Company size matters as the state’s construction industry tries to shake off a survival-mode hangover after awakening from a nearly two-year recession.
Large contractors that weathered the economic storm can now afford to position themselves for a market rebound. For such companies as Madison-based J.H. Findorff & Son Inc., the challenge is deciding whether to stick with an expanded range of specialties or refocus on traditional strengths.
“Everything is open for discussion right now,” said Jeff Tubbs, Findorff’s director of business development, “and that includes different industries and markets.”
For smaller companies, the strategy is far simpler: stay in business.
“Just because it stopped dropping, that doesn’t mean anything,” said Thomas DeBeck, president of Middleton-based Speedway Sand & Gravel Inc. “OK, now we know the bad point. It’s still not a good place to be.”
Speedway survived this year, DeBeck said, thanks to work on Madison’s East Washington Avenue reconstruction, a partnership between the city and the Wisconsin Department of Transportation. Despite that work, DeBeck said, he closed shop once in the summer and likely will shut down earlier than usual this fall.
“I’m one of the people who still thinks it’s going to get worse for companies like us,” he said. “A lot of stimulus money was directed toward highway and WisDOT projects, but city and county cutbacks are still really high. For a company that does municipal work, that’s hard.”
Madison-based McGann Construction Inc. is familiar with cutbacks. The company laid off a significant number of employees over the past year, said Randy Handel, the company’s vice president.
Now, the contractor is trying to regain what it lost before it worries about its standing in a firmer market. McGann, Handel said, will try to rehire its workers when project volume picks up.
It’s hard to say when that might be, he said, considering the increase in competition for public and private jobs and McGann’s reluctance to join the stampede for work.
“The challenge is in this environment: How excited are you when you’ve got 20 to 25 contractors bidding on the same thing as you?” Handel said. “It’s not really desirable for us, and we’re going with what truly fits our niche market.”
That could mean looking for work in other parts of Wisconsin, though Handel said McGann is hesitant to expand.
“I don’t think it’s a successful formula for the long term,” he said. “We wouldn’t pursue a project we didn’t have experience with or couldn’t excel at. I mean, it only takes one bad project to really hurt a company.”
It’s that kind of caution that governs the decision making at Janesville-based Angus Young Architects, which laid off a third of its work force in January. Jeff Hazekamp, a principal with the firm, said expansion is not the key to his company’s survival.
“I would love to say that everything’s looking great, but the fact is we’re still in holding-our-own mode,” he said. “Every day it’s a battle to make sure we get enough work to keep our staff busy.”
How a company gets the work is a matter of resources and perspective. Yet even for large companies such as Findorff, company leaders are well aware, Tubbs said, that committing to a broader market could create a new set of headaches.
If Findorff’s project managers, for example, cannot cover more ground, he said, it’s a major strike against expansion. But if familiar territory stays barren, the company must adapt.
“If we start to focus in another state, we have to consider what we lose here,” he said. “You have to be open to all possibilities, but any time you start to change the way you do business, you end up hearing about it from your customers.”