Rising from out of the ashes of a smoldering economy, an Arizona-based precaster finds new life and opportunity.
Story and Images by Ron Hyink
Remember when Arizona was the fastest-growing state in the nation? Housing and commercial buildings were popping up everywhere like pocket gophers on a low-rent golf course. Contractors kept a dozen crews busy all at the same time, and city engineers scrambled to keep up with the workload.
That all came to a screeching halt when the economy took its obscene nosedive into the abyss. Abandoned construction sites lay prostrated in open fi elds. Newly carved streets led to nowhere, and utility boxes were left sticking up out of the ground with nothing to hook into.
“There were supposed to be apartments there,” explained Jason Jackson, pointing out a half-baked development while passing by on a Phoenix freeway, “and that’s been sitting for three years now. When the bottom dropped out, they left houses half finished.” Jason, co-owner of Enviro-Systems Corp., a manufacturer of precast concrete sanitary and stormwater products in Mesa, Ariz., said all construction-related industries in the area were hit pretty hard.
But that is the very thing that keeps him and his company motivated. “It’s times like these,” he said, “when you discover what you’re made of,” and he wasn’t ready to pack up his tent just yet. “You can either fold up shop and call it a day, or you can accept the challenge, take it on and give it a go. So that’s what we’re doing – and I’m enjoying every bit of it.”
CM at Risk
It all comes down to fi nding those things that you’re doing well, and how you can do those things a little better, according to Jason. “You don’t have to overhaul everything – it’s little fine-tuning,”he said. “In these times, that’s real important. The people who focus on that are going to make it through this, and they’re going to survive.”
Jason thinks he might be seeing some positive signs of a recovery, however. “A few months ago we started seeing some activity, and they were finishing off those houses and starting to pour new pads to build new ones.” The American Recovery and Reinvestment Act (ARRA) money may have provided the state with a shove in the right direction, and the Arizona DOT has spent the money wisely and put it to good use, he said. “We’re starting to see some of the developments start back up now – it’s been real positive.”
Yet it’s not the same as before. All the rules for doing business have changed. When the money started to dry up, all contractors and subcontractors were forced to tighten their belts, lower overhead, cut back here, reduce manpower there and go lean everywhere. The City of Phoenix, one of Enviro-Systems’ main customers, had to modify its bid letting process once the ARRA money started to dribble in, making that process even more competitive.
Since 2000, the state had been using a Construction Management at Risk approach, which was designed to prevent projects from being awarded to the lowest bidders. Awarding projects based primarily on the lowest bids does not always translate into quality work, and so the CM at Risk strategy was adopted to award projects based on qualifications. In other words, the city would offer the project at a fixed amount and require the contractors to present their qualifications for completing the project before awarding the contract. If the winning contractor could complete the project for less than the fixed amount, he could keep the rest and reap the profit. However,
if his costs ran over the fixed bid – replacing faulty products, for example – he was responsible for making up the balance.
For federally funded stimulus projects, the state altered course slightly to a CM at Risk with Price Competition approach, somewhat of a compromise that rewards quality, experienced workmanship at competitive pricing. “The engineering contractors, instead of a standard quote and a bid process, put together a presentation,” explained Jason. “They have their history of work, their qualifications, jobs they’ve done that are comparable to this one, references.”
And it’s all done behind closed doors. Each contractor who wants the project comes in and gives his own presentation. “The city will choose basically on merit who they’re going to go with to put in this project,” said Jason. “I put together a big booklet with a listing of all our qualifications – our experiences, pictures, history – and put that in with these packages.”
Jason explained that city engineers’ original plans are sketchy at best. “The municipalities will have, say, 10 percent complete plans – basically just a rough plan,” he said. This allows the contractors to help develop the plans with the city. “So they’re part of the design process.”
It also allows Jason an opportunity to up-sell. “We can go to them and say, ‘Here’s what you’ve got spec’ed out, here are your ideas. I’ve got an idea that can save you money if we go this route, and here’s a different product line that I make that can possibly save you money in this area.’ And it gives us a lot more leeway, but you’ve got to be on top of that and be able to offer that to them before they even know they need it.”
A good way to determine those unrealized needs is through the Internet. Through a major contractor’s website, Buzz Metz, estimator for Enviro-Systems, said he can get all the plans for all the jobs online. “You have to download their program in order to see it,” he said, explaining that the program can be set up to defi ne and search within certain parameters. “We just do Arizona sewer and manhole or storm.”
When he submits his search criteria, he is presented with a number of projects that apply to that search. “All of them are listed, and it tells you the bid date,” said Buzz. “Now a lot of this stuff might not apply to us if they don’t have manholes. Since I put sewer in there, all sewer, all storm – all of that will come up for Arizona.” Once he finds a requirement for manholes, he can then investigate further. “If it’s open for public bid, which these are,” he said, pointing to his computer monitor, “it’ll be on this list with the whole plans and everything.” Then it’s just a matter of preparing a quote and sending it to the contractor, who then bids on the job.
The super-sized monitor on his desk displaying the project is the antithesis of the old way of doing business. Buzz recalled how he used to drive 25 miles to the contractor, sort through all the plans and do his takeoffs there, not knowing what other jobs might be open or available. “Nine years ago I used to get everything over the fax – everything – contractors asking for this and that,” he said. “Now I can go through everything myself and send them out to the plan holders. It’s so much easier, so much nicer.”
In fact very few of the cities anymore will print out requirement books. “They tell you to go online and print them by yourself,” said Buzz. “So that’s nice too.”
It all goes back to the changing needs of the customer. “I found out if you’re not willing to adapt to those needs, you’re not going to last very long,” said Jason. “You’ve got to be ahead of the curve.”
In the field
With less work to go around since the economy collapsed, there are naturally fewer and smaller contractors to take on the workload. But the cities have been reluctant to dismiss their workforces. For a contractor and subcontractor performing work for a municipality, that equates to more scrutiny. “The city hasn’t really laid off a lot of the engineering people and inspectors, and so they’re still involved in these projects,” said Jason. “And now there are fewer projects – same amount of inspectors, same amount
of engineers – and they all want to make sure they have job security.”
To Jason it means an opportunity to improve. “You’ve got six eyeballs on everything now as opposed to having two. And on busy days, there was a half an eyeball on everything,” he said. “So we’ve got to make sure that our quality control is prepared for that, and that we take the necessary steps to produce the best-quality product that we can, get it ready for on-time delivery and anticipate the needs of our customers. It’s been a challenge – it really has. But I’ll tell you what: You remember you’re alive.”
Jason is quick to point to his production line workers, drivers and field crew for that quality. At the job site, his employees are empowered to handle situations that may arise with the contractor’s people. “My guys have a lot of authority – they work hand in hand with these guys,” he said. “I don’t need to look over their shoulders, I don’t need to have my hands in everything. They know what they need to get the job done, so they can work hand in hand with the general contractor or with the project engineer. If things get changed on the schedule, those guys have that autonomy where they can reschedule themselves. They’re responsible for that job and responsible for what they have to do. They are in a position to make those decisions.”
Product quality and an empowered, competent field crew go a long way toward building positive relationships with his customers and vendors. “You create that relationship and it builds from project to project to project, and the next thing you know you’ve got this airtight relationship and a bond with your customer, and they know they can count on you, and you know that you can count on them,” said Jason. “And that goes for vendors too – we have that same relationship with our vendors.”
Jason strives to make a good home for all his employees. “That’s one of our main focuses, creating a good working environment for everybody,” he said, adding that there is a fine line where everyone wants to be efficient, everyone wants to maintain productivity, and everyone wants to maintain profitability. “When they’re profitable, we’re profitable.”
It hasn’t been easy lately, however, but that just made Jason dig his foxhole a little deeper. “It’s important to get tested every once in a while – and this is a big-time test,” he said. “We’re trying to meet it head-on with a positive attitude, and I think that’s what has gotten us through these last couple of years. Nobody’s going to pull us out of this mess; we’re going to have to pull ourselves out of this mess and figure out a way to get it done. To have that ability to control our own destiny and get ourselves out of one of the worst financial crises this country has ever seen, and to look back and be proud that we did something good and we did it the right way. That’s what keeps me going.”
ENVIRO-SYSTEMS: A Franchise Goes Family
Many successful precast concrete companies start out as family-owned businesses and then become a part of a corporation. Enviro-Systems Corp. of Mesa, Ariz., however, began life as a franchise and turned into a family-owned business.
When Dave Jackson came all the way out from Illinois to attend Arizona State University in 1966, he had often thought of returning to the area – but never dreamed he’d come back nearly 20 years later with a family. In fact it was his father who first made a permanent move to Arizona and wound up in the precast business. That was in 1975. Dave’s father bought a company that manufactured precast concrete extended aeration tanks for wastewater treatment systems and soon started making precast manholes as well when the City of Phoenix began to expand.
Ten years later, in 1985, Dave was laid off from his job in Illinois at a major corporation where he worked in sheet metal for heating and air condition systems. The time was ripe for him to finally make the move to Arizona with his wife and two children, “but I wasn’t going to move unless all three of them said yes,” he recalled. And they all agreed. “I said, ‘Good, we’re putting the house up for sale and we’re moving.’”
About a year later, Dave’s father’s health began to fade, and so Dave and his sister took over the business. By 2000, Dave earned his contractor’s license and began installing his own products. The company continued to prosper and then moved to its present site. Dave’s son, Jason, bought out Dave’s sister’s part of the business, and now the father-son team has firmly established Enviro-Systems as one of the Phoenix area’s preeminent businesses.