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Making a run for the border.

Crane Construction Co., With $65 Million in Projected Revenues, Enters Mexican Market

SITTING IN THE LITTLE Rock office of Crane Construction Co., Rex Crane verbalizes an outsider's first impression.

"We're not at all typical of what you'd expect to see in a construction company and not typical of any that I've ever been around," says the owner of the fast-growing, 5-year-old company.

Rather than occupying a sprawling office on a piece of land dotted with bulldozers, Crane Construction is based at buttoned-down Two Financial Centre in west Little Rock, along with investment bankers like Shearson Lehman Brothers Inc.

In fact, one would be hard pressed to distinguish between those who work at Crane and those who work at Shearson.

From the image to the carefully crafted business plan, Crane Construction shatters the stereotype of a building contractor.

The company's executives dress like characters out of Oliver Stone's movie "Wall Street," discuss business strategies like MBA graduates, drive sleek BMWs rather than pickup trucks and bust barriers shamelessly.

It must be working. Crane Construction has gone from $12 million in sales three years ago to a projected $65 million for 1992. Recently, it expanded operations into Mexico by forming a partnership with a contracting company there.

"I have never thought like a contractor," says the 41-year-old Crane. "I've always felt like I thought more like a businessman first and a contractor second, which is what we tell people. We're businessmen in a service business. It just happens to be construction."

Crane says the image is a conscious one. It is intended to steer away from sometimes negative, frequently unwarranted perceptions of the industry.

"We try not to even look like a construction company," he says. "We don't want to think like contractors. We don't want to look like contractors."

Crane started his self-named company in early 1988 by selling what possessions he could for capital, taking a second mortgage on his home and placing it all in CDs to incorporate the business.

His move followed about 13 years with Kinco Inc., a Little Rock construction firm.

Crane, with a degree in building construction, left Kinco as an executive vice president.

Crane's progress since hasn't gone unnoticed by others in the Little Rock contracting community.

They know the company has become the fifth largest in the state in total revenues since its inception. They know Crane builds a lot for Wal-Mart Stores Inc.

But most in the business say they don't know a whole lot more, partly because Crane does not fraternize with others through the local trade associations.

Even Crane's former boss at Kinco, Jack Kinnaman, says he doesn't know much about Crane Construction. Kinnaman says he and Crane did not part on good terms but declines to elaborate.

A close competitor of Crane's, Progressive Constructors Inc. of Little Rock, also builds a lot of Wal-Mart stores.

Harvey Skorcz, who owns Progressive, says he perceives Rex Crane as an honest, sincere competitor who "knows what he's doing."

The fact they both build Wal-Marts does not mean they step on each other's toes, he says.

"Wal-Mart has plenty of work for both of us," Skorcz says. "They haven't bothered our volume, and I don't think we've bothered theirs."

Crane Construction started building in June 1988 and at year's end had posted $3 million in gross revenues.

From there, its growth chart is a CEO's dream: up, up and away.

In its second year, Crane posted $12 million in sales, $21 million in year three, $37 million in year four and a projected $65 million this year.

The company has done 200-300 jobs -- they're apparently too busy to total them -- and has built in 13 states besides Arkansas.

Up, Up and Away

They're not confining themselves to the United States.

With the recent announcement of a partnership with a Mexican contractor, Crane showed it was not afraid to be on the vanguard of American companies testing the waters south of the border.

"I felt like it was the wave of the future, that the trade agreement was going to happen and that the markets were going to open up and Mexico would be a new frontier for a lot of U.S. companies," Crane says. "So, I wanted to be one of the first."

Assuming Congress approves the North American Free Trade Agreement, Crane will be in an enviable position: poised to usher his American clients into Mexico under his experienced wing.

The newly formed Mexican corporation, actually a Mexican-American hybrid called Constructura Abitat-Crane, is working out the kinks now with its construction of a 90,000-SF ceramic tile manufacturing plant in Chihuahua, Mexico.

"I thought I'd experiment with Mexican companies first," Crane says of the $2.7 million plant under construction for Internacional de Ceramica, North America's largest floor tile manufacturer.

After that, two other projects in Mexico are in the pipeline -- a hotel in Guadalajara and an unspecified project in Monterrey. Projects in other Central American locations such as Guatemala and Belize are being negotiated.

Crane says he decided to look for a Mexican partner because many of his clients have expressed an interest in expanding into Mexico. He likes the idea of having a partner who is familiar with the methods and customs of Central American countries.

The joint venture, he believes, will enable U.S. companies to find "a comfort zone by knowing that your contractor is a Mexican contractor. But he's owned by an American who speaks English and understands the business."

Crane Construction has gotten where it is by carving itself a comfortable, lucrative niche.

The company specializes in privately owned retail centers, hotels and restaurants of the chain variety.

"Rather than know a little bit about everything, we know a whole lot about a few small segments of the market," says Mike Hill, Crane's vice president of marketing. "And it just so happens that retail is one of the fastest-growing construction markets out there."

Chances are, you have either been in a Crane-built building or one owned by a Crane client.

In Little Rock, Crane built the Regas Grill and Olive Garden restaurants, the Wilson Inn near the airport, the Medi-Stat clinic and Petty's Discount Drug on Bowman Road and the Parkway Family Medical Center off Chenal Parkway.

The company renovated the University Shopping Center at Asher and University avenues and North Little Rock's The Other Center, where it built the Carmike Cinemas and Chili's restaurant.

Now under way is the construction of a new Wal-Mart in Little Rock at Base Line Road and Interstate 30. It is one of 20 projects the company has in the works in 10 states.

Although Crane hasn't built many Wal-Marts in central Arkansas, the various retail concerns owned by the Walton family account for about 40 percent of Crane's business.

As is the case with about 75 percent of Crane's business, most of the Walton-related projects have been located out of state.

The high volume of out-of-state business has led to Crane being recognized as one of the nation's most productive retail contractors on the national level.

The July-August issue of Monitor, a magazine about shopping center retailing, ranked Crane eighth among U.S. companies in retail work done last year. According to the magazine, Crane built or renovated 1.9 million SF of retail space on 29 projects.

Crane's projects represent the basic components of the company's business plan: target private, well-financed clients (those not dependent on bank financing) who build simply and frequently.

"If it's the kind of owner who builds repetitively, then marketing is a lot easier because you're not out there marketing a different person all the time," Crane says. "And that type of owner traditionally travels over state lines."

Marketing Mania

Marketing is a key word in Crane's big picture.

Crane says the company started out marketing rather than building, which he says is opposite from how most contractors work.

"Contractors traditionally just didn't market," Crane says. "They took out a phone number and put their name in the yellow pages and waited until something happened to them.

"I started out with marketing because you can't build anything unless you have something to build.

"That's why Mike was one of my first employees. I wanted a marketing man first. Everybody in Little Rock started to say, 'Rex is crazy. Everybody knows a contractor doesn't hire a marketing man with no superintendents, no estimators, no accounting staff and no comptroller.'"

For a contractor to seek work, through methods other than bidding in response to a public notice, is "a new concept," Crane believes.

"Not only seeking work but narrowing your field and specializing and pre-selecting what you're going to market and who you're marketing to," he says. "I don't think there are very many contractors in the nation even who are doing what we're doing."

Starting out, Crane says it was hard to get the clients they wanted because "most of them have established contractors they use so you've got to work your way into their list and you've got to somehow convince them to give you a shot.

"Then, once they do, you've got to be better than your competition."

He says their relationships with many of their repeat clients started indirectly. Crane would be hired by a developer to build a strip mall with a Wal-Mart or a Lowe's in it.

After getting experience building a company's store through a developer relationship, Crane had an advantage seeking projects directly from companies like Wal-Mart.

Client-Oriented Approach

Besides an aggressive marketing approach, Crane says the company's success is tied to its philosophy of trying to satisfy client needs as perceived by the client, not Crane.

He says the company will do as little or as much as a client wants. Crane sometimes does "the total package for a client."

That may involve finding the right market for a client, locating the land, zoning acquisition, obtaining permits and hiring architects and engineers.

"That's very unusual," Crane says. "It doesn't even fit in any other job description."

Because Crane is Little-Rock based and has so many out-of-state clients and projects, marketing vice president Hill came up with an idea that keeps the client and Crane continually in touch with progress at the job site.

For the duration of a construction project, Crane supplies each client with a Sony video Walkman desktop television monitor. It is used to view a regularly furnished videotape that keeps clients updated on building progress.

As he sits at his desk, the client can see what's being done at the job site in another state, rather than flying there to view the work.

"We send a guy by every so often -- once a week or once every two weeks -- and he walks the job site with his video camera and he videos the whole project," Crane says. "He shows important things like what materials have gotten there, any problems on the job, what progress has been made. Just like you're taking the owner on a tour and you narrate it as you go."

Too Much, Too Fast?

A cautious-minded person might wonder if all this building in all these different places might be too much, too fast.

Have growing pains caused any major problems?

Not really, Crane says.

Just some of the usual ones.

"Finding enough good people is always a problem," he says. "Cash flow is always a problem. Even facilities -- where you are, where you put people when you hire them. All those things are an ongoing problem as you grow that you have to deal with day by day."

One of those problems will be improved somewhat when Crane moves from its west Little Rock office to a two-story office building downtown on West Third Street.

Crane employs 80-120 employees, about 50 of whom could be classified as professional-managerial employees. The rest, a fluctuating number, are laborers and craftsmen.

Crane says when he started the company he didn't expect it to expand so far so fast.

"It's been more accident than anything," he says. "We didn't set out to have any particular amount of growth, but we've always been in the mode of 'as much as you can, as much as it'll stand.'

"We wanted to be full throttle. We just didn't know what full throttle would entail."
COPYRIGHT 1992 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:Crane Construction Company Inc.'s joint venture with a Mexican builder
Author:Walters, Dixie
Publication:Arkansas Business
Article Type:Company Profile
Date:Dec 7, 1992
Words:2048
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