While his photograph was being taken for this article, Mark Galasso, president of Lancaster Development Incorporated, and new AGC Chairman for 2008, stood in the rotunda of the very impressive headquarters in Richmondville, N.Y., and greeted employees as they came to work.
As Galasso said good morning to each, he joked that he was the new Wal-Mart style greeter for Lancaster, which drew laughs of appreciation. He is in fact, however, a no-nonsense leader of a company that has tripled its revenue since he took the helm, and he clearly sees opportunities and risks for AGC members and the taxpayers in the years to come.
For this article, Galasso discussed a variety of topics concerning the contractor community and his ideas for the AGC stewardship. His favorite expression by far is: “At the end of the day.” While it isn’t unusual for an engineer and self described “type A” personality running a business to look for the bottom line approach to life, he appears to take it to a higher level than most.
In the course of several conversations he returned to the taxpayers-as-customers concept, an idea never far from his thoughts as he evaluates projects and policy decisions. He argues against financing with bonds, for example, since taxpayers end up spending huge sums to service the debt. He favors a pay-as-you-go approach, knowing that it might not be politically palatable, because ultimately it will save taxpayers (read customers) enormous sums of money. Galasso is guided by the idea that every action must be filtered through the concept of whether the action is good for taxpayers. It is a question that keeps him focused.
On NYSDOT and the AGC
Galasso looks to the relationship AGC has with public agencies through this prism. And while he is clear as a bell about his ideas, he can see the other side of problems too, such as what he perceives as the state of the relationship between the AGC and the NYSDOT.
“Given the pressures on DOT from external sources to reduce staff, maintain the state’s infrastructure on an inadequate budget and meet non-’brick and mortar’ goals, among other things, the leadership at DOT has reached a breaking point. … The first priority has to be to use the 20-year needs study that Commissioner Glynn and DOT provided to assist in increasing the funding for infrastructure from both the state and federal levels. All AGC members, as well as our NYRIC partners, must contribute their time and money to advocate for this enormous need.”
Following the tradition started by his great uncle, August Galasso, and carried on by his father, Martin Galasso Sr., and many others in his family, he and his brother, Marty Jr., have led Lancaster to solid success and record growth since Galasso took over as president in 2001.
Galasso’s father has had an enormous influence on him, yet he emphasized the critical role of his late mother, Jan, as the most significant influence on his life. He calls himself very similar to her in temperament and outlook. His father was the AGC chairman in 1990, as well as a SIR award recipient in 2003. Regarding his father: “I’ve been blessed to be able to meet and interact with numerous industry leaders from dozens of firms across New York and the country and have learned from them all. But when measured against my father, there has been no one that I’ve met that comes close. His intellect, work ethic and character set the standard. In his career, he has left lasting contributions to the industry through AGC that we are still benefiting from today. He was one of several leaders responsible for the creation of [The Crisis Program] TCP which is still a critical component of our lobbying efforts. His influence on me, as with so many others that he has impacted, is best described by the example he set in his actions. He always did the right thing. In retirement, I can best describe him as ’the little red box on the wall that says BREAK GLASS IN CASE OF EMERGENCY.’ He is always there for me and my brother to offer advice or to provide an outlet for venting the inevitable frustrations that come with the territory.”
One of his principal goals is to increase membership in the New York City Metropolitan area. Galasso stated, “AGC is the premier vehicle in New York State for advocating the need for infrastructure investment, in particular, for heavy highway, roads and bridges. Our association is the only one that has statewide membership focused on public sector infrastructure. AGC is the largest public owner advocacy group. It is uniquely positioned.
“One of the things we have to do at AGC is expand the coalition by increasing AGC membership; we need to do a better job downstate. Our membership is predominately skewed upstate and that’s a disadvantage. We do have a good portion of people and firms on Long Island that are members of AGC and are active both in AGC and Long Island Contractor’s Association. We do have some members in the five boroughs but not enough, we do have some members in the lower Hudson, but not enough, and we need to do a better job of recruiting those firms, understanding that they’re facing the same economic reality that we are up here, issues involving consolidation; ultra competitive bidding; loss of capital investment monies due to inflation; they have the same issues, but as a percentage of available contractors, we have a lower percentage of membership downstate than upstate. We need to work on that.”
His views on the importance of a unified approach for the contractor community are focused on results.
“It is critical as an association that we focus on the overriding commonality and don’t get caught up in minute, insignificant differences and arguments, … understanding that at the end of the day, if the pie gets bigger, we’re all full. That’s the fundamental reason why I think NYRIC is so important. It provides the vehicle to get together and speak with one voice, both to our state representatives and our U.S. representatives from the state. To ensure that New York’s getting their good share of the funding stream.”
Up the Ladder
Galasso learned every aspect of the industry starting as an 11-year-old laborer, working his way up the proverbial ladder. Galasso received his first paycheck for a hard summer in the LDI quarry for $100 — for the entire season. Later he remembers a job he first worked on as a teenager in the Southern Tier of New York, and years later rebuilding it and telling his father he now felt old.
“When my brother, Marty Jr., and I were growing up, we started working when we were 11. We worked summers every year all the way up through completion of school. When I got out of college I came in as a foreman, at 21, but I had already labored on a bridge crew for five years; and then on a paving crew for a year; and I’d been around doing different things for an extended period of time. I had some practical experience.”
He related this in the context of recent DOT inclination to place new hires into design jobs almost immediately.
“I think it’s a change in philosophy at DOT. They now bring the new talent in, and put them right into design. It used to be, you go back 30 years ago, people started in the field, worked there for five or ten years, and then went to design.”
He thinks this must be due to a focus on credentials at the expense of real world experience, something he laments.
“They [the DOT] focus on certification and licensing. In order to do that you have to design. You can’t take the test for the P.E. [professional engineer] if you don’t have design experience, so they put them into design first so they can get their P.E., then they put them out on the job as an engineer in charge with no field experience. They’ve got it absolutely backwards.”
“How can you design something if you don’t understand the constraints of [for example] hauling big pre-casts or big steel? Over the road permitting for these mega loads is almost becoming impossible. Yet they design these big, fancy structures and you can’t deliver it to Manhattan [for example.] You simply can’t get the material there. So, without having that field experience, it’s a real downside.”
When asked how the bidding process can be improved in New York State he complimented NYSDOT’s adoption of modern electronic bid submissions. Equally important is the improvement of the quality of the designs.
“Poor designs increase the effort necessary to put together a responsible bid.”
He has embraced construction technology, recognizing the enormous productivity and efficiency benefits, and limitations, associated with the new tools available today. He said the pace today is much faster than it was when he first entered the industry, due to changes brought about by technology.
“The computer and communication capabilities have allowed the industry to really push the envelope of productivity. … I’ve read studies regarding labor productivity in the construction industry. It is only about 30 percent, whereas in manufacturing it’s pushing 90 percent.”
He said technology has improved this, to a degree, by giving contractors better control of materials, more precise equipment and automation.
“For instance, [in] earth work, when you see all the stuff about automated grade control — GPS control of equipment — that means there is not a foreman pounding grade sticks, just to convey information to the operator. And he’s putting information out there so the person who is installing work stays as productive as he possibly can. With GPS, you are taking the non-productive guy out of the equation, and you up the productivity of the guys who are still doing work, because now they are not waiting for that information. It’s always right there, staring them in the face. So productivity has climbed. That’s got its good points and bad points, because now we’re all pushing the envelope, but there are diminishing returns. Owners and engineering firms, who are designing the work, know that [contractors] are capable of that much more productivity, and they are always pushing the envelope.”
He added that with increasingly sophisticated technology and productivity gains, expectations have risen exponentially.
“And sooner or later it’s going to tip over. They are going to do something that can’t be done. They are going to put a design out that can’t be built.” He cited the Alexander Hamilton Bridge last year. “There were zero bidders. It was a couple of hundred million dollars contract, a great job. But nobody tried, because it wasn’t achievable, and DOT is back to the drawing board. The time line was too short; the amount of work that had to be performed was too much. They just asked for too much in too little time and the contractor community said, it’s not possible, we’re not even going to try. That’s the first time I’ve ever seen zero bidders.”
Incentives, Penalties and Consolidation>
His thoughts on incentives and penalties as they relate to NYSDOT and contractors are direct: “Used sparingly and for finite, discrete work elements, they can be beneficial. Applied generically to a project or in a shotgun approach [they invariably lead] to contract disputes and delays. As with any contracting tool, there is a proper time and place, but care must be taken in selecting any such approach.”
He cited another significant change in the way business is done in New York since he joined the community.
“The other big change in the industry is consolidation — in the contracting community; in the subcontracting community; in the materials supply community; in the design firm community. Engineering firms are consolidating. … The number of entities in the private sector side that are in this industry has shrunk.”
The critical focus of his work as president and CEO of Lancaster is his role in bidding and troubleshooting. The downside, if there is one, is that when his phone rings, it is usually someone wanting him to solve problems. Although he is involved with these day-to-day problems, Galasso sees himself as less of a hands-on manager than some would expect him to be.
“I participate in the grand scheme logic of how the job is going to be built, but I don’t micro manage, that’s what I pay them for. And they do a good job with it.”
As CEO, dealing with problems throughout the day has less immediate satisfaction than the kind of gratification he once got as a superintendent on a job site. At that time he took enormous satisfaction in looking at the physical progress he and his crew had made. He enjoyed the camaraderie of kicking back over a beer after a day of hard work and a job well done. The job satisfaction he derives these days is less immediate, but at a higher level in the broad scheme of things.
His coming of age wasn’t without challenges, intellectually or physically.
“I grew up around a dinner table debating concepts with my parents. Both my mother and father are very intelligent and you didn’t win many debates with my parents as a kid growing up. So it forced me to think, at a very early age, what’s right and wrong? What is the reality of economics?”
He also realized that the world was a much larger place than Cobleskill, the small town where he grew up. His time at The University of Notre Dame was eye opening. There were only two schools he considered, Michigan State, which his father had attended after his stint in the Navy, and Notre Dame. He spoke about the school being a true crossroads of the world with students from all walks of life and cultures. Together with his upbringing and the strong moral focus of Notre Dame, his world view was forged. He had a code to live by, led by people like Father Theodore Hessberg, the revered president of Notre Dame and Lou Holtz, its illustrious former football coach.
Opportunities and Risks
Galasso sees risks in the next five years in diminished market opportunities, ever increasing bureaucratic burdens and worker shortages. But he also sees opportunities in the next five years:
“We are undergoing a technological revolution in our industry with the advent of GPS and robotic machine control which is fundamentally changing the way that roads and bridges are built. The early adopters of this technology will have an advantage as owners migrate to these methods for both design and inspection. We also are, through our strengthened industry coalitions, gaining ground in the arena of public opinion regarding the need for increased investments in infrastructure. We must continue to aggressively pursue these funding increases by any means necessary, but it starts with financial contributions and the commitment of time from all AGC members and the members of the various other industry associations.”
Returning to his taxpayer focus, Galasso serves as an elected public official, a Trustee of the village of Cobleskill, where he is routinely outnumbered by opposition forces. He feels it is important for him to be the voice of the taxpayers, asking the questions, at the end of the day, whether the village is acting in the taxpayer’s best interests, a philosophy he’ll passionately carry with him as leader of the N.Y. AGC.
This article was reprinted with permission from Low Bidder magazine, from its March/April 2008 issue.