Firm Builds On Employee Ownership
Since its founding in 1922, Hoffman Construction has been building projects in the Northwest. L.H. Hoffman built schools and homes in Portland nearly a century ago, and as the regional population grew, so did his firm.
With $1.2 billion in revenue in 2016, the firm is the largest contractor in the region based on results from the ENR Northwest Top Contractors survey. The firm takes on many different project types, from small jobs to intricate and massive projects for Boeing and state and local governmental entities.
“Together, we’ve built airports, civic institutions, offices, apartments and data centers—you name it, we’ve built it. They are hands down one of the best contractors in the region,” says Dean Allen, CEO, McKinstry, an electrical contractor.
For its accomplishments, ENR Northwest has named Hoffman its Contractor of the Year.
Wayne Drinkward, CEO of Hoffman, says the firm’s workers are proud and excited to build structures that are important to the fabric of the community.
“We run [the company] for the employees. Not only as a stable financial base but for the challenge. Sometimes I am like a moth to the flame for things that are cool,” Drinkward says. “We’ve stayed real diverse in the work, though, so we don’t just do highly challenging work but also hospitals, light-rail stations, sports facilities and water treatment plants.”
Oak Harbor Clean Water Facility, in Oak Harbor, Wash., is currently underway. The $100-million facility will replace two plants and treat water using a membrane bioreactor process. Work is scheduled to end next year.
In Seattle, Hoffman is building, in a joint venture with Kiewit Corp., the first half of the $3-billion East Link extension for Sound Transit’s light rail system. Work on the seven-mile extension is challenging because it has to be done within the confines of the express lanes of Interstate 90 and on a floating bridge that spans Lake Washington, says Sound Transit.
In addition to infrastructure projects, the firm is known for its iconic cultural buildings in the Northwest. Hoffman built the Rem Koolhaas-designed Seattle Public Library’s Central Library and the Frank Gehry-designed Experience Music Project Museum, also in Seattle.
In April, the firm completed work on $33.5 million worth of improvements to Portland’s Japanese Garden. The project, which included educational facilities and event spaces, was designed by Japanese architect Kengo Kuma.
Later this year, Hoffman will begin a $100-million renovation of Seattle’s Space Needle.
Hoffman has been active in the Northwest for nearly a century. With each ownership transition, the contractor has grown, Drinkward says. The first transition was in the 1960s, from founder to his son, followed in 1967 by the addition of Cecil Drinkward, Wayne’s father, as a partner.
“Cecil Drinkward basically remade Hoffman into a major commercial builder,” says his son.
In 1992, the elder Drinkward and Eric Hoffman sold the firm to the employees, which set a tone that continues. “When people become owners, even a little piece, it changes the bond,” says Wayne Drinkward.
The number of shareholders is limited to about 100, to comply with S-Corporation regulations. Those selected for ownership must invest in the company. As a result, Drinkward says capital is maintained in the company and profits are distributed much more generously and widely than in many other firms. Employees are initially offered shares after about 10 years with the company.
“If there are people who want to make a fast buck, this is probably not the place for them. It is kind of a get-rich-slow program,” Drinkward says. “It was done for us, so we do it for them. I really enjoy people who come in, dedicate themselves and walk out with financial strength.”
Tony Johnson, a Hoffman vice president, says the result is a team of owners who are more dedicated than employees. It also helps shift the focus to the projects and the work performed in the field and away from other types of bonuses and incentives.
“There are a lot of companies that say they are employee owned, but actually having true ownership of the company is different,” says Johnson. “Owners of the company come back and work when an emergency strikes at midnight on the weekend.”
Hoffman self-performs concrete, carpentry and non-HVAC piping work when it is in the best interest of the project.
“The one thing we are very proud of is our ability to still make a concrete structure and build a concrete structure and be in control,” says Jake McKay, a Hoffman superintendent.
McKay, who is also an owner, says Hoffman is leading the industry in refining the role of superintendents.
“We are starting to take engineers and make them superintendents,” says McKay. The result, he adds, is a more equal relationship between the project manager and the superintendent.
“In some cases, our superintendent is our senior onsite person,” says McKay. The deep ties to the company helps this approach work effectively, he adds.
Additionally, as superintendents are on the front line for corporate jobsite safety, the super’s clout has elevated the importance of safety—even including evaluating the causes behind accidents that almost happened.
Johnson says that on Hoffman jobsites there is a direct correlation between a safe site and a productive one.
“You’ll actually make more money even if you think you have to spend money to get the right equipment,” he says.
Innovation and looking out for those in the field extends into employee health care benefits. Earlier this year, Hoffman opened a health clinic that primarily engages in preventive testing.
Drinkward expects the program to cost $1 million each year. He considers the expense a good investment, expecting the clinic to support an increase in productivity, reduce time off and most importantly, help employees.
“If you really care about people, do the things that result in real outcomes,” he says.
The decision to expand or maintain the company at its current size of about 500 employees will likely fall to the next generation of executives that will lead the firm, says Drinkward. A transition has just started.
Drinkward says he hopes the next generation will continue the firm’s mission of taking on challenging jobs that require creativity.