Wohlsen CEO talks company, industry
During the last few years, nearly everyone in the construction industry has had to sharpen their pencils and expand their footprint to secure work.
"The economy has required us to be better planners," said J. Gary Langmuir, president and CEO of Lancaster-based Wohlsen Construction Co., one of the top construction firms in Central Pennsylvania, based on reported revenue. "Your horizon has gotten much shorter."
When the industry was booming and the money was flowing, larger construction companies like Wohlsen had a feel for the economy three or four years out, Langmuir said.
In the wake of the Great Recession, where the construction industry remains flat in many sectors, the planning window has contracted to about two years, he said.
"The uncertainty of the economy requires us to be more adaptive and versatile than we had to be in the past," Langmuir said.
For a company that has been around since 1890, the focus remains on in-house craftsmanship as well as relationship and reputation building, he said.
Wohlsen is a recognized leader in the construction management of senior living and health-care-related projects.
The firm also has put greater emphasis on project collaboration. Last year, Wohlsen purchased an adjacent property at Steel Way and the Manheim Pike that it renovated and expanded for use as an operations center.
The 18,300-square-foot green facility has open office workstations and a variety of conference rooms to create a more centralized space and improve workflow between departments.
The Keystone Chapter of Associated Builders and Contractors recently named the operations center Project of the Year.
The Business Journal sat down with Langmuir last week to discuss the company's growth strategy and the biggest impacts on the commercial construction industry.
Q: What is the biggest challenge you face as the tide turns in the economy?
A: The duration of what it takes to get a project started is much longer. From the time a client decides they are going to (move) forward — everything from the approval process to the design process and financing — that is quite long.
The ability to manage our own resources with that very volatile part of when a project is going to start is always a challenge. We're working with our clients during that entire period.
Do you see development opportunities picking up, staying flat or possibly dropping off because of national economic pressures or other factors like the election?
The good thing about our industry is we — because of what we do — we have a long horizon. Once we begin a project, we can be working anywhere from less than 12 months to as long as four years. We're able to project out a certain level of future work.
The decision-making process, because we're dealing with large transactions, when those projects get moved or get delayed, it can have some fairly (significant) impacts on our managing of the business.
With regard to where we're at (as an industry), surely we came off the bottom around late (2009) or (early 2010). Things slowly improved. After the end of last year and the beginning of this year, things started to accelerate. And then in early spring it really kind of came to a grinding halt again.
The national statistics would indicate — one of the measurements would be the billings for the architects — (things) have dropped dramatically over the last several months.
McGraw-Hill Construction just announced that the nonresidential sector fell 7 percent in the month of July.
Our strength would be in our reputation and diversity of products. Even though the market has declined, there is still a lot of construction going on. Then it becomes about competition.
It's a difficult cycle for the business because the more aggressively people price (projects) — while owners think they are getting a bargain — the delivery of the project sometimes doesn't go as smoothly as owners would like.
Your company posted nearly $200 million in revenue last year. What sectors are most responsible for that total, and how do you continue to grow that number and improve in areas where you excel?
Health care has remained strong. Education and senior care, which is a big part of our business, they reacted quickly when the financial markets drove the economy down. They were either impacted on their endowments or their ability to borrow.
We saw as the market recovered that private education started to come back. Senior care is driven by demographics and continues to have needs. There are a lot of older facilities that are in need of renovation and modernization for them to remain competitive.
We have seen a greater increase in the amount of renovation and expansion (work) versus new construction, particularly in health care and senior care. (Those projects) tend to be in geographies with higher density and older populations.
I would say health care obviously is impacted by the dynamics of what is going on in the political world and changes in health care management. They are continually trying to work to drive costs out of their systems.
What we see, in aggregate, is that a client might have been better prepared to do a larger overall building program that they would commit to (a decade ago). Now they may have a master plan, but they are likely to only commit on a project-to-project basis.
During the last decade, a lot of firms started to move away from having their own workforces in the field. We continue to self-perform with our own craftsmen, so we're able to bring that Central Pennsylvania capability to other areas.
Wohlsen opened a new operations center last summer. What were the biggest reasons for that facility addition and is the company looking to expand further?
It was long overdue. It's like being the shoemaker's kids. You take care of yourself last.
We were very busy over the last decade. As we continued to grow, we kept adapting as to how we were dealing with our physical needs.
We were looking for a way to get better collaboration of all our teams and getting them into one centralized location, so all the project managers and engineers, pre-construction (employees) and estimators could work together on one project.
We had contemplated building a new building across the street. But, we have a strong commitment to sustainability and green construction. We felt (reuse) was a better use of an existing opportunity.
Could any of our other regions expand? Yes.
When you look at the cycle the industry is in, if we are in a recovery, we're still in the early stages of it. For us, we consider it a good time to be doing our planning and consideration of where future expansions would come from.
We have built as far as Florida for a client. We compete for work in Virginia, West Virginia, New York and New Jersey. <
About J. Gary Langmuir
Langmuir began his career in the construction industry in 1976. He joined Wohlsen Construction Co. in 1980 as CFO.
In 1990, he became president and CEO. He added the title of chairman of the board in 1995.
Langmuir, 57, lives in East Hempfield Township. He has been married 38 years and has two children. He enjoys fishing and golfing.