Celebrating its fifty-fifth year in the upper Midwest, is Construction Materials Inc., with operations in several states and a home base in Minneapolis, MN. This construction materials company supplies materials for the Highway Paving, Heavy Construction and Commercial Construction Industries. It fabricates reinforcing steel for the Commercial Construction and Heavy Construction industries as well as it manufactures Contraction and Expansion Baskets for the Highway Paving industry. Revenue currently stands at $40 million, and the company is growing at a good pace. We spoke with its President Dick Galligan.
Len Shope founded Construction Materials Inc. in 1961 to provide materials for highway paving in Minneapolis, Minnesota. Some of the hires made by Len proved to be extremely beneficial to the growth of the company. Bob “RJ” Nagle was the first to come on board in April of 1961, followed by Wynn Binger, and the two brought spirit and different thinking to the venture.
“They both had a great vision for the company. Len was very happy to have them in his employ. Back then, Wynn was very young but had that forward-thinking attitude, with a platform that entailed and revolved around great customer service,” says Dick.
“Wynn was a great guy and mentor to me as I was coming up through the ranks.” The founders built a strong foundation. The company has a very low turnover, and this is one of the chief reasons for its growth. It employs up to seventy-five people corporately including seasonal employees who return to employment year after year.
From the beginning, it was decided that the company would not take on just any brands. Quality was a must. Construction Materials Inc. has been with the same vendors for a long time, and that loyalty ensures a high standard of product.
The focus on carrying quality products, distributing them, and being problem solvers soon led to expansion into Iowa. Construction Materials, Inc. moved to the Cedar Rapids market in 1978 followed by a move into the Des Moines market in 1984.
Each of the locations of Construction Materials Inc. provides a variety of services, ranging from the provision of material for the Highway, Heavy and Commercial Construction sector, to fabricating steel in both of the Iowa locations for the Highway/Heavy and Commercial Construction sectors, to the fabrication of Contraction and Expansion Dowel Bar assemblies in the Minneapolis location for distribution throughout the Upper Midwest.
It also creates computer aided design (CAD) drawings for both the Highway/Heavy and Commercial Construction markets.
Most of the work performed by Construction Materials Inc. takes place in the summer. “We are busy from when the snow melts to when the snow flies,” as Dick puts it. For the highway market in the upper Midwest, once the ground freezes and the snow comes, work is halted. On the commercial side, it used to be that everything would shut down in November, but its Cedar Rapids and Des Moines locations have diversified and fabricate reinforcing steel all year round.
Hiring people is tough, and this seems to be a constant with all construction firms. Finding the right people is actually made harder because this is seasonal work. “With seasonal work, the first issue is with finding people who want to work, and secondly, the work can be somewhat hard at times. In Minneapolis, we have had great luck with a lot of great seasonal workers who come back every year,” explains Dick. “It’s an ongoing process in that we want to make sure that we hire the best possible people that we can. This is especially important as we run a second shift in our Reinforcing Steel fabrication area.
Another way to attract a larger workforce has been by increasing the hourly rates. “We try to let workers know that they are appreciated; we bring in food for lunch from time to time as well as provide our employees with years of service bonuses. We have incentive program in our fabrication areas as well. In one, if workers hit a certain fabrication volume per day, their hourly rate will be increased.”
Not only has the company had to increase pay rates, but it has also had to deal with the rising costs of insurance and healthcare. “It’s a double-edged sword because virtually everything we do is bid work. We are bidding work all the time, which in this industry is extremely competitive. So, you think you can maybe offset some of those increasing insurance costs and rising premiums by just increasing bid margins but that’s extremely hard to do,” says Dick. Construction Materials Inc. is also very overhead conscious. Dick watches finances on a monthly basis to make sure that the company is staying within budget.
The company gives cost of living increases to its workers and has for many straight years. At the same time, it keeps up health insurance. This is becoming harder and harder to balance with changes in government regulations.
“We have been with some of these insurance vendors for some time, and I think that pays off because they know our history and our background. When it comes to rate increases, they will really go to bat for us. That has been a big help,” says Dick.
This industry has really changed over the last five to six years. Different players have appeared on the scene – formed by acquisitions, mergers, and buyouts. Dick comments that it is more complex now than it has ever been. Issues inevitably pop up when its long-term vendors are merged or otherwise reform.
“When our vendors have been involved in mergers, the new companies are moving closer to our demographic. We are just trying to stay out in front of all that and grow at a good pace, nothing too fast, especially in a bid industry.” Construction Materials Inc. is looking at keeping steady growth while maintaining the territories in which it presently works.
Something that separates Construction Materials Inc. from its competitors is providing a total package that starts with great customer service. Due to low turnover rates, clients will speak with the same people every time, and that familiarity is huge for a contractor. The client knows the materials they need will get to the job site when promised.
“Anything from our CAD drawings for placement or reinforcing steel – extremely thorough – all the way through to how we load our trucks and tag our steel. It’s easy for the contractor in the field to know the placement there. It boils down to having really good people who care about the customers,” explains Dick.