By Rodney Garrett

David Breisler, president of Seward Sand & Gravel, champions the concept of business diversification.

Seward owns and operates six sand and gravel pits. The company also specializes in transporting big construction equipment, both its own equipment and that of other contractors. The company’s construction equipment is for use in its contracting business, which focuses on residential and commercial properties site work. Further, Seward acts as a sub-distributor for new and used equipment parts. The parts business is a welcome convenience for local contractors—and profitable for Seward.

While the company’s sales and services cater to different markets and are therefore quite diverse, there is a commonality among the company’s activities that enables it to optimize the use of its personnel and the major equipment in its fleet.

PHOTO: GARRETT FILMS INTERNATIONAL

Seward is located near the town of Oneonta, NY, about one mile from interstate 88. Oneonta is about halfway between Binghamton and Albany—a one-hour-plus car drive in either direction. The area between the two cities can best be described as rural, dotted with small towns and farms. Since it is not a densely populated area, most major construction projects—such as highway paving and bridge rehabilitation—are publicly funded. With the interstate passing through the area, some new motels have been recently built and more may be on the way. As well, chain retail stores are sometimes built and, less frequently, schools are constructed. All such projects -require extensive site work.

Since there is not a high concentration of major new construction projects to be had in and around Oneonta, Breisler has reasoned that growing his company by concentrating on only one market, such as excavating/site work, would necessitate the company to reach farther from the company’s headquarters to obtain the required additional business. That action would not only make it difficult to keep a local work force employed but many construction managers would not want to commute long distances to the jobs. Mobilizing equipment would also become a challenge because of transportation logistics and costs. Clearly, the company’s sand and gravel business cannot be increased by reaching farther, because delivery costs would preclude offering competitively priced products.

By diversifying, Breisler has been able to keep the work local and still realize a profitable business. “Sure a company has to be a certain size to justify the cost of owning and operating equipment. We have 20 employees in the company. The value for employees is they have year-round employment that many construction or sand and gravel companies do not have,” says Breisler.

Versatile Equipment
Sand and gravel production, excavation/site work, and equipment-hauling services necessitate a sizeable equipment fleet. For mining the sand and gravel pits and transporting the materials to the crushing/screening plants, the company has a Volvo L120 and four Volvo L150 front-end loaders. The loaders are used not only for mining and transporting the sand and gravel to the crushing/screening areas, but they feed the plants the mined materials for processing. They are also used for digging out the finished products from inventory stacks and loading delivery trucks. During the winter months, the loaders are used for mixing imported bulk salt with the sand, stockpiling it, and loading the trucks. The sand/salt is a surface mix for ice and snow control on roadways.

Some of the Volvo loaders are relatively new, as is an Eagle crushing plant that features its own impact crusher. Breisler will not hesitate to buy new equipment when he deems it profitable to do so. He says Volvo has one of the best new equipment financing programs he has seen.

As to preferred equipment brands, Breisler is set on Volvo and John Deere. “I need very reliable equipment in my operations because I cannot afford to have business interruptions and I certainly cannot afford to own back-up equipment to place at each pit and construction site. The equipment dealer, LB Smith, gives us good service and the parts arrive here the day after they are ordered. I buy John Deere bulldozers for much the same reason,” he says.

Volvo and John Deere equipment do not overlap in the company’s fleet. He buys exclusively Volvo front-end loaders and hydraulic excavators because he thinks they are the best. Besides the front-end loaders, the company owns a Volvo EC240 and two EC140 -excavators. As to the John Deere equipment in the fleet, there are a -total of 10 Model 450, 650, 750, and 850 bulldozers.

Grader blades are mounted on the two smaller Volvo excavators for grading backfilled areas on homesites. Breisler chose the two different model excavators to match their size to the type of work they perform. Primarily, the EC140 excavators are used for small excavation work such as trenching from a house to a septic tank location and then excavating a hole for installing the concrete septic tank.

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For bigger excavating projects and those with more challenging digging conditions, the Volvo EC210 excavator is used. It -normally is assigned to dig out -cellars, to do major excavation for underground utilities instal-lation, and general excavation work on major commercial -projects. Despite the shale or rocky conditions encountered, the EC210 will complete digging out a cellar and foundation in four to six hours. “Both model excavators are good producers but for real tough shale digging the 210 is faster. We cut out two hours by using the big excavator,” says Breisler.

Since the small excavators are assigned to small -excavation and grading projects, they will visit two to three projects a day. The equipment is transported on one of the company’s lowboys. There are three International Harvester tractors that have either 36- or 50-ton payload capacities for pulling the lowboys. “These tractor-lowboys are on the road every day, as are our seven dump trucks. The only significant problem we have with this business is finding good drivers to man the trucks,” says Breisler.

During the spring, summer, and fall months, the dump trucks are busy hauling sand or gravel. The gravel is used primarily for road-base or parking lot construction. Much of the sand goes for septic tank and sewer system filter-bed construction. One recent order for a new school required 3,000 tons of filter sand. The dump trucks are used during the winter for delivering the sand-salt mix.

The sand/gravel product sales are consistent from year-to-year with little expectation of substantial growth. About 250,000 tons of sand are produced each year in the six sand and gravel pits, with it selling for an average of $20 per ton.

While the company began about 70 years ago as a sand and gravel producer, Breisler changed that in an evolutionary process after he purchased the company in 1983. Taking all the business conditions of the area into consideration, he concluded that providing service to demographically different customers was the best way to have a profitable company. In the late ’70s, prior to his purchase of the company from a third party, the demand for sand and gravel was very high because -interstate 88 was under construction. A local construction boom of that magnitude is not likely to recur in the near future.

Conclusion
Just because sand sales might be bearish, does not mean the equipment transport business is soft, or for that matter, home and commercial site work. Further, there is always a need locally for used and new equipment parts. The parts business will never grow into the dominant business activity for the company but it is steady and profitable. In the state of New York, one can almost be assured of plenty of ice and snow in winter. As with all other Seward businesses, supplying sand-salt mix is a limited business but it is predictable and profitable. While diversification will not work for all businesses, it works well for Breisler. He has the right set of business circumstances for ensuring its continued success.

Writer Rodney Garrett of Bernville, PA, specializes in construction subjects.

GEC - May/June 2005