Specialty Contractor of the Year is One GEM of a Company
‘Holistic’ approach to serving long-term customers keeps Ohio-based contractor on steady growth path
With 28% growth in regional revenue, 2015 was a GEM of a year for Steve Johnson and his colleagues.
But no single year’s results can define GEM Inc., says Johnson, president of the Walbridge, Ohio-based firm named ENR Midwest’s 2016 Specialty Contractor of the Year. “Our focus is really not chasing projects; we want to find customers,” he says. “We want customers for life, and sometimes we’ll sacrifice an individual one-off project to maintain that. We can do projects of size, but is it a good fit for us at the time based on what our current customer base has in front of us?”
GEM Inc., a member of the Rudolph Libbe Group and specializing in such multiple trades as electrical, mechanical and fabrication, is “very much self-performing,” says Ron Donnal, vice president, business development. By “owning the whole,” says Donnal, “we like to think we look at projects a lot like the owner does. Success isn’t defined by any one discipline; it is defined by the total project goals.” Or, as another longtime company executive Douglas Heyman puts it, there is “one throat to choke,” should a problem arise. “You can’t point at the structural steel contractor; you can’t point at the piping contractor. That’s us.”
Formed in 1982, GEM today has about 900 employees, the largest number based in the Toledo-area head office. The company has additional offices in Cleveland and Lima, Ohio, as well as the Detroit market. Toledo, Cleveland and Detroit make sense, but why Lima? That rural western Ohio market, says Donnal, is a prime example of how GEM nurtures relationships with companies in industries ranging from petrochemical and powerplants to health care and automotive.
Customers in the Lima area had mechanical work for GEM and, more than 20 years later, GEM crews are still on some of those same properties performing maintenance and other projects as they arise. “We might work for somebody for 20 years before they have a major plant expansion, but we’re there for them that year,” says Donnal, “and there for them for the following hopefully 20 years. That’s the model.”
Back up Interstate 75 near Toledo, specialty chemical manufacturer Jones-Hamilton Inc. describes GEM as more than just a friendly neighbor. “GEM has the skills and expertise in every discipline we need to add capacity, improve capability and performance, and help us fix problems in any area of our operations,” says Gerry Danes, project manager. So much so that Jones-Hamilton even brought “our engineering and design partner” along to South Carolina to build a new plant there.
“GEM’s skill and expertise start with their people. They are committed to doing quality work that adds value to our business,” says Danes. “Being an employee-owned company, Jones-Hamilton’s success is largely due to engagement of all employees striving to improve performance in their area of responsibility. GEM’s people have the same approach to their work, so they almost become an extension of our employee base for whatever project they are doing for us.”
So, is GEM a local, regional or national company? “We have great local relationships that provide us with regional opportunities,” is how Donnal explains it. “We’ve never gone to Iowa looking for work,” but the firm has done work there and in 36 other states. “If an existing customer has a job for us,” says Johnson, “we’ll go anywhere that customer needs us.”
Noting that a good mix of capital work and maintenance projects in a wide range of industries is what provides GEM with stability and long-term growth, Donnal says 75% to 80% of the firm’s annual revenue is derived from repeat customers. “The jobs that stick out to me are the ones that are with long-term customers, where we have been able to grow together, have success together and do multiple meaningful projects together.”
Figuring It Out
Based on 2015 regional revenue of $208.78 million, GEM moved to sixth place in the 2016 ENR Midwest rankings, up from 10th last year and 13th the year prior. In the dominant mechanical sector, the firm ranked fourth, with revenue of $132.62 million.
Johnson credits GEM’s employees for continually striving to understand the business needs of customers and endeavoring to “figure out how we can make those businesses more successful, which will lead back to us being more successful.” In the past five years, the company has completed more than 22,000 jobs with zero disruptions to ongoing operations.
GEM employees are also encouraged to participate in organizations pertaining to their respective industries, suggest internal improvements and engage new technologies, says Johnson. “If you’re working in the construction industry,” he explains, “we want to be the preferred place that you can go to work, at all levels.”
Laser scanning is an example of a cornerstone technology for GEM today that was first used 15 years ago by the youngest employees, many of whom initially arrive at the company as co-op students from universities such as Toledo, Ohio State, Bowling Green, Ohio Northern and Ferris State. The co-op program is the largest source for new employees who become project engineers and eventually project managers, says Scott Kepp, vice president. “Construction may look like a dying or stagnant industry,” says Donnal, “but they come here and they see growth and opportunity.”
Kepp, who has been with GEM for approaching 20 years, was one of those newbies among Donnal, Heyman and Johnson. Donnal came on board in 1992, about five years after Heyman and Johnson. “When we walk out of the room,” says Heyman, senior vice president and chief financial officer, “we’re all on the same page.”
When informed his firm was the runner-up for the ENR Midwest Specialty Contractor of the Year, Brian Helm, the president of Illinois-based Mechanical Inc., politely asked who won. When he learned it was a peer organization, his response was both immediate and telling. “I know them well. GEM is a great company with outstanding management,” says Helm. “They are more deserving than us.”
Eye on the Prize
Heading up business development, Donnal is particularly proud that “tough, challenging projects” often land at GEM. He credits the team’s understanding of creative sequencing to keep jobs on target overall and keep customers’ operations running in the midst of construction.
“We look at it from the whole perspective, rather than the trade contractor perspective,” says Donnal. “We thought that model worked really well on industrial projects, and what we found out is that model works really well, period. That model translates.” Mechanical insulation is an example of work once subcontracted but now self-performed by GEM.
Being part of the Rudolph Libbe Group, also headquartered in the Toledo area, supports what GEM describes as a “holistic” approach to specialty contracting—an area of business synonymous with smaller, independent contractors and subcontractors. “There’s nothing in the construction process from property selection all the way through the maintenance of the building that we can’t do within the confines of the larger company right here … located within a mile and a half,” says Johnson. “Each company has its own independent strategy, but there’s also an interdependent strategy, and we just think it really serves the customer well.”
The repeat business is a reflection of customer satisfaction, says Donnal. “One of the things we say is that, ‘If anyone can do it, we can do it,’” adds Kepp. “Our customers have a lot of very challenging demands or expectations. We dig in really deep and make their goals our goals.” In the end, owners don’t care about the 10 or 12 disciplines that make up a particular project, says Donnal. “They just want their project done.”
Reliability is core to the GEM brand, says Johnson. “In good times and bad,” says Kepp, “our customers know we’re not going anywhere.”