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U.S. Companies Will Benefit as Kuwait Rebuilds

February 28, 1991

NEW YORK (AP) _ The next big deployment in the Persian Gulf will come from Corporate America, which is signing contracts and rounding up workers to help rebuild Kuwait in an effort that could be worth up to $100 billion.

Among the major U.S. companies involved are Bechtel Group Inc., American Telephone & Telegraph Co., Caterpillar Inc., IBM, Motorola Inc. and Raytheon Co.

A host of smaller companies, such as oil-field specialists, also should benefit from what could become the largest rebuilding effort since the Marshall Plan reconstruction of Europe after World War II.

Kuwait is expected to spend the bulk of its rebuilding funds with companies from the United States and other nations whose troops ousted Iraq from the nation, officials said Thursday.

One of the first chores will be extinguishing oil well fires that are blanketing the Kuwaiti sky with black smoke. Nearly two-thirds of Kuwait’s 950 wells are believed to have been sabotaged by retreating Iraqis.

Three Houston companies - The Red Adair Co., Wild Well Control and Boots & Coots - will be put to work fighting the oil fires. The companies have not disclosed the value of their contracts.

Once the fires are out, Bechtel, the nation’s second-largest construction and engineering company, is expected to head the rebuilding of Kuwait’s petroleum industry.

Bechtel has received a letter of intent from the state-run Kuwait Petroleum Co. calling for Bechtel to act as project management contractor, said Bechtel spokesman Mike Kidder.

Bechtel, a privately owned San Francisco company that has worked in Kuwait for 40 years, will send about 4,300 employees and subcontractors to the emirate, Kidder said.

Bechtel said it did not have an estimate of the value of the work. Some petroleum experts believe rebuilding Kuwait’s oil, natural gas and petrochemical facilities could cost $10 billion.

Reports of such a windfall have sent the stock prices of U.S. construction firms and equipment makers soaring.

″The market’s been euphoric,″ said Richard Sweetnam Jr., an analyst who follows the construction industry for Kidder, Peabody & Co.

Sweetnam said the contracts awarded to construction firms will have a trickle-down effect, since much of the equipment and supplies needed by the contractors will be bought from other companies.

Shares of construction equipment maker Caterpillar Inc. surged $3.25 in heavy trading Wednesday and rose an additional $1.12 1/2 Thursday to close at $54.62 1/2 on the NYSE.

Caterpillar recently shipped an order of generator sets to Kuwait to be used to restore electrical power. And the Peoria, Ill.-based company could supply Kuwait with large bulldozers for clearing rubble and rebuilding roads, but has not disclosed such a contract.

The stock of CSX Corp., an owner of railroads and a shipping line, jumped $2.62 1/2 Wednesday in heavy trading to close at $38 a share following a media report that it received a contract to transport all rebuilding materials to Kuwait.

However, the Richmond, Va.-based company denied the account, saying it had only signed a contract to deliver emergency supplies. It declined to disclose the contract’s value. CSX stock fell 12 1/2 cents a share Thursday to $37.87 .

A number of smaller construction companies should benefit from $45 million worth of reconstruction work being done by the U.S. Army Corps of Engineers on behalf of Kuwait. This will involve rebuilding the nation’s highways, airports, water and sewer systems and electrical utilities.

Among the construction firms on a list of potential recipients of corps contracts are Perini Corp. of a Framingham, Mass., and H.B. Zachry Co. of San Antonio, Texas.

Among major non-construction companies benefiting from Kuwait’s rebuilding:

- IBM has signed an initial contract for a wide range of computer equipment for the Kuwait government, said IBM spokesman Matt Jeffery, who added he did not know the value.

- Raytheon, maker of the Patriot missile defense system, received a $5.7 million contract from the Corps of Engineers on behalf of the Kuwaiti government to build an airport control facility in Kuwait, said spokesman Lawrence L. McCracken.

- AT&T is reportedly in line for a contract to help rebuild the nation’s telephone system. AT&T already is working to install a temporary satellite phone system in Kuwait City.

- General Motors Corp. has bid on a contract to resupply the Kuwaiti government fleet. Ford Motor Co. spokeswoman Lin Cummings and Chrysler Corp. spokeswoman Karen Stewart said those companies also were negotiating to sell cars to the Kuwaiti government.

- Motorola reportedly supplied two-way radio equipment to the Kuwaitis.

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