Houston's Encompass Realigns, Axes High-Tech Group

The tech group, which shuts down Sept. 30, provided general contracting and construction management services to technology facilities, specifically telecom hotels, call centers, collocation facilities, data centers and server rooms and web hosting facilities. In 2000, the business unit generated $153 million, or less than 4% of Encompass' total revenue.

An Encompass source tells GlobeSt.com that the group most likely won't be resurrected once the business climate improves. But, he quickly adds, "Encompass will still work on equipping traditional buildings with data components."

The source says 30 employees are left in the global technologies group. There were 178 workers at the end of December 2000. The remaining employees could be transferred to other company operations, but that has yet to be decided, the source confides.

From 1998 through 2000, there was a tremendous build-out of product that sparked the group's founding. Those projects are at a standstill and drove the elimination of the business unit.

The source isn't saying how much Encompass invested in the operation. He expects that information won't be forthcoming until mid-November when a revamp of the 2001 performance comes out. Encompass also has withdrawn its financial performance speculations on revenue, earnings and EBITDA for the third and fourth quarters.

In a conference call yesterday, Encompass president and CEO Joe Ivey outlined measures to financially reposition the operation. The focus, he emphasized, will be to generate cash. Mechanical and electrical businesses will be realigned geographically, sales processes standardized and remaining services expanded.

"The tragic events of Sept. 11 have injected even more uncertainty into an already struggling economy, giving us extremely limited visibility," says Ivey. "Given the outlook for capital spending on collocation facilities, telecom hotels and Web hosting centers, maintaining a business group that provides construction management services to mission-critical technology facilities is no longer a wise use of our resources."