Show me the Mooney

Show me the Mooney

CONSTRUCTION by Jean Gruss | Editor/Lee-Collier

Meridian Construction & Development is a small construction company that is nimble and agile.

That's critical in an industry that's being buffeted by economic headwinds.

Lynn Murtagh has a secret weapon: a Mooney.

He pilots the four-seat, single-engine plane all over the Southeast, overseeing jobs for his small Fort Myers-based construction firm, Meridian Construction & Development.

"With an airplane, I can go to Charleston, S.C., and be home for dinner," he says.

It's that kind of agility that is helping Murtagh survive the commercial-construction downturn while many of his competitors are dropping out of the business. He brings that fleet-footed ability to the work he does, often taking jobs that others won't or can't do.

Meridian is not a big commercial builder; it's not even in the Review's list of top-50 construction firms. But the way Murtagh managed his company is a good lesson in how to run a lean organization that is highly efficient and productive.

Murtagh learned from previous downturns that diversification is a good thing. Half the work he does now is for the public sector, an area that builders are scrambling to get into as private-sector work slows.

He also learned that it's crucial to cut overhead quickly when the industry is in decline. Waiting for economic conditions to turn around is a mistake. Murtagh speaks from experience. He was a commercial builder in Lafayette, La., when that state's oil economy collapsed in the mid-1980s. "When I left they issued six permits a month for the parish," he says, with a hint of a Louisiana accent, referring to a county in Louisiana.

Sound familiar? Fort Myers, Murtagh says, reminds him a lot of Lafayette during the oil boom and bust. But he's learned a lot since then. Among them: No matter how bad it gets, it always gets better. Murtagh says: "2007 was the best year I ever had, 2008 is better and 2009 is better than that."

Born on the bayou

The 53-year-old Murtagh grew up in Morgan City, La., southwest of New Orleans, fishing and hunting on the Atchafalia River as a child. His family still owns a fish camp there.

He started his first business while still in college at the University of Southwest Louisiana, now the University of Louisiana at Lafayette. While taking classes in industrial arts, Murtagh was busy framing houses and had four employees.

At its height, Murtagh's company in Lafayette had about 20 employees. But the oil bust of the mid-1980s hit Lafayette and other Louisiana towns hard. According to the University of Louisiana, Lafayette's unemployment hit 14% in 1986.

"Never take the future for granted," says Murtagh. What would he have done in retrospect? "I would have acquired more property and saved more money to be prepared for a downturn," he says. "There were good deals for those with money."

Instead, Murtagh moved to Orlando in 1986 and he went to work for various developers and builders. He then moved to Fort Myers and started Meridian with a partner in 1989. It was a tough time to start a commercial-construction company because it wasn't until the mid-1990s that the market for such buildings would improve.

But by 2000, Meridian Construction was building fiber-optic switching stations for telecommunications companies. That work started when a phone-company representative called him from a listing in the Yellow Pages. He first built one in Fort Myers. When that went smoothly, he built another in Sarasota. Pretty soon, Murtagh was building them all over the Southeast.

Murtagh couldn't have done it without his Mooney plane (Mooney calls its owners "Mooniacs"). He was able to subcontract the work and fly up on a day's notice to monitor the construction projects. "At the time, we were looking at telecom as a niche," he says.

However, no one expected the telecom bust that ensued. "We lost half our volume," Murtagh recalls. He bought out his partner and laid off employees. "You're never prepared to lose half your business," he says. But he moved quickly to cut overhead and one of his former employees even became a customer.

"Don't take it as an end," he says. "Handle it as a beginning." Too often, Murtagh says, entrepreneurs are slow to cut staff in a downturn. "They wait too long," he says.

It's always difficult to lay people off and it's crucial to do it in a compassionate way, Murtagh says. But that's one of the reasons he keeps his company lean, with only eight construction superintendents and two project managers. Most of the labor is subcontracted to experienced firms that specialize in certain areas of construction.

Working for the DEA

After the telecom bust, Murtagh started looking for work to replace the lost revenues. That began with a building for the Social Security Administration in Naples and soon spread throughout Florida and neighboring states. He's now building a super-secure U.S. Drug Enforcement Agency building in Miami, among other public projects.

Developers and real estate investors love to build federal-government buildings because leases are generally lengthy and the credit of the tenant is perfect. After all, if the federal government needs more money it can simply borrow or print more.

Again, Murtagh's skill as a pilot paid off. With such a small staff, it would be impossible to fly commercially or even drive to many locations without adding substantially to travel time and cost.

Today, government work accounts for about half of Meridian's revenues. Murtagh won't say exactly what they are, but says they were between $3 million and $6 million in 2007.

Although novice contractors have gone out of business, the construction slowdown is overblown, Murtagh suggests. "Things aren't coming to a stop," he says. "The work doesn't come to you; you have to get it. I'll work anywhere in Florida."

The credit crunch is not as bad as it might seem either. The banks' lending criteria are returning to pre-boom normalcy. "For a viable borrower and project, there's financing available," Murtagh says.

And here's a clue to Murtagh's success: "I'm always contracting work nobody else wants." Many of these projects are tricky, such as the time he had to drill holes in the roof of an old movie theater to insert beams so he could transform the place into a church.

Murtagh also sees benefits in the ecological movement. His firm's accreditation as a Leadership in Energy and Environmental Design (LEED) builder will be essential as a qualification. "I think it's the future," he says.

CEO insight

Lynn Murtagh, the CEO of Meridian Construction & Development, has survived at least two big busts: the oil bust and the telecom bust. Among the lessons he says he learned from those experiences:

• No matter how bad it gets, it always gets better.

• Never take the future for granted.

• Only the best survive.

• Diversify and offer products and services that rivals don't.

• Downsize quickly during the storm.

• There are good deals for those with money.

REVIEW SUMMARY

Company. Meridian Construction & Development

Industry. Commercial construction

Key. Small companies can have a big reach if they're efficient with their overhead and expand their geographic boundaries.