When the bottom fell out of the economy, things got tough for builders—even for one of the nation’s top firms, Atlanta-based H. J. Russell & Company (HJR), founded in 1952. H. Eric Hilton, senior vice president, secretary, and general counsel, has been with the firm for 10 years, and he says the industry has changed significantly in that time, with increased competition as new companies enter new sectors. However, through diversification, marketing, and reinvention, HJR is not just surviving but thriving coming out of that challenging period, even as it finds itself bidding and building with much smaller profit margins and no room for error. Hilton sat down with American Builders Quarterly to detail the company’s latest strategies further and outline his legal department’s role in crafting new initiatives.
In his words …
2008 was a major turning point in the life of our 60-year-old company. Clients in all areas stopped construction activities. When that happens, you work through your existing backlog without seeing the negative impact for some time. In 2010, however, we started seeing the resulting effects. That required a great deal of adaptation and adjustment.
We analyzed all the changes we saw and noticed that we were competing with many more companies on each bid. Lowest bids started to win above all else. The bottom line is this: there is less work out there, and more people who are going after it. We historically did not operate with a full-time marketing staff and knew that had to change, so we started looking at different models to get more competitive, go after projects, and market ourselves. Now, we have full-time marketers who engage in these efforts on our behalf.
I even lost my corporate counsel as a result of budget cuts, so now I’m a one-man legal department. I’ve been here for 10 years and have served as GC since 2004. My daily work involves managing our litigation portfolio, drafting and negotiating contracts, corporate governance, EEOC charges, union negotiations, and HR administration. But in this challenging environment, the risk-management function continues to be essential to business operations. Having the right insurance in place is key, and the legal department’s overall contribution is crucial to ensuring the company can move forward in new areas.
We’ve always been known as a construction company and general contractor. We do project management, property management, real estate development, and airport projects. We do a significant amount of K-12, college systems, health care, retail, condos, and apartments in stand-alone and joint-venture models. Geographic diversification became huge for us during the period following the recession. We started to pursue work in Texas and North Carolina because of the vibrant economies there. We’ve purposefully developed those markets, doing projects that put us in touch with new partners and showcase what we can do. The $850 million, two million-square-foot Dallas Parkland Hospital project, started in 2009 as a mainland campus facility, was important in developing our foothold in the emerging region.
Diversification through our business units—program management, property management, and real estate development—helped us to navigate the great recession. We have joint ventures in different areas that allow us to stay competitive. Additionally, we became involved in some new areas and more heavily involved in others. We completed a $9 million interior project in our home city of Atlanta for the Greenberg Traurig law firm. The open-flow penthouse is clean and modern with quartz columns and expansive windows that overlook the financial district below. For us, this interior work represented an emerging area that we continue to explore. We’re very opportunistic and willing to give anything a shot if we know we can make it work. We’re always looking.
Another project, The National Museum of African American History and Culture on the Mall in Washington, DC, personifies our ability to work on high visibility and joint-venture projects. It will be opened in 2015 on a five-acre lot and features a building more than 100 feet tall with a tiered roof.
So, we keep moving forward knowing that margins are thinner and bids are more competitive. You really have to estimate with no errors. Companies that don’t have reserves are challenged. We have good financial strength, but I think expectations have to change. Instead of making huge profits, some projects might just break even, but at least you’re working and keeping people employed. HJR engaged in controlled, strategic growth in good times, so we are well positioned now.
The key to success is staying hungry and being willing to reinvent yourself. It comes down to who can build a building on time, on budget, and with the right reputation. That’s us, and we continue to look for and attract the best possible people. I believe that as an established company with excellent client service, we can provide consistency. All three of Mr. Russell’s children are involved in the business, and he remains chairman of the board.
We’re active in the community, we grow the right way, and we have the expertise. That’s why we’re set up to win. We’ve done major projects like the Georgia Dome and many buildings in downtown Atlanta. Because of our bonding capacity, we can do big projects, and we were just named part of a joint venture to complete a new NFL stadium for the Atlanta Falcons.