Forward Thinking

The stark recession choice Thurston Lamberson faced in 2010 was simple, even common, yet brutally difficult to execute: To layoff a bulk of the staff, 75 people, or maintain the payroll with 40% less work.

Lamberson, founder and president of Palmetto-based TLC Diversified, a niche general contractor for the water/wastewater industry, chose to not layoff en masse. About 20 positions were cut in 2010 and 2011, mostly laborers, but he stuck with the core group of employees. In the process, Lamberson ran TLC at a sizable loss for nearly two years — a particularly painful experience for someone who calls himself a simple Iowa farm boy.

The pain, however, recently gave way to gain: Revenues at TLC Diversified are up 110%, from $11.5 million in 2011 to $24.2 million in 2012. That's even 39% better than 2009, when the firm had $17.4 million in sales. The payroll is back up, too. TLC now has 89 employees. Says Lamberson: “We're glad we have our company still going at full strength.”

Lamberson, 62, has now turned his anxiety to 2013, which he so far doubts will replicate 2012 in sales growth.

Nonetheless, the sales rebound at TLC Diversified isn't an isolated experience. Indeed, several Gulf Coast construction firms have had big revenue boosts. Examples include:
• McIntyre Elwell & Strammer General Contractors: Revenues at the Sarasota-based firm increased 33.7% in 2012, from $34.4 million to $46 million. Work at the firm includes several large-scale renovations for Publix stores;
• DeAngelis Diamond Construction: The Naples-based commercial construction firm saw revenues rise 15.2% in 2012, from $88.5 million in 2011 to $102 million last year. Co-founder John DeAngelis says the work is still coming in, too, and the firm could hit $125 million in sales by 2013. Says DeAngelis: “We think 2013 is going to be a very good year.”
• Power Design: Sales at the St. Petersburg-based firm, one of the largest full-service electrical contractors in the U.S., rose 28.2% last year, from $110 million in 2011 to $141 million in 2012. The company is up 53.3% since 2010, when it had $91.96 million in sales.
Lauren Permuy, a business development executive with Power Design, a family-owned firm that does work in 17 states, also says 2013 should be a big growth year. Permuy says one factor in the recession-era success is the company, like many others, branched out in geography and sectors when the economy sank. “If we were only Florida-based,” says Permuy, “there is no way we would be able to keep our doors open.”

Those firms and others are also hiring again. Sarasota-based Core Construction, for instance, hired nine people over the past three months, for projects that stretch from Georgia to Miami. Now with 37 employees, Core expects to hire another nine people by mid-March. Core President John Wiseman says the company, with a focus that includes multifamily housing and senior-living projects, is “as busy as we have been in four or five years.”

Both Wiseman and DeAngelis say the influx of business comes mostly from clients that were on the sidelines for a few years. Some of those clients include real estate investment trusts and private equity firms — a signal that the long dormant financing end of the industry could be on the mend. “Financing isn't becoming easy by any stretch,” says Wiseman, “but it is less difficult.”

Practical restraint
Meanwhile, there are several reasons behind the revival at TLC Diversified, from both external and internal forces.

One that stands out is the restraint Lamberson and his wife, Joanne Lamberson, who runs the financial side of TLC, exercised to not overspend during the boom. The company, further, used boom-time profits to pay down debt on property, equipment and trucks. Says Thurston Lamberson: “We knew tough times had to come from the good times.”

The company also expanded outside the Gulf Coast, where it picked up jobs in central Florida and Iowa. One project, its largest in 2012, was an $11.3 million contract to work on improvements at a water reclamation treatment facility in Orlando.

Manatee County officials, moreover, enhanced their local contractor rules, which led to a few more local jobs. TLC even took on some rare private sector work, in partnerships with other companies.

Counterintuitively, Lamberson also doubled the estimators on staff, from two to four. His goal was to flood the market with offers to work. “The key to success in this business is number of bids,” he says. “If you put out enough bids you are bound to get something.”

The confident move to mostly keep the staff intact, of course, was another integral factor. While Lamberson says he thought a lot about how he was responsible for many employees and their families, his decision was only partly altruistic.

It was also practical. “If we had cut some of those guys to be more profitable,” Lamberson says, “we wouldn't be able to do this much work now.”

Low debt
The Lambersons not only kept up the payroll, but they recently made at least a $200,000 investment in technology to help transform the way TLC works. The changes, says Lamberson, “just make data so much more available. We want to stay as high-tech as possible.”

Those changes include updated estimating and scheduling software and new hardware, like iPads for project managers in the field to track projects. Dalas Lamberson, vice president of production at TLC Diversified and the Lambersons' son, says the software allows the company to move fast when labor, material or equipment issues arise.

Intricate drawings of projects are now done electronically, not printed. “We used to do everything on big sheets of paper,” Dalas Lamberson says. “Now we do everything on a 30-inch monitor.”

That vision is far from the early days of the company.

In fact, when Thurston Lamberson first started out on his own, in Pompano Beach in 1985, it was a true barebones startup. He and a business partner got things going with a $20,000 loan. Lamberson had previously worked for a construction firm in Minnesota that built grain-processing plants worldwide, from Minneapolis to Moscow.

Lamberson started small, yet business still came in slow. Some weeks in those early years he made payroll off his credit cards. For a while he ran the business out of what was Joanne Lamberson's garage.

“We barely had enough work,” says Lamberson. “The only thing that kept me in business was my unwillingness to go broke.”

But just like he did a few years ago, Lamberson ran an operation with little debt and little overhead. That allowed the company to survive, and by the mid-1990s it booked about $8 million a year in jobs. The company opened an office in Sarasota in 1997 and in 2001 it relocated its headquarters to a 5-acre complex in Palmetto. It continues to maintain an office on the east coast.

“It wasn't my intention to become a mega company,” says Lamberson. “I always wanted something I could manage.”

'Stay alive'
That something is now a statewide leader in construction and renovation for the water and wastewater industry. Recent projects include a $5.6 million screening and grit removal contract with the city of Clearwater; upgrades to a water and wastewater treatment facility in Martin County, a $6.1 million contract; and a $3.8 million reclaimed water facility job in Palm Beach County.

Lamberson says the certainty of doing work for municipalities and governments was a recession blessing. Plus, he adds that one of the best things about being in such a technical niche of construction is the high barrier to entry. Several big regional firms, in $300 million range, do this work, but there aren't many others out there.

Yet that edge, temporarily, turned into a disadvantage in the recession.

That's because companies with little to no experience in the field bid on jobs. Sometimes 30 companies would bid on one project, Lamberson says, when there would normally have been no more than 10.

Those low-bidders — some, says Lamberson, were cash-strapped homebuilders — won jobs because several clients sought to save money any way possible in the downturn. “When the private sector goes to hell,” says Lamberson, “everyone shows up at the public trough to stay alive.”

Another challenge, more long-term, is the company is currently working out its succession plan. In addition to Dalas Lamberson, there's Tiffany Monaco, the Lambersons' daughter. Monaco, who first worked for TLC in West Palm Beach, when she was a teenage receptionist, has worked her way up in the accounting department.

Both Dalas Lamberson and Tiffany Monaco are being groomed for leadership positions. The key to that process, says Thurston Lamberson, is one person does field work, while the other does inside financial work. He says he's seen succession efforts fail when there isn't a good balance.

The elder Lamberson says he's not ready to retire, though he and Joanne Lamberson have already begun to spend four months of the year in Iowa. He's also doesn't want to go through a downturn again.

“When you are 40 or 45 years old, it's just a challenge,” says Lamberson. “But when you are in your 60s, do you really want to roll up your shirt sleeves and do it again?”