Hopes Run High for $20M Phenix City Development

Skanska’s American Divisions Unite Under Single Name

Fri April 27, 2007 - National Edition
David Chartock



For years, as Skanska USA has acquired companies throughout the United States, it has allowed those companies to co-brand to take advantage of the strength of a global enterprise and the good will and market presence of each company.

For example, there was Slattery Skanska, Gottlieb Skanska and Underpinning and Foundation Skanska in the New York marketplace; Atlantic Skanska, Tidewater Skanska, and Bayshore Construction Products in the southeast; and Yeager Skanska in the west.

Now these companies will operate as a single, integrated entity under the Skanska USA Civil banner to maximize the potential in existing markets; take advantage of opportunities in emerging markets; and to take steps to grow from the nation’s No. 3 construction company with $4.5 billion in revenues, to No. 1. This will be accomplished, in part, by leveraging the reputation and strength of its Swedish parent, Skanska, a $16 billion global construction firm.

The integration of Skanska’s U.S. business entities under a single banner will result in the formation of three regions: the northeast region, the southeast region and the western region.

Skanska USA Civil’s Northeast Region is headed by Richard Cavallaro, president of Slattery Skanska and executive vice president of Skanska USA Civil — Northeast region.

Cavallaro will be responsible for the business units that had operated as Slattery Skanska, Gottlieb Skanska an Underpinning and Foundation Skanska.

He said Slattery celebrated its 80th anniversary in 2006; Underpinning is more than 100 years old; and Gottlieb is approximately 25 years old.

Slattery, a heavy construction contractor, does deep foundations and concrete, and builds power plants, sewer treatment plants, bridges, tunnels, roads and light rail transit (LRT) systems.

Gottlieb’s expertise is in mechanical engineering, structural and architectural iron, and train station finish work.

In addition to Slattery, Gottlieb and Underpinning, the Northeast Region will include Skanska USA Civil’s Large Projects Group, which pursues public-private partnerships, and Koch Skanska, which specializes in steel erection and will be the only entity that will continue to operate as a co-branded company.

“We will be recognized as one national company,” Cavallaro noted, explaining that Skanska USA Civil’s integration campaign will emphasize the company’s strength as a national contractor, the capabilities of Skanska USA Civil, and the financial strength a national contractor can bring to large, local projects.

Cavallaro said the integration under a single name does present challenges.

“There’s an emotional attachment to the co-branded names,” he explained.

The internal solution to this challenge is helping employees understand why the co-branded names are being eliminated and emphasize that the Skanska USA Civil balance sheet brings a lot to the table.

“It enables us to compete. It enables us to win projects such as Airtrain [$1.5 billion], Newtown Creek [$500 million] and the Phoenix Transit Hub,” he said.

To help with the transition, “We spoke to the whole company in mid-October [2006] and started a process to help employees understand why we are doing what we are doing. While employees understand it, there was always the fear of change. That fear was overcome through good communications,” he observed.

Cavallaro added that the process to get the message across externally began in December 2006. This campaign consists of one-on-one visits and letters to all clients.

Senior vice presidents are selling the message for the Northeast Region. That message includes being the “contractor of choice.”

The Northeast Region and headquarters will be located in the Whitestone, N.Y., offices, where a 20,000-sq.-ft. addition is being built to meet the needs of the integrated companies.

The Southeast Region, known as Skanska USA Civil Southeast, is based in Virginia Beach, Va. It will include Atlantic Skanska, Tidewater Skanska and Cape Charles, Va.-based Bayshore Concrete products, according to Peter MacKenna, executive vice president of Skanska USA Civil Southeast.

Atlantic Skanska, based in Marietta, Ga., specializes in water treatment projects in the southeast.

Tidewater Skanska was founded in 1932 as Tidewater Construction Corp. Based in Virginia Beach, Va., it was acquired by Skanska in 1998. It is a major heavy, highway and marine construction company focused on the Hampton Roads area, but has pursued projects as far south as Florida and as far west as California.

MacKenna explained that Bayshore Concrete Products was the precasting facility created for the Chesapeake Bay Bridge and Tunnel complex in 1960 and built by Tidewater, Kiewit/Raymond International joint venture.

“When the 260-mile project was completed, we turned Bayshore into a business,” he added.

One of the biggest challenges facing the integration of these companies “is their own proud histories and sense of belonging to those operating units. The challenge is a loss of local identity,” he said.

The solution was to demonstrate the benefits of being Skanska USA Civil. For example, Tidewater is a $300 million company. Skanska, as a whole, is a $16 billion business.

MacKenna said that this type of integration “presents enormous opportunity — being part of a larger, flatter organization.

“We are a decentralized, integrated business with a lot of autonomy. We run projects all the way down to Florida. This requires empowered, accountable people,” he explained.

“We use multi-line reporting with decisions in the field to remain nimble and agile and to be able to respond to needs and opportunities as they arise. Multi-line reporting has procedures in place to ensure quality assurance and compliance with corporate policies and procedures,” MacKenna said.

Decentralization also is the solution to the region’s geographic challenge — the distance between the home office, satellite offices and the projects themselves. Empowering employees in the field allows them to excel, he said.

Other opportunities for employees under the integration include a management development program and the ability to have dual career paths.

“This rewards employees for doing the work they prefer to do, whether it is being a project manager or being a project superintendent,” he explained.

Employees in his region understand the purpose of the integration. The message has been delivered through a series of “town hall” meetings held at the region’s headquarters and in the field.

He added that the message included why the integration was being done and “why we at Skanska see more opportunities as a unified, national player rather than as a federation of smaller operating units. We also explained what’s going on in the marketplace, the way we will participate in the public-private partnership marketplace, and where the money is coming from.”

MacKenna said employees are positive about the integration.

“The key is to deliver the reality of the dream of Skanska. This dream is to be the No. 1 construction company in the U.S. and not only make us the construction company of choice, but the employer of choice as well.”

The goal is not just to be No. 1 in revenue.

“It’s returning the maximum return to stakeholders. It is important to provide the right environment to employees.

“Otherwise a company is just money and people. But a company is its people and that is the reason to be the employer of choice and the reason to be Skanska,” he pointed out.

The Skanska name symbolizes a commitment to quality and integrity, he said.

“I’m excited about the change. It’s the beginning of something extraordinary. The growth of Skanska lies in the U.S. and the greatest opportunities for growth lie particularly in the southeast.”

Growth also is planned for the western region, according to Eric Taylor, senior vice president and general manager of the Skanska USA Civil Western Region — California District. The region consists of Yeager Skanska, which was founded as E.L. Yeager in 1919 as a heavy construction company. It was acquired by Skanska in 2002.

Taylor said Yeager has become a strong and prominent player with a strong reputation throughout Southern California.

The integration began with the acquisition.

“Clients have already accepted the co-branded company as Skanska USA Civil Western Region. Employees also accepted the single Skanska identity beginning in 2002,” Taylor noted.

“Here, clients and our employees know the Skanska brand and the strength and reputation it brings to the table. Skanska brings a global recognition to a regional marketplace.”

“The Skanska identity also allows managers to develop their own identity for themselves and the region. Skanska provided better benefits to employees, a career path, and greater opportunities.” he said.

“[Furthermore] there is a great deal of respect for Jack Yeager. Jack has been very supportive in the community and in making the name transition easier for clients, prospective clients and the community.”

Taylor also said the transition has been made easier with the help of a young management team that has embraced the opportunity being provided through a single identity.

This team includes: Vice President of Operations Tony Bagheri, Vice President of Estimating Chad Mathes, Chief Financial Officer Joe Nogues, Vice President of Plants and Materials Jack Yeager, Structures Manager Tim Boyer, and the following project executives: Alex Medyn, Mike Spain, Don Reiter, Tim Wilson and Gary Baxter.

Taylor is excited about the change to being a single entity because of the opportunity it represents to grow with the company and to grow the company. With regard to the latter, Skanska’s financial strength allows the company to do larger projects such as those that will be part of the coming construction boom in Southern California. These large projects, mostly transportation and infrastructure projects, were approved by the voters during the November 2006 elections.

Cavallaro said the integration of the co-banded companies under the Skanska USA Civil banner is about the future. It’s about building market share in the world’s largest construction market. It’s about growing an organization through acquisition and it’s about the opportunity to be diversified, but one. CEG