime collaborator, the opportunity to improve its public name. Indeed, the association was awarded the right to add the appellation Koninglijke (Royal) to its name.

By the 1960s the association had been confronted with growing competition from the private sector, and Heidemij was forced to adapt. After decades of more or less decentralized operations, according to the variety of its activities or to their regional location, Heidemij was forced to reorganize and move in a more consolidated, centralized direction. Meanwhile, the modern organization was being burdened by its own past successes. Its identity remained closely linked to the government—with many Dutch continuing to believe that Heidemij itself was a Dutch government institution—while its sphere of operations remained rooted, in the popular view, to its former solely agrarian activities, even though such activities now represented only a small part of the association’s business. By the end of the 1960s the association chose to undergo a transformation, and it prepared to make the leap from a nonprofit association to a full-fledged, for-profit company.

Company Perspectives:

Part of a bigger picture. This theme is central to ARCADIS: a single, global company with a strongly developed local network enabling us to serve our clients optimally, also in large scale projects. The awareness that the projects which we as a company carry out are always part of a bigger picture is essential to the added value which ARCADIS offers its clients.

Surviving the 1980s

The first step toward becoming a company called for uncoupling the nonprofit association from its revenue-generating activities. Upon a decision taken in 1969, Heidemij was reorganized into four operating companies: Heidemij Nederland, responsible for consulting and project operations, especially for government projects; Adviesbure Arnhem, grouping the association’s engineering consulting services; Imlo, which continued its foreign market activities, and would be regrouped as Euroconsult in the early 1970s; and Lareco, which had changed its focus from the developing countries to focus on Dutch public works projects. These four companies remained grouped under the nonprofit parent association Koninglijke Nederlands Heidemaatschappij (KnHM). In 1972, however, Heidemij Nederland was transformed into the full-fledged holding and operating company NV Heidemaatschappij Beheer, group the Adviesbureau Arnhem and Imlo as subsidiaries. KNHM became the company’s sole shareholder; its revenues, which continued to be earmarked for nonprofit activities, now came solely from Heidemij’s profits.

The early 1970s seemed to hold the same promise of the sustained economic growth that the Netherlands—and most of Western Europe—had experienced in the decades following World War II. The new Heidemij prepared to reap those benefits, determining on an ambitious expansion and diversification program, including a series of acquisitions of more than 20 businesses, many of which had already been losing money, between 1970 and 1973. Financing for this expansion came primarily from banks. The acquisitions brought the company into such new directions as the lumber industry, as well as areas of engineering and architecture, with which the company had no experience. Meanwhile, the company’s many new and existing operations remained only loosely connected, even as the company attempted to consolidate its holdings during the second half of the decade. As such, Heidemij was in poor position to weather the economic crisis of the 1970s, brought on by the Oil Embargo of 1973. The wind had been taken out of the European—and world—economy’s sales.

By the beginning of the 1980s Heidemij was losing money rapidly. While its core activities had continued to be profitable, its diversified activities had been wholly unprofitable, dragging the company’s balance sheet into the red. By mid-1982 the banks that had supported Heidemij’s expansion effort now began to pressure the company to declare bankruptcy on its unprofitable activities and turn its profitable core over to its financiers. This move would have meant the end of Heidemij. Instead, the company chose another reorganization method, a so-called sterfhuisconstructie (literally, mortuary construction), in which the ailing parts of the company were spun off, while the healthy part of the company was declared bankrupt. This allowed Heidemij’ score activities to be bought up by Heidemij itself, under the Stichting Lovinklaan, an organization formed to represent Heidemij employees, while eliminating its failing businesses. The rescued Heidemij was freed from its creditors’ claims (which would take more than 15 years to bring to resolution). Reorganized as Heidemij Holding, the company was restructured into independent operations, notably splitting its consulting, project management, and foreign operations into separate units. This construction was further refined in 1987, as Heidemij slowly rebuilt itself around its core competencies. By the company’s 100th anniversary in 1988, revenues had grown to NLG 334.2 million (approximately US$150 million), with profits of NLG 8.2 million.

Renewed Expansion for the 1990s

At the time of Heidemij’s 1970s expansion drive, part of the company’s management had insisted that the company cling to its core activities and seek expansion through international growth. In the 1990s Heidemij would do just that, calling for more than half of its revenues to come from international activities by the end of the decade. Once again, Heidemij went on an acquisition drive, adding companies that would bring Heidemij into position to compete in the coming open European market. At the same time Heidemij also began seeking entry into the vast North American market, notably via a partnership with—and in 1993 the acquisition of—publicly held Geraghty & Miller Inc. of Plainview, New York. That acquisition helped raise Heidemij’s 1993 revenues to NLG 816 million, almost double the revenues of the year before. The Geraghty & Miller acquisition, for some $130 million, also brought Heidemij onto its first stock exchange, with a listing on the NASDAQ.

With its new acquisition drive, Heidemij sought out not only new international markets, but also complementary competencies, by which the company could extend its consulting and project design and management activities. Whereas government institutions would remain of necessity the company’s primary clientele, international expansion also enabled the company to attract a growing number of private sector corporations. One such company was General Motors, which turned to Heidemij not only for support of its U.S. operations, but also much of its European operations.

By late 1997 the company had grown to revenues of more than NLG 1.2 billion (US$600 million), with subsidiaries not only in the Netherlands, but throughout Europe, including Germany, France, Belgium, the United Kingdom, Spain, Russia, and Ukraine, and with a growing presence in Asia, Africa, and Latin America as well. The increasing cooperation and consolidation among the company’s many subsidiaries and the resulting confusion arising from so many different names—as well as the inability of much of the world to pronounce the name Heidemij—led the company to change its name in 1998 to Arcadis, from the mythical Arcadis, said to be the most beautiful place on Earth. In this way Arcadis also signaled its intention to continue building as one of the major players in the worldwide environmental and infrastructure engineering markets.

Principal Subsidiaries

Arcadis Heidemij Advies BV; Arcadis IMD BV; Dynamicon BV; Inspectrum BV; ILIS International Land Information Services CV; KLM Aerocarto BV; Tukkers Milieu-onderzoek BV; Arcadis Bouw/Infra BV; V.o.f. Stationseiland; V.o.f. SAT; Arcadis Heidemij Realisatie BV; Copijn Utrecht Holding BV; Arcadis Heidemij Realisatie Lelystad BV; Serasea BV; Kafi BV; Boonstoppel Invorderings-en Advieskantoor BV; Fiscal Control BV; Involon BV; Arcadis Geraghty & Miller, Inc. (U.S.A.); ISA Environmental (U.S.A.); Arcadis Grabowsky & Poort Caribbean NV (Curacao); Eurolatina (El Salvador); Ilaco Suriname NV (Surinam); Arcadis Geotecnica (Chile); Geotecnicos Peru S.A. (Peru); Copijn België Boomchirurgen BVBA (Belgium); Gedas NV (Belgium); Enviras (Belgium); Starke Diekstra NV (Belgium); Antea SA (France); CFG SA (France); Arcadis ASAL Ingenieure GmbH (Germany); Ar-cadis Trischler & Partner (Germany); Gebr. Becker Sportan-lagenbau GmbH (Germany); Arcadis Ekokonrem Spólka z o.o. (Poland); Grupo EP/Eptisa (Spain); Arcadis Geraghty & Miller International, Inc. (U.K.); Arcadis Euroconsult; BMB Management Consulting for Development BV; Darwish Consulting Engineers (Egypt); Grabowsky & Poort Consulting Engineers (Kenya); EurAsia Consult (Kazakhstan); Euroconsult Pakistan; Arcadis Konsult (Russia); Recon (Russia); Ukron (Ukraine).