Gray Construction

The same clear thinking and drive for perfection that will soon position Toyota as the world’s largest car manufacturer has long been a factor in the success of Gray Construction, a burgeoning family-run firm located in Lexington, Ky. Gray’s penchant for kaizen, continuous improvement and a total team concept, have helped it land over 250 exacting projects for Japanese firms and another equally demanding 500 projects for American, European and Korean firms.

After the untimely death of founder James Norris Gray in 1972 left the firm in the hands of his widow, Lois and their two oldest sons, Howard and Jim, the family saw Japanese construction activity in the South as a potentially rewarding emerging market. They did their homework, including traveling to Japan, touring plants, learning Japanese management styles and the language. The firm landed several contracts with Toshiba and Hitachi in the late 1970s and early 80s, but it was the Georgetown (Ky.) Toyota Assembly Plant project that kick-started a long and productive relationship.

When Gray picked up a 292,000-sq-ft plastics manufacturing building on the $800-million Toyota plant in 1986, the Japanese manufacturer was the world’s third-largest automobile manufacturer and Gray, then known as James N. Gray Construction Co. Inc., Glasgow, was ranked 294 among ENR’s Top 400 U.S. contractors. Twenty years later, Gray is ranked 126 with 2005 revenue of $377.3 million. Both firms focus on listening to customers, paying attention to detail and building relationships.

"The basic process of assembling an automobile and creating a building are similar."
— Jim Gray, president and CEO

“Gray’s experience with Toyota taught us numerous lessons including kaizen,” says Jill Wilson, Gray vice president. “If we don’t constantly look for ways to improve, we run the risk of becoming a commodity, just another contractor, and thus will not be providing our customers the best service they deserve.”

Wilson says Toyota inspired the firm to integrate a total team concept, a process that encompasses subcontractors, vendors, network friends such as economic development officials and the communities in which they build. “Gray, like Toyota, strives to build relationships for generations with our customers, employees and vendors,” says Wilson.

And the relationship has been mutual. “The reason we selected Gray initially was that they met our sourcing criteria,” says Tom Zawacki, Toyota’s Georgetown plant general manager of administration. “From that point on, we began to establish a very close working relationship and we found a lot of similarities, such as their desire to be efficient, eliminate waste from their processes and to always seek self-improvement."

Gray Construction
Gray Construction
From building manufacturing plants to renovating its own office, Gray Construction is hardwired for continuous improvement.


Kaizen, the Japanese variation of W. Edwards Deming’s continuous improvement philosophy, is a much-discussed goal within Gray. Deming created a 14-point total-quality-management guideline that took hold in Japan. In essence, it exhorted firms to think long term, improve continuously and build teamwork. Kaizen embraces change, quality and teamwork, as well as eliminating waste in motion and material. 

Kaizen works hand in glove with integrated design-build project delivery, which flourishes in a teamwork and relationship environment. “Gray was one of the first of the smaller traditional construction firms to venture into design-build, first utilizing outside architectural and engineering firms under contract in the early 1970s,” says Alan Fowler, a retired Gray vice president. “Later, Gray eased into truly integrated design-build by creating an in-house architecture-engineering department providing mainly architecture and civil design while outsourcing structural, mechanical, electrical and process engineering to a small number of closely allied firms. Gray later added conceptual and supervisory capabilities in-house to assure a seamless approach to true design-build.”

Building seamless relationships helped the firm compete because they pushed the design and project execution into its subcontractor base, much like Toyota. To build a better sub and supplier base, the firm had to train local firms to meet Gray’s rigorous quality standards but the learning curve has paid dividends. By combining people and process in a socio-technical mix, Gray has created a culture that constantly challenges itself. Close enough is not good enough.

Gray focuses on four core markets—automotive, distribution, manufacturing and Japanese and Korean—and strives to be the design-builder of choice in each. Utilizing kaizen, Gray recognizes that while projects differ, the delivery processes are similar. “The basic process of assembling an automobile and creating a building are similar. Hence, our system, like the Toyota Production System, is centered on five Ps—philosophy, process, people, partners and problem solving,” says Jim Gray, president and CEO. “We question and challenge how things are done and why, with a view toward improving and making them better. We continuously focus on quality design and installation and encourage active improvement feedback. It is almost axiomatic that margins in our industry cannot continue to accept a production model that accepts recurring quality problems. That’s why continuous improvement is our kaizen-based DNA.”

Kaizen also improves construction and program management services. “Any work process, including project delivery methods, can be enhanced by kaizen,” says Gray. “We engage our subcontractors to help us evaluate the project to break work packages down more efficiently and to combine or split up divisions or work for a more cost-effective contracting plan and one that addresses schedule deficiencies or to increase the overall schedule float. We also engage our suppliers to understand mission critical dynamics. Our challenge is to create a project delivery system within a random and customized job environment just as Toyota-like as we can.” He notes that geographic challenges and custom jobs in different locations add to chance. But Gray tries to make the randomness as predictable as possible.

Gray now is working seriously on a continuity of management plan that blends staff talent and performance for top-level project management development. Gray strongly believes in the sensei relationship—the shadowing of a manager or teacher at the professional level. “If we are going to invest in someone just coming into the company, we ensure they are with a great teacher,” says Jim Gray. “We acknowledge the long-term asset value of the newcomers and how critical it is that they are exposed to our culture through our best teachers.”

Like Toyota, the firm promotes from the ranks and ensures that the Gray philosophy is ingrained. About 90% of Gray employees are management and the firm prefers a general management position on projects, using known subcontractors...