Skanska USA Reboots For a Southeast Rebound
Instead of focusing on merely surviving the Southeast's vicious downturn, Skanska USA's Southeast operation has used the slower times to improve its capabilities and people. It has been adopting new approaches to construction, accelerating field adoption of emerging technology and diversifying and deepening its talent pool. It is even expanding into new geographic markets.
It is a strategy borne of necessity that has turned into a survival tactic, says Scott MacLeod, co-chief operating officer for the Southeast in Skanska USA's Raleigh office. "We were concerned about the future and knew that cutting overhead and shrinking was not sustainable," he says.
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For the results it has achieved so far, ENR Southeast recognizes Skanska USA as its Contractor of the Year.
Changing Fortunes
The most basic criteria for receiving recognition as Contractor of the Year is business success. On that score, Skanska USA earned high marks. The company's 2011 Southeast revenue total improved by 18%, or $109.8 million, compared with the same period a year ago, resulting in $711.8 million in revenue for 2011. The achievement was notable since Skanska was the second-highest ranked firm to record an increase, after the top-ranked KBR, which improved by 44%.
Skanska USA's Southeast operation ranked fifth on the latest Top Contractors list. Skanska USA's total revenue in the U.S. in 2011 was $5.3 billion. It ranked seventh on the ENR Top 400 Contractors list.
Noteworthy new contracts in the Southeast region hint at the firm's savvy positioning during a down market. Earlier this year, the Tampa office started work on the first building—an $80-million science and technology facility—at the Santiago Calatrava-designed campus of Florida Polytechnic University in Lakeland.
Also in 2011, Skanska USA started work on a $141-million University of North Carolina Hospital in Hillsborough. And more recently, the civil division, in a joint venture with Ajax Paving Industries, landed a $215.4-million Florida Dept. of Transportation contract to reconstruct a section of Interstate 275 in Hillsborough County.
"Fortunately for us, the sectors that took the full force of the downturn were retail, corporate/commercial and high-rise residential," says John Reyhan, general manager for Georgia in Skanska USA's Atlanta office. "We did not have a major position in any of those markets at that time," he adds.
The company had shifted its focus to health care and higher-education work. Reyhan credits Georgia's development of its technical college system and an overall increase in statewide enrollment for the relatively steady flow of contracts in recent years.
He also attributes some success to the Atlanta office's increasing emphasis on near-site preassembly of overhead racks for mechanical, electrical and plumbing systems for higher education and health care projects. Skanska USA pioneered the prefabrication approach a few years ago on a hospital in Dayton, Ohio.
The approach saves time and money and increases worker safety. "Our customers can measure the value," Reyhan says. "It begins to define our commitment to innovation."
The company also expanded its presence in southeast Florida, South Carolina and Virginia. The reasoning was simple, says MacLeod: "Most of our large competitors were moving out of those regions."
Counterintuitive Thinking
Counterintuitive thinking is standard operating procedure for MacLeod. The firm has diversified rather than consolidated its workforce in the recession. "We had to start developing our own talent pool, which meant hiring people with diverse backgrounds," MacLeod says.
Skanska USA executives say the number of Southeast employees has remained "consistent" in recent years.
Instead of only adding workers with construction backgrounds, the contractor hired more engineers and people educated in business and the humanities.
"Sometimes in our industry, there's a lot of inertia to change," MacLeod says. "But then you inject this person with a diverse background, and he's the one who starts saying, 'Why do we do it that way?'"
For instance, a superintendent in North Carolina, with a carpentry background and a degree in Spanish, was previously a teacher. He was the one who pushed Skanska USA to roll out iPads in the field.
The company says it invested about $250,000 on technology last year. Part of that was for its $95.2-million James B. Hunt Jr. Library project at North Carolina State University in Raleigh.
There, Skanska USA rolled out an information kiosk on wheels, which contains a computer and a large monitor. The kiosk allows any contractor on the job to review plans electronically.
Paul Manning, director of Duke University's office of project management in Durham, N.C.—and a former Skanska executive for New York—was impressed with the kiosk when he toured the library site. At one point, Manning says, he asked an assistant superintendent to tell him about an air handler.
The super responded by scanning the air handler and using a mobile computing device to immediately pull up a trove of information, including performance specifications and dates related to installation and commissioning.
Manning is looking forward to seeing the technology used on an upcoming student union project at Duke. "I really do look at Skanska as being on the cutting edge of the use of technology on the project site."
Steve Stouthamer, Skanska's general manager for the Carolinas in Raleigh, says the slowdown gave the firm the opportunity to emphasize "emotional differentiation." That translates to investing more time with clients to better understand their needs.
Refocusing for Clients
The approach seems to be working. "They think like we do," says Manning. "They really take on the role that they work for Duke and are representing our best interests."
David J. Bailey, president and CEO of Nemours, Jacksonville, Fla., says hiring Skanska USA for its $248-million children's hospital in Orlando "has been one of the best decisions our organization has made."
"This may sound corny, but they understood from early on that they weren't building a hospital for us—they were building a place of hope for children and families," Bailey says. "They became committed to our mission.
"Their laser focus on workplace safety fits hand in glove with our focus on the care of children," Bailey adds.
When the U.S. Occupational Safety and Health Administration conducted an unannounced, two-day inspection, there were no citations and no recommendations. Even the OSHA inspector was surprised, says Bailey.
Nemours has since awarded the contractor another project in Delaware. Bailey concludes: "Skanska's a very impressive organization."
