High-Flying Clayco Lands on Top
One of the Midwest's mightiest construction firms is on the move.
After years of dominating the St. Louis market, Bob Clark, chairman and CEO of design-builder Clayco Inc., has set his sights on Chicago, the base of such homegrown powerhouses as Pepper Construction Group, James McHugh Construction and Power Construction Group.
“I'll be relocating here,” says Clark, who opened a Loop office earlier this year. “As places for recruiting young and ambitious talent go, downtown Chicago can't be surpassed. The plan is to build a presence comparable to the one we've established in the St. Louis area.”
Clark already has colleagues in the region. Clayco has operated an office in suburban Oak Brook for 10 years. He also is acquainted with newly elected Chicago Mayor Rahm Emanuel, whom he met while serving on the finance committee for President Barack Obama's 2008 presidential campaign.
The initiative meshes with Clayco's broader strategy to diversify by just about every means imaginable, an approach that has served the company—a design-construction-development firm—very well in the face of a weak economy. While other construction firms have struggled with the nation's lingering recession, Clayco has nearly doubled its revenues—to $880 million from $471 million—in the past four years and secured the No. 2 spot on ENR Midwest's 2010 ranking of the region's largest contractors.
Helpful Advice
The 27-year-old firm, known for distribution centers and tilt-up concrete systems in the 1990s, also has acquired the expertise to tackle projects of greater complexity, including a $320-million, 440,000-sq-ft battery manufacturing plant for Dow Kokam, a project currently under way in Midland, Mich.
Clark says the 2000 arrival of board member Hal Parmalee, past president of New York City-based Turner Construction Corp., proved pivotal to shaping the firm's future. “Hal made the great observation that in order to grow we needed to diversify,” Clark recalls.
“At the time, our specialty was a certain method of delivery,” says Kirk Warden, Clayco senior vice president. “I hesitate to call it design-build because it really focused on the integration of services required to deliver well-constructed buildings to our clients.
“So we began to identify markets to which we could apply that particular craft and made a conscious decision to pursue sports facilities and life science and health-care projects,” Warden adds. “We also began investigating corporate and financial sectors, knowing if one or two of our markets were down that another one or two would be up.”
The firm literally regrouped, organizing operations into business units and establishing the development arm, Clayco Development Group, in 2005. “We acquired all the resources required to take a project from nothing to complete,” says Warden.
Clayco presently operates across a full spectrum of non-residential building types, including corporate, government, financial, university and residential facilities, some of which are financed by Clayco Development and constructed as build-to-suits. The firm also remains the largest tilt-up concrete contractor in the nation, self-installing about 4 million sq ft of wall systems annually, in addition to foundations, parking structures and structural systems.
Its soup-to-nuts approach has helped Clayco target Fortune 100 firms, for which it performs an array of services, including site search and selection, feasibility studies and incentive negotiations. “It's been a real point of differentiation for us,” says Clark. “We're on board when projects are conceived.”
Because clients such as Procter and Gamble serve as bellwethers of rising or flagging economic conditions, Clayco began putting its house in order when those clients started to reduce capital spending in 2007.
Though it scaled back on other expenditures, the firm invested heavily in building information modeling. “We brought in three of four employees to focus solely on virtual design—to upgrade our 3D modeling so we could align it with scheduling and estimating software and provide a truly holistic approach to 3D design and construction,” says Warden.“
“We eliminated the entire shop drawing phase,” adds Clark. “We also eliminated field cutting and shifted our focus to assembly.”
The firm also placed greater emphasis on pre-fabricated systems, including factory-assembled ductwork and bathrooms, while honing its expertise in sustainable design. In 2007, it broke ground on a global headquarters for Novus International in St. Charles, Mo., that later achieved LEED-Platinum status, only the second facility of its kind in Missouri to receive the designation.
“By the time Lehman Brothers collapsed, we'd become leaner and meaner,” says Clark. “We were impacted earlier, reacted earlier and came back earlier.”
The hard-charging Clark, who founded Clayco at age 25, says that once the recession hit, his firm began pursuing projects with renewed vigor. “I made it clear that we'd better not miss a major project in our markets or someone was going to pay.”
The firm also flexed its development muscle. Among other projects, Clayco developed, designed and built Centene Plaza, a 21-story, 550,000-sq-ft office tower and 900-car parking facility in Clayton, Mo.
The Dow Kokam plant, which broke ground in May 2010, was supported by an American Reinvestment and Recovery Act grant from the a U.S. Dept. of Energy, while a planned second phase, also to be designed and built by Clayco, will be partially financed by $42 million in tax credits issued by the Michigan Economic Growth Authority. “We had the advantage of being brought in early, at the application stage,” says Clark.
As he contemplates his move to Chicago, Clark says he plans to leave his management team intact in St. Louis, which will continue to serve as Clayco's headquarters. He is staffing the Chicago office rapidly, at a rate of about five employees per month. In time, many employees in Oak Brook will join them.
“We have 60 designers on staff, but that number could exceed 100 by sometime next year,” says Clark.
