This was a really good article.
Plenty of giants remain
Lockerbie doesn't sting like it once would have
By Gary Lamphier, The Edmonton JournalFebruary 3, 2009 7:55 AM
Aecon Group's surprise $220-million offer to acquire Lockerbie & Hole will soon lead to the disappearance of one of the city's oldest and most respected construction firms.
No matter how you slice it, that's a loss. But this isn't the same city it was a decade ago, when the departure of local giants like Telus, Enbridge and Shaw shattered Edmonton's sense of self-confidence.
The explosive growth of the city's construction sector shows how far Edmonton has come as a corporate centre over the past decade.
Edmonton-based PCL, the country's largest builder, has morphed into a North American behemoth, with annual revenues of more than $6 billion. That's well over twice the size of Aecon and Lockerbie & Hole combined.
Churchill Corp. has also mushroomed in size. The Edmonton-based civil, commercial and industrial builder posted record results for Q3 of 2008, and its annual revenues are now in the $900-million range. That's about 50 per cent greater than Lockerbie & Hole's top line.
North American Energy Partners is another key local player that has grown at a rapid clip. The Spruce Grove-based oilsands giant boasts annual revenues of well over $1 billion, about $400 million more than Lockerbie & Hole. And then there's Clark Builders, founded by CEO Andy Clark in 1974, at the tender age of 24. When I last sat down with Clark in 2005, his firm's annual revenues had reached $250 million, quadruple the level of the mid-1990s.
Just four years later, its top line is closer to $600 million -- roughly on par with Lockerbie & Hole -- and its work backlog has swelled to $1.4 billion, even as new construction work in the oilsands has slowed to a crawl.
That's no small feat, considering the fact that Clark Builders saw a third of its work backlog disappear in the final months of 2008, when Petro-Canada delayed its massive $24-billion Fort Hills oilsands project.
"The analogy I like to use is a sports analogy. It's like we were up 5-4 with five minutes left in the game, when all the work in Fort McMurray died. Suddenly, we were losing 6-5. So what do we do?" asks company president Paul Verhesen. "Do you just accept the loss? Do you accept that this year isn't going to be as great as last year? No. You put out your best line, you dig deep and you go looking for new opportunities. And that's what we did."
Instead of spinning its wheels in the oilsands, Clark shifted its focus to government-funded infrastructure projects, where building activity -- especially in Alberta -- remains high. In the last half of 2008 it bid on five major public works projects, and won every one of them, adding roughly $900 million to its pipeline.
The lineup includes the planned $265-million restoration of the long-vacant Federal Building, in Edmonton's legislature precinct; a $170-million expansion project at Northlands; a $150-million addition at Red Deer College; a new $205-million project at NAIT's main campus; and $35-million worth of work on a new fieldhouse for the Edmonton Eskimos football club.
Clark is also working on a new $25-million sports multiplex project in Lac La Biche that could evolve into something bigger, including two new schools.
"We feel really good about our future, and about the talent, depth and reputation of our team," says Clark. "I guess the other thing is, because of our northern history (the company was born in Yellowknife) and the mobility we have corporately, we're not particularly worried.
"When things slowed down (in the last cycle), we went to Russia, China and Japan. Now we're looking at projects in the Caribbean, so we're not particularly worried about the future. It's going to get tough, but we know we'll be fine."
So how does Clark account for his firm's success? Not surprisingly, it comes down to the quality of its people.
"About 15 or 20 years ago I was at a management course and they were doing a study of Richard Branson, and Virgin Records. Richard was a guy who wore blue jeans to the office. He was a maverick, yet he was growing this tremendous business that didn't fit any of the standard MBA rules," says Clark.
"So they were interviewing one of Branson's VPs, and asking him what makes your business so different, and he says, 'Well, one of the things we do around here is we don't just hire for the best talent, we hire for the best character. The best talent comes second.'"
Clark says he realized he had already adopted the same approach, and it had paid off. So he has stuck with it ever since. "I don't think I'd ever dialed into what I was doing in my own mind, but I'd never been comfortable with conflict. So I was always trying to hire self-motivated, responsible individuals who brought their best to the office every day," he says.
"I could find no joy or value in going around and pushing people to do better. It just went against my grain. And that's helped us to build a great team."
Clark and his longtime partner, company COO Bill Giebelhaus, have been slowly reducing their stake in the firm over the years, spreading the wealth among the company's 700 to 800 full-time staff.
Currently, Clark and Giebelhaus each own 30 per cent of the firm. Senior management owns 25 per cent, and the rest of the staff owns 15 per cent. Clark says the two major shareholders will continue to reduce their holdings.
"Our motto here is one good project at a time, one good staff member at a time, and if you take care of today, tomorrow takes care of itself. It's really pretty simple stuff."
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http://www.edmontonjournal.com/business/Plenty+giants+remain/1247080/story.html
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