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When Paul Hatcher, President of
Oliver/Hatcher Construction,
based in the Detroit suburb of
Wixom, and his partner Paul
Oliver started their own company in
1995, business in the industrial building
market was booming. In early 2003 however,
shortly after the economy began to
stall, activity started to fall off, and the
company now finds itself in a flat market.
A key factor, Hatcher speculated, is
belt-tightening by the big three auto
manufacturers, who tend to drive most
of the business in the region. “While cars
are still being produced at a high level,
they’re not putting a lot of money into
new plant facilities,” he said. Oliver/Hatcher Construction does not usually work
directly for the auto manufacturers, but
because it does a lot of work for people
who supply those companies, the firm is
definitely feeling the impact. Another factor
in the slow down, Hatcher speculated,
is an over-supply of industrial space.
Yet Hatcher, who said it’s no secret that
the building industry is cyclical by nature,
noted that his company is well prepared
to weather the downturn. During the
boom, which he characterized as “unprecedented,
many firms throw caution to
the winds and say ‘there’s no way there’s
going to be a slow down.’ You need to
manage your business with the knowledge
that it will slow, and we did this.”
The slow down is manifested in two ways:
a decrease in the number of projects, and
a reduction in the size of projects. While
some companies specialize only in smaller
or larger projects, Oliver/Hatcher Construction
does a blend of both, which is
an asset in tough times. “We’re known
for doing large industrial projects”— say,
over one million square feet of renovation
costing $50 to $60 million — “but we’re
always able and willing to complete
smaller projects” — as small as 5,000
square feet, valued at a mere $750,000.
The key right now, he noted, “is being
able to focus on smaller or different kinds
of projects.”
Hatcher’s years of experience in the industry
have helped him survive the tough
times as well as thrive in the boom days.
He started working in the construction
business during summers when he was in
college, and he was employed by a number
of different companies before starting
his own business. He and Oliver were
motivated to go out on their own because
they wanted to have “the opportunity to
do things our way, treat customers the
way we wanted, go after business we
couldn’t do with our previous employers,
and hire the type of people we wanted.”
Hatcher describes the firm, which has
average revenues of $50 million and 22
employees, as “a design/build contractor.”
We offer clients everything from design
services to engineering to construction
and manage every aspect of a job,
including the subcontractors and municipal
approvals. In essence, we serve as
a one-stop shop for owners.“We hand
over the keys to him and he moves in,”
Hatcher said. This business paradigm
has proved extraordinarily successful:
Oliver/Hatcher Construction, which is
ISO 9001 accredited, built six million
square feet of construction during its first
five years of business.
Approximately 80 percent of Oliver/Hatcher Construction’s business is industrial,
which runs the gamut from renovation
of large existing industrial facilities
to new, green-field buildings. Much of the
firm’s work is in warehouse distribution,
but it also pursues projects specializing
in light industrial uses, such as assembling
of parts, as well as the heavy industrial
market, which would include, for
example, an auto-parts stamping plant.
The remainder of Oliver/Hatcher Construction’s
business is a mixture of retail
and office.
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The company focuses almost exclusively
on private work. That characteristic,
along with its focus on the industrial
market, might seem to be a big disadvantage
in the current climate. While the
industrial building market is flat, Hatcher
noted that public work, such as schools
and roads, along with hospitals and
residential construction, is booming — a
trend that is consistent with the cyclical nature of the business. (Generally speaking,
“when private work starts to ebb, the
public work is very busy,” and vice versa,
Hatcher said.)
But Hatcher said despite the plethora of
public works projects, Oliver/Hatcher
Construction has chosen not to get
involved in that type of business and
occupies an entirely different niche.
“A lot of public entities are mandated
to publicly bid out a job,” he said. “We
don’t obtain our work that way. Public
bidding flies in the face of how we like
to do business. We’re not a low-value,
low-cost provider.”
He pointed out that many public agencies
have their own engineers on staff, who
have the expertise to design a project.
In contrast, “our customers are people
who may or may not have built anything
before. They don’t have staffs of engineers.
They rely on our expertise.” Oliver/Hatcher Construction works with owners
who are seeking “to team up with someone
to give them the best value. We think
we offer better service and higher value
the way we do it.”
While Hatcher said so far he didn’t see
any signs of a complete turn around, he
has noticed more of a market for new
space, which might be an early indicator
of a pick up. “No one is necessarily
making decisions, but they’re out there
looking.” Meanwhile, “we’re maintaining
our business and have managed to keep
our employees busy.” |
