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Another factor helping to lend stability to the Company's operations is the fact that a good deal of its domestic work is performed for governmental or state agencies or municipalities. Public works of this type generally are accelerated when general business is declining in order to cushion the effects of the recession.

The majority of the domestic work of MORRISON-KNUDSEN is obtained by bidding on contracts for unit prices, although a substantial volume of business is obtained by negotiation. The latter contracts my be either at a unit price, on a cost-plus-fee basis, or on an incentive-type target estimate arrangement. Most of the foreign projects are obtained by negotiation and are performed on a cost-plus-fee basis. Contracts entered into by M-K companies for the construction of projects in foreign countries commonly provide for U.S. dollar advances to cover dollar expenditures for construction equipment and machinery shipped to the project site. In many instances, additional U.S. dollars also are deposited by the client in the United States to cover fees earned by the Company for construction services. Foreign currency, in excess of the amount needed to meet native payrolls and the cost of construction materials available in the foreign country, is accepted only when, in the opinion of M-K management, the particular currency is convertible readily into U.S. dollars.

One of the greatest elements of strength in MORRISON-KNUDSEN is its large staff of seasoned engineering and construction specialists. While laborers ca be recruited at or near job sites, the superintendents, foremen and other supervisory personnel are M-K employees, who are moved from project to project. Exclusive of the H. K. Ferguson Company, this permanent employee staff now numbers about 1,800, and is one of the important means by which high quality and performance standards are maintained.


In 1950, MORRISO-KNUDSEN broadened its diversification through the acquisition of 98.1 per cent of the stock of The H. K. Ferguson Company of Cleveland, engaged in the design and construction of complete manufacturing, chemical processing and technical facilities. H. K. Ferguson, established in 1918, is one of the United States. Its growth has been due to the excellent results achieved by its technical staff and also to the single-contract, single-responsibility system which it pioneered and which provides complete production plants in less time and at less cost. Under this system, Ferguson enters into an agreement to provide all the architectural, engineering and construction services, including plant start-up, required for an entire project.

H. K. Ferguson is equipped to design and build a great variety of facilities, including all types of chemical plants, processing plants, warehouses, shopping centers, atomic energy installations, oil refineries, power plants, paper mills, synthetic fibre plants, steel and non-ferrous mills, drug and pharmaceutical plants, laboratories, etc. The company built the first synthetic rubber plant under the Baruch Program, designed and built all the chlorine facilities required by the Chemical Corps during World War II, designed and constructed the nuclear reactor at Brookhaven National Laboratory, performed the engineering and construction for a number of facilities at Oak Ridge, designed and built the $42,000,000 Wolf Creek Ordnance Depot at Milan, Tennessee, designed and constructed a bacteriological research facility for the U.S. Army Corps of Engineers at Camp Detrick, Maryland, and set a record by designing and completing a thermal diffusion plant for the War Department in only 66 days.

In private industry also, H. K. Ferguson stands out as a leader. It performs design and construction for plants of Proctor and Gamble, and also has done design and construction work for such well-known companies as Westinghouse Electric, General Electric, Johns-Manville, National Cash Register, Atlantic Refining, Bridgeport Brass, General Mills, Eli Lilly, Titanium Metals, Atlas Powder, Ford Motor, Owens-Corning Fiberglass and others.


The status of the Company's construction Contracts, as well as that of its domestic and foreign subsidiaries, was as follows on December 31, 1957:

[[5 column table]]
|  | Parent Company | Domestic Subsidiaries | Foreign Subsidiaries | Total |
 (000 omitted)
Uncompleted Volume Carried over from 1956. | $173,375 | $85,513 | $141,740 | $400,628
New Volume Awarded in 1957 | 95,361 | 57,747 | 88,989| 242,097 |
Total Volume in force in 1957 | $268,736 | $143,260 | $230,729 | $642,725 |
Volume Completed in 1957 | 155,794 | 103,061 | 110,459 | 369,314
Uncompleted Volume Carried Over to 1958 | $112,942 | $40,199 | $120,270 | $273,411 |

The backlog at the beginning of the 1958 year is considerably lower than a year ago, but still is of substantial size and should be augmented by new contracts obtained during this year. Construction is a basic element of programs involving national defense; industrial, agricultural and natural resource development; expansion of state and municipal services; and the improvement of highway systems. Most of these programs are expected to be active in 1958, and there should be many new business opportunities.

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