A Looming Recession:
1974-1984
Legacy of Leadership
This part of Barton Malow’s heritage story was written by former President and Chairman Ben Maibach Jr. in the late 1990s prior to his death in 2011. Ben Jr. had the privilege of working closely with Carl Barton and Arnold Malow and speaks to their impact on the values that shaped our culture in the early days of the company.
Having observed our 50th year in 1974, a reception was held at the Detroit Athletic Club to toast this golden anniversary and company achievements. The first 50 years produced in excess of $1 billion of projects.
Robert C. Mair, who had served very ably as a Director and Treasurer of the company, tenured his resignation in June of 1975. Ben C. Maibach III, my son, was named Executive Vice President and elected a Director; here, another seed was planted to promote and ensure the continued growth and stability of the company. I was elected Chairman of the Board, and Rollie Wilkening was appointed President.
Another milestone was reached when revenues exceeded $108 million and the return on equity was over 30%. To handle this increased volume, in August of 1976, Floyd Wieland was elected Senior Vice President; William Dryburgh, the Project Manager on the Pontiac Silverdome, was named Vice President; and Thomas Brady was appointed Director of Marketing. The company recognized fairly early that qualifications-based selection required marketing expertise. Gone were the days when a low bid was enough to win work. New strategies had to be developed to position the company for the future.
An objective that was achieved was market and services diversification. Industrial projects made up most of our volume and our healthcare division continued to grow. Contracts in hand included several office and high-rise projects and a few water filtration and sewage treatment plants. A Special Projects division was established for the construction of stadiums and arenas.
A new position of Director of Community Relations was filled by Bernie Webb to further strengthen the company’s policy of fair employment practices and to promote the use of minority and disadvantaged businesses.
An analysis of our Denver-based Mead & Mount operations revealed that a separate company and name was not essential to our progress and the Board directed the phasing down of the operation and incorporating their endeavors into Barton Malow. This transition was completed in 1977.
In recognition of our need for an in-house counsel, Eugene Twitchell was hired. We were living in a more litigious society and it was wisely understood that “an ounce of prevention is worth more than a pound of cure.”
Also in 1977, Thomas Madden, who had been with the company since the early 1950’s, was elected Assistant Vice President to assist in field operations, and Mark Bahr was named Treasurer and elected a Barton Malow Director.
1979 was a banner year, with revenues reaching $133 million. Floyd Wieland retired on May 31, 1979, and Tom Brady was elected to the office of Vice President in December of 1979.
Sadly, on October 19, 1979, Carl Barton, the father of our company, died at the age of 82. During his lifetime, he made outstanding contributions to the community and our company. I will never forget his kindness, wisdom, and consideration for me personally and how it has impacted my life in unfathomable ways.
The Board of Directors determined that it was necessary to continue to pursue work beyond Michigan. The impact of foreign automobile competition impacted automotive work. We were grateful to see the Health Facility Group expanding to make up for the loss of volume. The firm continued to move forward as a leader in the construction industry.
The company has continued the practice of employment agreements between senior officers established by Mr. Barton and Mr. Malow. Rollie Wilkening and I established a buy/sell agreement to provide for an orderly transition of authority, direction and stock control of the company when Rollie retired. This proved to be a very wise decision and we are grateful for the recommendation and advice of our legal and accounting firms.
During this time as Chief Executive Officer, I was required to consider a difficult decision — how could we provide continuity of operations, including how we might have the financing necessary to carry on a growing workload and the essential bonding capacity needed for the volume of work.
Unsolicited, we received two inquiries for the possible purchase of my controlling interest. First was the Dumez Company from France, one of the largest international contractors. Their desire was to have an operation in the United States and to make a major investment. The other was the Parsons Corporation of California, who wanted to get a foothold in the industrial market, particularly the automotive industry. Both firms were impressed with our workload and customer base. Both would have been willing to pay a premium for controlling interest. Several meetings were held to investigate the possibilities that a sale might have, first on our employees and clients and then on my family. After several family meetings, one chief factor came to the forefront.
Our great concern was that a change in ownership might drastically affect career opportunities for dedicated and conscientious employees. The values of C.O. Barton and Arnold Malow helped make the decision. In spite of the potential for my immediate personal gain, we decided to keep the management and ownership and proceed with a long-term plan to keep the company private.
In the 1980s, several factors were evident; many of the old-line construction companies who had been our competitors, either closed their doors, merged with others or a few, unfortunately, had gone bankrupt. A recession loomed about us and the industry was suffering a decline and profits were dropping. There was a general degree of pessimism, but, by the grace of God, Barton Malow continued to forge ahead and had another banner year in 1980. Revenues were over $165 million and return on equity was 25%.
Mark Bahr was appointed Vice President, Mike Ferber (who was the chief CM estimator) was appointed Assistant Vice President and Chief Estimator, and Bruce Sinclair (a project administrator) was named Vice President.
Success with General Motors
After having completed the General Motors Assembly Division World Headquarters, we were honored when General Motors awarded us a construction management contract for the Orion, Michigan, assembly plant. This 3.2 million square foot complex was one of the largest private contracts awarded in the United States. The structure was for the production and assembly of a complete new line of restyled, short-wheel base, front-end drive automobiles designed with all of the latest technology, including robotics. Time was extremely important, and we were to build the project in concert with the GM Assembly Division, Plant Engineering and Construction.
Our mission was to schedule, analyze and determine bid packs, purchase and supervise the construction, as well as purchase and install the necessary equipment to bring this facility on line as expeditiously as possible — unquestionably the greatest challenge the firm ever had. To our amazement, General Motors awarded us the second mirror plant to be constructed in Wentzville, Missouri, just west of St. Louis. The total of these two awards was in excess of $1 billion. Most of our competitors were severely impacted by the recession; consequently, there was a universal reduction of staff and we were able to bring on board experienced and capable individuals who played a beneficial part in this dramatic undertaking.
Both plants were brought online in time for General Motors to produce its new line of vehicles. After 50 years of association with GM, we were very grateful for the confidence they placed in our firm. Obviously, we were honored to be chosen for the second project and to be able to build the plants simultaneously. Rollie Wilkening consented to continue as President for another year, which gave Ben III an opportunity to gain more experience.
More Leadership Changes
In April of 1981, Ben Maibach III assumed the title of President; Rollie Wilkening advanced to Vice-Chairman and Secretary; Mark Bahr was promoted to Executive Vice President and Chief Financial Officer; Mike Ferber was appointed Vice President of Estimating/Engineering; and John Wieland (a project administrator) was named Vice President. John had been placed in charge of the GMAD projects and in spite of the depressed economy all around us, another huge milestone was reached as the ’81 year saw our volume almost doubled to over $262 million and profits rose another 5%.
Edward R. Jarchow, a C.P.A. in the auditing department at Ford, joined the company in January of 1981 and became Controller.
Recognizing the need to align our structure with a growing volume, we established several divisions with an officer heading each; Commercial/Institutional, Health Facilities, and Special Projects.
In recognition of ongoing progress on the two large assembly plants underway, General Motors very graciously awarded us a third assembly plant — the GMBOC Detroit Hamtramck Assembly Center.
Dykema, Gossett, Spencer, Goodnow & Trigg had been our legal firm for many years. From inception, Collins, Buri & McConkey, or their predecessors, were our accountants and we appreciate their cooperation and partnership in our business. Clearly, the advice of many over the years helped shape the company.
The Industry Changes
As projects became harder to procure, a marketing plan and department were expanded. Today we appreciate the contribution this division has made to our growth. The day when the firm’s principals were the primary salespeople had dramatically changed. Client needs were changing and they were asking more questions during the selection process.
There were big changes in how construction was delivered, which required a complete change in operations. Early in my career, practically all general contractors employed most of the basic trades and did most of their work with their own trades personnel. As technology has increased, we witnessed the development of specialty firms, which allows closer supervision and better monitoring of work put in place.
Since 1924, probably no year stands out as much as 1983. The company had attained national acclaim. According to Engineering News-Record, we were the only construction company among the top 25 that performed solely domestic work.
Barton Malow was in the top ten in construction management and in the top 25 in overall volume, listed among the large firms with revenues at $853 million with profits continuing to be impressive. Two of the three GM assembly plants had been successfully brought online, which helped propel growth.
Our operation in Florida was merit shop and on September 1, 1983, David M. Thomas came on board and was elected to the office of Vice President at Barton Malow Southern.
Also that year Bill Dryburgh retired. He had served seven years as a Vice President and played an active role and rightly received well-deserved accolades for his personal direction in building two air inflated stadiums, the Silverdome and Metrodome. Bill continued as a consultant, particularly in relation to the special projects areas.
Space age technology has allowed for higher and stronger structures to be built with unique and novel designs. Research has developed lighter materials that are better able to endure the harshness of a changing environment. Dramatic changes have come not only in the type of construction but as well as the process, style, and techniques of a broad scope of the industry. Time is money and there is no question that scheduling must reach far beyond the building proper and into areas such as the environmental impact, the availability of natural resources as well as equipment and materials. Value engineering recognizes not only the initial cost, but operation, maintenance and longevity. The net result is the development of many specialty firms not only in the construction phase but also in the architectural/engineering/design phases.
The whole process is vastly different from the days of our forefathers and to be successful, one must be progressive, considering the much broader aspect of the building or project alone. We need to keep innovating, while preserving company values, which have proved to be the foundation of our success over time.
