Sometimes strong competition means reducing one’s bid to the point where it simply results in thin profit margins or no margins at all.

By Rodney Evans Garrett

Reducing the pricing might be necessary to cover the business overhead and the payroll for key people in the company. Unfortunately, to make ends meet, some contractors will often reduce their prices to the point where the project brings added pressures because the low margins cannot compensate for unforeseen project-related problems that require additional time and money to remedy.

The question is what to do about such business conditions. It is difficult to convince potential customers that a given contractor’s performance is superior to its competitors’ and thus justifies a higher price. Even if a customer recognizes the contractor’s better-quality performance, he does not necessarily translate it to accept the higher project cost that is passed on to him.

The very nature of business in a capitalistic state is of course one of competition. So how does one reduce pressure of competition? George Coyne Jr., president of Armored Inc., has found a way. While most contractors will not be inclined to follow in Coyne’s business path, the principle he uses to reach a higher plain of success can be implemented by others. It is the law of supply and demand. The principle goes like this: Find a niche within the excavating and site work business that is not crowded with other contractors because it requires expertise that is beyond them. The fewer the contractors to be had who can perform the specialized work, the less competition there is for those who can carry it out. Less competition can lead to fairer pricing for the contractor.

Win, Win for All
Make no mistake, focusing on most specialty niche markets and being successful at it demands much of the contractor. Coyne has been in the excavating and site work business for 13 years. From the start, he managed his company in a conventional manner by supplying general excavating services to both the public and private sectors. The company did well and gained a very good reputation for services rendered. However, Coyne began to realize that competition was tough.

Photo: Rodney Evans Garrett

The Liberty Natioanl Golf Course site is fittingly named for its view of Liberty Island, home of the Statue of Liberty.

Despite the business going well, Coyne kept his eyes open for finding greener pastures. This led him to landing a contract with the partnership Applied Development Co. and Willowbend Development Co. for doing demolition and early site work at an old J.D. Rockefeller/Standard Oil Co. oil storage facility in Jersey City, NJ. When Coyne started the project, it was not much more than a large industrial waste dumping site. Now, the site is being transformed into a $150 million golf course that is appropriately named the Liberty National Golf Course.

Location, Location, Location
Liberty National Golf Course is indeed a fitting name for it. It is bordered at its east-side shoreline by a 4,000-foot waterfront. The body of water includes the New York Upper Bay and the Hudson River, which surrounds Liberty Island, the location of the Statue of Liberty. The Statue of Liberty is about 0.5 mile away from the golf course, so there are many vantages on the 160-acre golf course with an outstanding view of both Lower Manhattan (including the Empire State Building) and the statue.

Coyne’s company started working on this site in 1998 and is still not finished with all work involved. The project will be completed by the coming spring. So far, the company’s activities have included demolishing an oil tank farm, reprofiling the whole site to meet the specifications set forth for the new golf course, extensive excavation, all underground utilities installation such as sewerage and potable water lines, and placing backfill and bunker sand.

One million cubic yards of bunker sand are being put into place, and the backfilling of soils involves 500,000 cubic yards. A total of 2 million cubic yards of soil are being excavated and relocated to other areas on the site for creating natural-looking mounds and small hills. Other activities include crushing and screening excavated rock used as road-base materials and screening excavated topsoil. Another very challenging project for Coyne is the construction of a retaining wall that is 1,400 feet long by 12 feet high. It is being constructed with a manufactured concrete block called Redi-Rock. The block’s exposed face is designed to look like rock. The blocks are installed similarly to conventional concrete blocks. Masons are required to install the Redi-Rock blocks. Nevertheless, the footing has to be dug, and the earth side of the wall must be profiled and brought to grade.

With so much diversified work taking place at this site, Coyne contracted seven subcontractors whose expertise meets the different specialized work requirements. Coyne says, “I wanted the very best specialty contractors I could get, so they come from different parts of America. Most of them have had experience working on golf courses that were under construction, so they know what and how to do the work. Not only does this ensure high-quality results, but the work is completed in a timely manner.”

Equipment Equally Important
Most site-work projects carry with them stringent completion dates, and a golf course of this significance has a grand opening date that will have to be met, no excuses accepted. Consider this fact: Former New York City Mayor Rudolph Giuliani has become a member of the club, as have many other people willing to shell out about $500,000 each for the membership fee. The golf course is scheduled to open July 4, 2006, and if that does not happen, imagine trying to explain to the members why.

Photo: Rodney Evans Garrett

At the Liberty National Golf Course site, Armored operates an average of 30 pieces of equipment at a time.

There typically are unforeseen roadblocks at site-work projects, as Coyne is well aware. It is why he got the best contractors in the country to assist his own company’s workforce at this project. Coyne is also aware that he can have the very best workforce, including top equipment operators on the site, yet fall behind schedule because the equipment performance is not up to par.

As for equipment, Coyne says, “I am supplying most of the equipment on the project used by the subcontractors for two major reasons. For one, it eliminates equipment-mobilization costs, which would be very high since some contractors are from extended distances. The other is I want the very best, most reliable, high-producing equipment possible to make sure that it is not a bottleneck slowing down construction progress.”

On average, 30 pieces of Armored Inc.’s major equipment is in operation at the site. The two brands represented most in number are Volvo (with 15 pieces) and Caterpillar. As for the Volvo equipment, there are eight excavators including models EC45, EC55, EC160BLC, EC210, EC240, EC330, EC360, and EC460. There are two A35 articulated trucks, two wheel loaders (models L70E and L150E), and a BL70 backhoe-loader. Rounding out the fleet are two Hypac single-drum compactors, an Extec C-12 mobile impactor crusher, a portable Extec jaw crusher plant, and four Extec portable screeners. Caterpillar is well represented with eight bulldozers ranging in size from models D-4 to D-9. In addition, there is some Komatsu equipment.

There is a reason for so many Volvo pieces on the project. According to Coyne, “I find the Volvo equipment outstanding in performance and very economical to operate. With fuel prices so high and maybe going higher, the fuel consumption made by the equipment is very significant. For example, the Volvo L150E loader consumes only 3.4 gallons per hour compared to another make loader of comparable size that consumes 4.9 gallons per hour. Reliability is another very important factor where Volvo is very good. If a machine goes down on the project, it could hold up the operation of other equipment and thus slow down the work in progress. Fortunately, the Volvo equipment is not breaking down.”

So exactly what is the niche that Coyne has carved out for his company? Essentially, it is specializing in managing and carrying out the site-prep work for such specific challenging projects as new golf courses. The Liberty National Golf Course site is probably more challenging than most sites because of the terrible condition it was in prior to construction. Those challenges have been to Coyne’s advantage, for he demonstrated to the owner that he was up to the task. Preparing this site over the past seven years has given him extensive managing experience over many different specialty contractors as well as his own workforce, who carried out major demolition work, special complex reprofiling of the site, extensive excavation, and backfilling with bunker sand.

Coyne is not the only contactor with a specialty. All the subcontractors also have found their niche, and that explains how they managed to get the work at this project. Naturally, Coyne would not have brought contractors in from other states if he could find them in New Jersey. It goes back to the law of supply and demand.

Coyne sees taking his company further toward the specialty construction markets and says the future looks very promising. Currently, he is entertaining an offer to manage and perform the site work for another golf course and a special municipal sewerage project. During this project he has established a team of company experts, including his son George III. Depending on the project, he will bring on board subcontractors to further carry out the work. He says, “Our company has developed into a management and services contractor that can take on specialty projects like golf courses. We now sit down with the owner, designer, and planning engineers to give them advice in the pre-planning stage of a project. The owner can benefit from this since our extensive knowledge on challenging site work enables the designer and engineers to plan the project in such a way that makes it the least cost to construct.”

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

GEC - May/June 2006