M. Sullivan & Son

Source: Construction Digital

Date :11/04/2008 04:06:35

Exec speaks to M. Sullivan & Son’s senior management team to find out how the family–owned firm became a leader in the Canadian construction industry

Written by James Hurley & Produced by Michael Gutierrez

M. Sullivan & Son Limited has been enjoying continuous and steady growth ever since it was established in 1914. This has been reflected in the increasing scale of the projects that it handles – and, as president Tommy Sullivan tells me, the changes he has seen in the 51 years he’s spent at the company.

“As a young boy starting out in the business, I had a wheelbarrow with a rubber tire on it,” he says. “From there we went to buggies, then to cranes. We’ve had to dramatically increase our heavy equipment usage so we can do all our own civil work. We’ve grown with the times and we’re up to date. We try to keep ahead of the industry with different construction methods.”

The company provides a full complement of construction contracting services to an impressive array of clients in the industrial, commercial, institutional and public sectors. With head offices located in Arnprior, west of Ottawa, and a regional office located in Kingston it is able to service Ontario and Eastern Canada. It owns a full range of construction heavy equipment, which enables it to minimize dependency on outside sub-contractors and maximize flexibility for scheduling purposes.

Gold standard

A lot of M. Sullivan & Son’s work is what Tommy calls ‘negotiated work’ – i.e. negotiated with clients it has had in the past that understand the company and like the work that it does. “Our reputation has certainly grown over the years,” he says.

“On the public market in Canada today, to bid against an open market, you put your pencil in your pocket – there’s little or no profit in it, you’re just exchanging dollars really.” As a response, the firm looks to get into the business in a larger way through negotiations with most of its clients. “We’ve got a variety of customers that deal with us continually and we’re now going for bigger jobs because it eliminates some of the trash in the industry,” Tommy explains.

It’s a policy that seems to be working. “We’ve got more work than we know what to do with and we’re looking for good men to complete the work. We don’t want to over extend ourselves but we’re getting to the point in the business - and in the dollar value of the work - where we can start to extend ourselves. We have to be very careful in that because we’re privately owned and if we lose money it’s our money that we’re losing so we remain pretty cautious.”

The scale of the projects that the company handles has been increasing incrementally in recent years. A milestone example was the firm’s construction of the Kingston Police Headquarters for the Corporation of the City of Kingston, completed last year. The eighteen month, $26.6 million project is one of Sullivan’s largest completed projects to date and involved working towards LEED certification. The Leadership in Energy and Environmental Design (LEED) Green Building Rating System provides a suite of standards for environmentally sustainable construction.

“It was a bit of a learning curve for us,” acknowledges Marty Smith, general manager. “But it was money well invested, especially with government markets heading that way – they want to be leaders in having environmentally friendly buildings. Having gone through one big contract we’re now set up to offer that service to clients. That’s one example of an innovation that we’ve taken hold of.”

The company entered into the project – the first of its kind in Kingston - aiming for ‘silver designation’, but performed better than expected and achieved a gold standard. “It’s a guideline for police stations across Canada,” says Tommy. “It’s recognised as the gold standard and it’s what all the other police stations in Ontario want to be like.”

Increasing scale

Although the Kingston job is one of the largest M. Sullivan & Son has completed to date, Marty says the firm is becoming increasingly comfortable in the $40 - $50 million dollar range. “I would have said ten yours ago that the largest job we would have done would have been between $15 million and $20 million. We’re currently bidding on a project that’s $150 million so we’re consciously taking steps forward.”

So how does the company manage the growth that’s associated with projects of increasing scale? An interesting test will come with its next project: Sullivan & Son has been selected to build and finance phase one of the expansion and renovation of Quinte Health Care’s Belleville General. The redevelopment project will modernize the hospital and increase its capacity. “A job of that size is new to us and the first thing I look at is management,” says Tommy. “If you’ve got the people to manage the contract itself, you’re halfway there. The other thing that’s important about this job is that we’ve not only got to build the facility but finance it whilst it’s under construction. We had to find $70 million to run the son of a gun so it’s a big job for us!”

Given the company’s ‘cautious’ outlook, one might think that this might constitute a shift in its relatively risk averse strategy. Not so, says the company’s CFO, Kerry Hisko. “We don’t really feel that we’re taking on any additional risk but we are leveraging our assets more towards bigger jobs.”

Rapid response

Now 76, Tommy represents the third generation of family members running the company. He’s learnt the business ‘from the ground up’, and says this has informed the way he deals with the public and the employees of the company.

“We treat all the employees as part of the family – as far as I’m concerned they’re related to me and what’s good for the company is good for them. They run their own show around here. We don’t look over their shoulders. They have a job to do and they’re expected to do it. If they have a problem they come and see me, if not they just keep going. That has proven very successful and we hope to continue that way.”

The company must be doing something right; it was named one of Canada’s 50 Best Managed Companies (the country’s leading business awards program, recognizing excellence in Canadian-owned and managed companies with revenues over $10 million) in 2003, 2004, 2005 and 2007.

Kerry explains that Tommy’s emphasis on employee focus contributed to this recognition. “They don’t look so much at financial records, although that is important. They want to see a track record that shows the company is making money to show you’re well financed and well managed. They also look at what you do that’s different from the rest of the industry in terms of managing your company. Tommy allows the employees to be entrepreneurs – they run their own jobs and only come back to head office if there’s a major problem. If there’s no problem they make decisions on site - there’s not a big rigmarole to go through to get answers.”

The company’s ability to respond rapidly to issues and opportunities is also founded in its family origins and the fact that it’s privately owned. “We take decisions here that are right for ourselves and not those that are right for some shareholder sitting in Vancouver,” says Kerry. “Long term thinking can take place a lot more easily. We can also respond to customers’ problems a lot more quickly.”

If one of the company’s clients has a problem, they can pick up the phone and get Tommy, Kerry or Marty at the end of it. “Their question will get answered immediately so the job will proceed very quickly,” says Tommy. “When you get the Federal Government taking months and months to make a decision to a change in the job that slows everything down. As a company, we can make a decision an hour within knowing what the problem is.”

M. Sullivan & Son maintains a company culture that encourages and motivates its construction professionals to provide excellence in their fields of endeavor, thereby assuring its position as a leader in the Canadian construction industry. A focus on health and safety is integral to this employee centered approach.

The company has completed over a million man hours without an LTI and holds one of the strongest positions on safety in the Ontario area. This level of performance doesn’t occur by accident and it doesn’t come cheap, as Marty explains.

“We end up spending a lot of money on safety,” he says. “The employees come to work healthy and we want them to leave healthy. It’s easy to say but these guys put it into action and the money that we spend on safety would cripple most companies. It’s a long term thing and it’s not tangible – if a shareholder saw that on your financial statement they would ask why we’re spending so much money on it. It’s about running the company as a family company and not for the benefit of shareholders.”