Alexander Building Construction president talks collaboration, core sector focus
After back-to-back years of more than $50 million in revenue, Harrisburg-based Alexander Building Construction Co. is on track to reach at least $75 million this year.
The 85-year-old construction management firm, which has an office in State College, flirted with $100 million before the recession and then fell under $50 million in 2009 and 2010, according to Business Journal records.
The Business Journal sat down Aug. 21 with President Rick Seitz to discuss company growth over the last three years, current projects the firm has under contract and its strategy for future success.
Q: Company revenue is on its way back to prerecession levels. What is driving that fast growth?
A: It's the markets that are our primary markets — health care and higher education. Those two markets saw us through the downturn, and they are certainly major contributors to our revenue growth over the last three years.
We're not back to our prerecession revenue yet, but we're getting close. We'll probably do $75 (million) to $80 million in revenue this year. We'll probably be close to that (prerecession) range this year or next.
Some of the areas that were down that haven't come back are corporate office construction and parking garages. Parking garages were a mainstay of ours. That is kind of a hit-or-miss market. Industrial is another market segment that dropped off significantly. We're hoping it comes back.
Tell me about a few of the notable projects Alexander is working on right now or wrapping up.
Dickinson (College) is one (with) the new athletic training center. We have two medical office buildings that will be wrapping up this fall. One is for Lancaster General Health and one for WellSpan Health. (They are) similar size buildings, about $7 million projects. Dickinson also is around $7 million.
We have three major projects in State College. We completed a $30 million project at Mount Nittany Medical Center in June. It was a multiphased project, and the final phase was completed in June. Last summer, we started another $30 million project there. That's a new four-story wing. That will take us to the end of 2014. After the new building is done, then there is a renovation phase of some operating rooms and an intensive care area.
Another large client of ours is Geisinger Health. We're doing three large projects for them right now. One is in State College, one in Danville and we just started one in Scranton. The ones in Danville and Scranton are contracts held by our sister company, Alvin H. Butz. We are providing significant resources, preconstruction and construction phase resources, on both of those projects.
What are some of the factors prompting facility growth in your primary sectors — health care and higher education?
I think the big driver with these health care and higher education clients is "keeping up with the Joneses." For instance, there are trends in the health care industry toward single-patient rooms, more advanced cancer treatment locally (and) more efficient emergency department operations. Operating rooms also seem to be a trend right now. I don't know whether it's larger operating rooms to accommodate newer equipment that's available or it may just be demand for more surgery in hospitals.
In higher education, some of the trends have been suite-style housing to offer individual bedrooms. The other trend that we've seen is on the dining side toward more of a food court approach, or a higher level of dining service.
We just broke ground on a project at IUP (Indiana University of Pennsylvania) on a dining hall expansion. It's both (public and private schools).
What type of crossover is there between the subsidiaries in Butz Enterprises? What is the benefit?
We've been doing (crossover) from day one, but the last five years we've really made a concerted effort to focus on that. We approach each project from an enterprisewide standpoint. We look at what the personnel needs are for each project and where within the enterprise we can provide the best people.
We've got some enterprisewide initiatives. One of them came out of the building information modeling trend in design and construction.
Some of our clients — Geisinger and Penn State, for example — are requiring that BIM be used by their construction managers. We've invested in hardware, software and training. Through an enterprisewide initiative, we have what we call a virtual design and construction committee.
That came out of a strategic planning effort about two years ago. We're in the early stages of the implementation process.
Definitely, there has been a cost benefit. It (also) benefits our customers (and) allows our people to grow. It's the type of thing a company like ours needs to be doing.
Are you looking to expand offices or service areas? Or might the company be going in another direction?
We did a strategic plan here seven years ago. Out of that came the direction to just focus on health care and higher education, corporate offices and parking garages, and move away from other segments we had been working in. Some of those segments were the ones that took the biggest hit.
We reaffirmed that (direction) two years ago with the enterprisewide plan.
Geographically, our market is Central Pennsylvania, the Philadelphia region and the Lehigh Valley. We have a couple of clients who have asked us to look at projects in northeast Pennsylvania. (Butz has) taken on those projects. One of them was PNC Field (in Lackawanna County).
Baseball stadiums, football stadiums and hockey arenas are starting to become a little bit stronger market for us, particularly for Butz. Butz did the baseball stadium in Allentown for the Lehigh Valley IronPigs. They are now building the hockey arena in downtown Allentown for the new hockey franchise. And we've done Beaver Stadium. We've done five major projects and have a new one starting this year after the season.
We don't competitively bid for our projects. We negotiate our projects, so we look for those (construction management) opportunities from prospective customers. Most of the institutional clients that we work for prefer CM at-risk to the general contractor bid scenario.
So we're selective on what we pursue. We sometimes turn down opportunities to bid, because we just don't believe that selection process is the best for the client. A lot of our new work is with repeat customers.
What state- or federal-level concerns do you have and the impact they might have on business?
State funding for higher education, which has been in a decline for state-affiliated and the state universities themselves. Funding is a challenge for them. And the Affordable Care Act and how it's going to impact our health care clients.
More about Rick Seitz
The 55-year-old has been president of Alexander Building Construction Co. since 2008.
For 33 years, he has worked for the companies that ultimately became part of Butz Enterprises Inc., which is based in Allentown. He worked for R.M. Shoemaker Co. (now Shoemaker Construction Co.) in the Philadelphia area from 1980 until 1996, where he was a project engineer, project manager, estimator and manager of preconstruction services.
He joined Alexander in 1996 and worked his way up from vice president of preconstruction services and vice president.
Seitz earned his bachelor's degree in civil engineering from Penn State in 1979. He and his wife, Sue, live in Hampden Township. The couple has three daughters.
He enjoys traveling, reading and attending professional and college sporting events.
More on Butz
Butz reported $212.8 million in revenue, according to ENR.
Gates Butz Institutional Construction LLC in Florida is a sister company.