"The owners wanted us to continue working because they felt confident that things would be worked out," says Paul Hoffman, the company's vice-president and treasurer. "But if the owner defaulted, we wouldn't get paid and shutting down and demobilizing our force would be a huge expense for us."

Executives from many global companies were caught by surprise when Asia's currencies tumbled and stock markets crashed beginning in mid-1998. The meltdown was especially painful for firms like Black & Veatch, which had viewed Asia as an engineer's Shangri-la. The region had a young, growing population that was rapidly becoming more affluent, and developing a need for many infrastructure basics, such as mass transit systems, airports, hospitals, dams, and bridges. Hundreds of American firms in a wide range of engineering fields traveled to Asia vying for a piece of the action, swelling sales to Asia-Pacific countries by the top 400 U.S.-based contractors to $5 billion in 1996—second only to Europe among international markets.

For the most part, these companies had not faced severe financial dangers in a long time. That fact, combined with the soaring stock market, may have led engineers educated in the 1980s and 1990s to believe that the industrial world's economic prosperity was the norm.

The Asia crisis is a perfect case study. Although in the early 1990s some economists predicted that Asian infrastructure construction would expand sixfold in the next 15 years, those forecasts have now been radically adjusted. According to a recent report by the Manufacturers Alliance, a policy research organization, business service exports to Asia, which had grown about 4 percent per year during the 1990s, will contract by 3 percent in each of the next two years. To be successful in this shrinking market, engineering firms must minimize risk while also being prepared to cope with occasional crises. "If you're going to be in international markets, there's no room for the faint of heart," explains Brian Harris, a senior vice-president and manager of international practice at Daniel, Mann, Johnson & Mendenhall (DMJM.)

Harris should know. The Los Angeles-based firm once had a longstanding practice to accept payment in U.S. dollars only to guard against the devaluation of less-stable local currencies. But intense competition for business, from both domestic and foreign firms, caused the enterprise to alter its policy. During negotiations for an airport design in Bangkok, Harris asked to be paid in dollars or at least be guaranteed an exchange rate. Thai officials refused. Harris contacted his firm's banking advisors, who said that all the economic indicators from Asia were positive. If DMJM passed on the project, some other firm would be sure to accede to the terms, so Harris signed the contract with no safety net for currency problems. When the value of the bhat plunged relative to the dollar, DMJM took the financial hit. "The Thai government said that being paid in dollars was an insult to the government, but in retrospect, look what happened," says Harris. More than a year later, the airport project is still on hold, DMJM is owed a substantial amount of money, and the firm has laid off roughly 60 people because of the Asian financial troubles.

Of course, this strategy works only when a firm has strong relationships in a country. Degenhardt knows the owners in South Korea and feels confident that the project will resume soon. He didn't have that same feeling in Indonesia, where Ellerbe Becket had done only limited work and was less familiar with the political situation. When riots protesting the despotic regime of then Indonesian President Suharto broke out, Degenhardt pulled his staff out of the country. "It's the only country where we're not taking the long view of sticking it out," he notes.

Firms with geographical and occupational diversity can more easily abandon work in a country to hedge against a regional slowdown. Global giant Bechtel, which has $11.3 billion in revenues, sidesteps the effect of regional slowdowns by not specializing in any single region or project type. It can help manage projects ranging from mines to auto factories. DMJM also seeks a broad geographic base, and therefore has not been crippled by the crisis in Asia, which accounts for only about 10 percent of the firm's $200 million in annual revenues. Harris is counting on other countries, such as Bulgaria and Romania, to replace the lost Asian business.

Aside from lost revenues, the net effect of the Asian crunch may be to strengthen the resolve of companies that can make it through the slow period. That's proven by Black & Veatch's experience. It finally got the go-ahead on the power plant project in June 1998, after a delay of about eight months. Black & Veatch's concessions were a key part of getting the project moving again: The firm accepted a deferred payment schedule that improved the developer's credit line, which helped him gain new financing. At the very least, the experience toughened the firm for the marketplace battle among the survivors. "Even if there is the same number of international competitors, those people will be chasing fewer projects," says Hoffman.

Only time will tell if engineering companies learn any lessons from the adversity they are facing during the current Asian financial crisis. Those who do survive the instability should be in a good position not only to rebound when the region recovers, but to apply their newly learned survival skills in the world's next volatile market.