Reinventing an industry

As area manager of PENTA Building Group in Reno, Lou Primak is in his element visiting job sites, consulting with clients and poring over building plans a self-described "bricks and mortar guy."

But these days, Primak is spending most of his time in a suit and tie and shiny shoes, boarding airplanes, shaking hands with strangers and networking to chase work.

"It's building relationships instead of building buildings," he says.

And it's part of surviving the worst downturn in the construction industry that anyone can remember. Managers like Primak and their companies are reinventing themselves to adapt, and often that means stepping outside comfort zones and into unknown territory.

Until recently, the nine-year-old PENTA, which has experience in the hospitality, military, higher education, restaurant and industrial sectors, focused strictly on the markets where it had operations Las Vegas, Palm Desert, Calif., and Reno. But late last year with opportunities shrinking and competition rising, PENTA staked out a larger territory everything west of Denver.

With developers now inundated with pitches from builders, getting past the gatekeepers to crack open the door is no easy feat.

"You're reinventing your business development plan from square one," Primak says. "You have to get in front of these new people in these markets you don't know. You can spend half a day on the phone chasing down a decision-maker."

The process involves getting to know the person who knows the person who knows the person who makes decisions. To do that, Primak and other PENTA managers are traveling a lot these days, getting involved in community organizations in new markets, attending conventions and shaking lots of hands. Building relationships takes time, and they don't expect overnight results.

"The focus isn't so much on today, but on 12 to 18 months from now," Primak says.

Panattoni Construction Inc. in Reno, traditionally a design/build firm focused on private work for Panattoni Development and other clients, is reinventing itself by venturing into the public sector and new markets.

The expanded focus has already paid off; the builder is finishing an operations center for Southwest Gas in Fernley. But the bidding process can be frustrating. In several cases, Panattoni has come in second place, missing the bid award by a tiny fraction of the project cost, says Matt Clafton, Panattoni senior vice president and mountain/west regional manager. The company also has had to adjust to the different requirements in the public sector.

"As a design/builder, we're used to identifying if there's a deficiency in a set of drawings and filling in the blanks," Clafton says.

But with public projects, he adds, "You have to bid exactly to what's actually on the paper...it's a whole different way of thinking how to put a project together... In public works, you control only your part you're directly responsible for."

United Construction in Reno began reinventing itself a couple of years ago by intensifying its focus on providing a full range of client services. When everybody in construction was busy, a lot of firms bid projects, built them and moved on. United saw a need for a deeper commitment to clients.

"We knew there would be a downturn at some point, but we didn't know this deep of a recession was coming," President Craig Willcut says.

United also focused on cross-training its staff so employees could pick up slack in other areas, and it eliminated middle management. Now the company is leaner, and employees are versatile, doing work outside their traditional job titles when the need arises. A project manager, for instance, might do estimating. Good communication is essential under the new system because the lines are blurrier, Willcut says.

Of all the adaptations to the market, slashing staff has been the most painful of all, and it's a strategy to which virtually every builder has had to resort. Reno-Sparks construction employment was down by more than a third in August compared to a year ago, according to the U.S. Bureau of Labor Statistics.

"It's such a gut wrenching, tear-jerking process," says Primak of PENTA, which downsized its workforce to 125 from 182 employees at the market's peak.

Willcut declined to disclose employee figures but acknowledged the pain. "It was like letting family go."

The tough part now is preventing current employees from getting burned out when they're doing more for less, Clafton says. Verbal expressions of appreciation and occasional lunch outings have replaced big bonuses.

Meanwhile, as builders adapt to the economy, the key is avoiding acts of desperation.

"Now there's a lot of pressure on the construction industry to bid at no or below cost. That's a short-term business plan," Primak says, and it's one PENTA has avoided. PENTA also is sticking with sectors where it has experience. "Now is not the time to take on work you don't know how to do."

Savvy companies are still selective in choosing projects. Clafton says Panattoni avoids bidding on projects it's not likely to win. There's no use wasting time and lowering morale for a long shot, he says.

United, which does both private and public projects, is maintaining its focus on Nevada, although it does work at request outside the state for clients.

So when will things turn around? Commercial follows residential construction, so although homebuilders bled last year, commercial builders didn't feel the pain until this year, and won't feel the relief of recovery right away.

United, for instance, was on track to have the best year yet with the contracts it had in hand in February. But one by one, many got put on the back burner.

There are glimmers of hope, though.

Primak senses a "buzzing" in the air that wasn't there three months ago. He's optimistic, and although PENTA is looking further afield for work, the company remains committed to its roots, he says.

"PENTA is still very bullish on Nevada."