Structured Success

Structured Success

DEVELOPMENT by Sean Roth | Real Estate Editor

When John Jackson set out to lead S&R Construction Inc. in 2003, he had more than a few strikes against him. He was young, in his early 30s. He had never run a company, let alone a land-development company.

The biggest problem, though, was not with him. Although S&R booked nearly $5 million a year in revenue, it was so cash starved that the strain had started to affect its relationship with suppliers. Things were so bad, both in the finances and the operations, that Jackson says bankruptcy was not far off.

Things are far different today.

Jackson's company, since renamed Earthworks Land Development Inc., avoided a bankruptcy filing, but it took the leadership techniques Jackson picked up in the Army, when he fought in the first Gulf War. Using a structured formula, he went through the company unit-by-unit until he knew which processes were missing and how to fix them.

"I read a lot of management books and most of them say that until you've been involved in a turnaround, you've never really been in business," Jackson says. "It certainly is a feather in the cap having come through those challenging times. People always want to do well. It's leadership's job to set a common vision."

With the near bankruptcy days behind it, Earthworks is moving into a growth phase, aided by all the real estate activity in the company's target markets in Hillsborough, Manatee Sarasota and Charlotte counties. The firm, which hit $10 million in revenues last year, has already secured $44 million in contracts with major builders such as Taylor Woodrow, Columbus and Ohio-based homebuilder M/I Homes.

The 35-year-old Jackson has also purchased a 42-acre site near Gibsonton Drive and Interstate 75 in Southern Hillsborough County. Jackson's development subsidiary company Jackson Holdings LLC is rezoning the land to develop 221 townhomes along with 43,000 square feet of office space.

"I'll probably get it entitled and then sell it off," Jackson says. "We don't do vertical construction."

This year, Jackson will kick off Tampa Groves Aggregates LLC, an about eight-person subsidiary company built around mining and selling fill dirt. He has a partnership with the current landowner to mine an area on State Road 674 near Wimauma. An early estimate is that the fill-dirt company could generate somewhere in the neighborhood of $10 million a year for at least the next five years.

Time to Change

Jackson took a roundabout path to his current role with Earthworks. After high school, Jackson enlisted in the U.S. Army. He served two tours of duty including 6 months in the deserts of Kuwait as part of Operation Desert Storm. He also obtained a bachelor's degree in finance from the University of Tampa and a master's in business administration from the University of Colorado.

In 1999, he left the Army as a captain and took a job as a financial analyst with Clearwater-based Tech Data Corp., a worldwide distributor of I.T. products. He worked his way into management through business development, working in operations as a strategy manager for North America.

It was during a family Super Bowl party soon after leaving the Army when Jackson was first turned on to S&R. Jackson's uncle, Michael Smalley, was half owner in the five-year-old S&R, and towards the end of the night, the conversation between the two turned to development and real estate. Jackson had grown up around construction, and he had followed the steady growth in development demand the past few years.

"We wanted to develop land together," Jackson says. "This was back when you could still buy property near the county line [between Manatee and Hillsborough counties] for $15,000 an acre. My dad was an electrical engineer, so I've been working in construction on weekends and after school for a long time. During college, I was project manager for various construction jobs my dad had going."

Smalley's business partner in S&R, David Roehr, was interested in selling out, so Jackson agreed to buy his shares.

"I really wanted to be involved in growing a business from the ground up," Jackson says. "I think it goes back to my time in the Army. It comes from the level of responsibility you're given. You're responsible for people's very lives."

Shortly after Jackson joined the company in January of 2003, Smalley started feeling ill with what turned into a losing battle with emphysema. By the middle of 2003, Jackson had taken on all of the operational duties of running the company.

He quickly learned some of the travails of being the boss. Not only did he have to run a company, he had to figure out how to make the company viable.

S&R Construction had grown under the previous owners - the company did much of the site work for the large home community of Panther Ridge off State Road 70 - but it had left the company's cash stretched thin.

"The company had grown quite a bit, but it was in pretty desperate need of some processes," Jackson says. "We either had to organize, or we had taken on way too much work."

Ultimately, Jackson says it was just a mater of looking at the business department by department. In accounting, he found there wasn't a purchase order system to track vendor invoices. In operations, there wasn't a policy for employees to do preventative maintenance on the large mechanical equipment. Plus overall, while the company was bidding projects correctly, there was no job-costing process to translate that estimate into goals for employees to follow as they worked throughout the project.

"It was never conveyed to the field," Jackson says. "No one ever took that bid information and told the pipe crew you have to meet this goal for us to be profitable on this job."

Jackson also wrote a new business plan.

The following year was challenging. Among other duties, he had to call suppliers to not only assure them the company was on the mend, but to also ask them to grant Earthworks a little flexibility during the transition.

By the middle of 2004, Earthwork's revenue had improved by about $3 million, but Jackson says the more important change was in the firm's financial picture. The company was back firmly in the black.

Refreshing growth

And 2005 wasn't just good for the bottom line; the company saw the size of its clients grow considerably over the year, too.

One of those new clients, Alan Zirkelbach president of Palmetto-based Zirkelbach Construction General Contractors, was impressed with the company's focus on procedures.

"He brought a lot of management to the site construction," Zirkelbach says. "It was refreshing. They came in on time and on budget. That's pretty unusual for site contractors. I also never saw a big piece of equipment on the site without operator. That's important if you're on a tight timetable. He runs that small- to medium-sized company like a big firm."

Earthwork's work for developers in Lakewood Ranch could wind up landing the company an even bigger client. Two Schroeder-Manatee Ranch officials reported that Earthworks is in consideration for future projects the community developer is planning.

This year, Jackson is working to increase the company's philanthropic efforts. Jackson has committed to doing one pro bono project a year; this year the company has agreed to build a parking lot addition for Southeastern Guide Dogs Inc. In addition, Jackson plans to donate 2.5% of the company's pre-tax earnings to nonprofits.

Jackson's goal is to grow Earthworks to revenue of $50 million in the next three years.

Earthworks Land

Development

Year Gross Revenue

2003: $5million

2004: $8 million

2005: $10 million

2006: $14 million (projected)