The Boldt Co.
2007 Contractor of the Year

A Passion for Construction

by Craig Barner

Oscar C. Boldt loves construction.

Boldt, 83, chairman of the board of The Boldt Co., an Appleton, Wis.-based contracting firm, started in the family business in 1948 and has been involved ever since. That's 59 of the firm's 118 years.

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Prior to coming on board, Boldt had served as a navigator on a B-24 Liberator stationed in Italy during World War II.

On a recent day, Boldt made a confession: "This morning, I was late."

Boldt still works some 40-hour weeks and does not like being tardy.

Given his longevity, veteran status and well-earned right to take it easy, few would find fault for his "miscue."

But Boldt loves his business, his company, his work, and he still wants to play a role. His eyes glimmer when he talks about strategy, trends, clients, company history.

"I still have plenty of energy, and it's a way of burning it up," he says.

A key attribute is his insight. When asked, Boldt passes along lessons from his deep well of experience to the company's other officers, including son Thomas Boldt, 54, chief executive officer, and Bob DeKoch, also 54, president and chief operating officer. (DeKoch is not related to the Boldt family.) For instance, a question might arise on how a tough condition in a contract was previously handled to avoid reinventing the wheel.

"But I avoid looking over their shoulder, second-guessing and commenting on everything they do," he adds.

Boldt's energy, commitment and love have permeated the organization, and The Boldt Co. has become a key player in commercial construction under his guidance.

The company is a leader in implementing dynamic strategies to deliver client value. It has shown agility in capturing market share and serving key markets.

It is heavily involved in the community and has established a reputation for ethics.

Moreover, Boldt's financial performance has been strong, though it had a drop in billings in 2006. The company finished the year with $330 million in revenue in the Midwest, down 14% from the 2005's $384 million. Nationwide, it tallied $547 million, down 5.6% from 2005's $580 million, according to Midwest Construction's parent Engineering News-Record.

The decline was attributable in part to schedule slippage-the company worked as a developer on a number of projects that did not break ground in 2006, Thomas Boldt says. "I don't see that as a trend," he adds. "I think we'll be bouncing back in 2007 pretty nicely."

The company ended 2005 with billings up 30% from 2004's $295 million; nationwide, revenue was up 31.5% from 2004's $441 million, according to ENR.

For these and other reasons, Midwest Construction is naming Boldt its 2007 Contractor of the Year, the magazine's fourth. Boldt is the first Wisconsin company to receive the honor.

"I think Boldt is highly proficient," says Jim Rasche, executive officer of Milwaukee-based Kahler Slater, an architecture firm that has done about a dozen projects with Boldt over the last decade. "They have outstanding talent."

A Midwestern Company

The Boldt Co. has roots deep in the Midwest.

Martin Boldt, son of a German emigre and grandfather of Oscar, founded the firm in 1889 as a carpentry and millwork shop and house builder. His company got its first commercial construction contracts by the 1920s.

Three sons came up in the business, including Oscar C.'s father, Oscar J., who took over in 1931 when the company was incorporated and named Oscar J. Boldt Construction Co.

As with many, the Depression took a heavy toll on Boldt in part because the firm built a bakery without the owner paying for it. Boldt itself acquired the building in bankruptcy and sold bread on credit for 4 to 5 cents a loaf.

"They got nowhere," Oscar C. Boldt adds.

The Depression ended only with the start of a world war. During those years the firm's work included a return to its carpentering roots to manufacture ammunition boxes.

"It was a railroad car a day of ammo boxes," Oscar C. adds.

After the war, all the debts from the Depression were paid, and Boldt was ready to reap its share of the postwar wave of prosperity and optimism.

Under Oscar C., who became chief in the 1950s, the company increasingly focused on commercial building, especially in institutional and industrial projects, including dormitories and factories in nearby Ripon. The company's first branch was opened in Wausau in the 1970s.

Paper mills in Wisconsin, Minnesota and Michigan represented a major market for Boldt. Indeed, by the 1990s ENR ranked Boldt the No. 1 contractor nationwide in the pulp and paper industry.

The company continued to expand geographically, opening offices in Milwaukee, Chicago, Oklahoma City and Cloquet, Minn. Today, Boldt has seven locations in the Midwest and six outside the region, including a facility in Fairfield, Calif., which is between San Francisco and Sacramento.

"I would like to have 20 companies of that size going out and spreading their wings in other communities and states," says Mike Fabishak, CEO of the Associated General Contractors of Greater Milwaukee. "It brings the state considerable benefit."

Market Smarts

Boldt works primarily in seven markets: health care, education, power, pulp and paper, food, plastics and other industrial.

Agility is a key attribute: The firm leveraged its experience in the pulp and paper industry, where contracts started evaporating in the 1990s, to find work in power-a market expected to grow exponentially throughout the Midwest due to deregulation and the need for energy in an ever-expanding economy.

"Disguised in [pulp and paper] work are the power islands-the gas-fired, oil-fired or coal-fired boilers-and the precipitators we were building right alongside the building the paper machine is in," DeKoch says.

Major projects include the $85 million, 65-MW petroleum-coke-fired power house for Manitowoc Public Utilities; the $450 million, 525-MW Riverside Energy Center peaker plant in Beloit; and the $450 million, 525-MW Fox Energy Center peaker plant in Wrightstown.

The power market is already moving in directions other than generation, including environmental controls, alternative fuels and transmission, DeKoch adds. About 12% of its billings are in power.

Market smarts is another company attribute. About 25% of Boldt's billings are in health care, a market with a strong supply of projects due to aging baby boomers, aging healt care facilities, economic opportunities in the life sciences and the strong research culture at the state's flagship school, the University of Wisconsin.

Oscar C. learned about the health care market in part by being on the board of Appleton-based ThedaCare, a community health system, for 29 years.

"Acceptance in that industry is a tough qualification," he adds.

Key projects include the $187 million Heart Care Center and Patient Tower at St. Luke's Medical Center in Milwaukee, the $174 expansion of St. Marys Hospital in Madison and the $70 million expansion of Children's Hospital in Milwaukee.

Boldt's experience helped it become a team member in a multi-team effort organized by Sacramento, Calif.-based Sutter Health. Sutter is planning to spend $3 billion over the next 10 years on capital improvements and wants the best ideas.

Boldt has 350 salaried employees and 1,500 field personnel and averages the start and completion of about 200 projects annually-up from an average of 150 starts and completions a decade ago.

In 2000 the company restructured. The Bold Co. is the holding organization for three divisions: Boldt Consulting Services, Boldt Technical Services and Oscar J. Boldt Construction. Major services include construction management, design-build, owner's representation and development.

Alan Fish, associate vice chancellor of Facilities Planning and Management at the University of Wisconsin, credits the firm's development expertise for helping deliver a residence hall with other uses in two years, rather than the normal six years. The $83 million mixed-use Park Street Development Project with Newell J. Smith Residence Hall was the school's first dormitory in 40 years.

Boldt owned the land and devised a lease-purchase scheme: It constructed the project and leased it to the university, which had the option to purchase it.

Except for the office portion, the university completed the buy last summer.

Six years would have normally been needed primarily because of the red tape that comes with state procurement and project complexity, Fish says. The work involved six major elements: building the office, parking ramp, visitors' center and residence hall and the relocation of utilities and a business.

Had it not been for Boldt's development services "I don't know if we would have even proposed it," Fish says. "We probably would have skipped this."

It is that kind of customer satisfaction that makes Oscar C.'s chest swell with pride.

"There is a satisfaction at looking at a building after it's finished and saying, 'I had something to do with that,'" he says. "There is a purpose to this, so you go back and put your hands on the wall and hope they're 70 and dirty and leave a handprint."

SIDEBAR

An Ethical Company

The Boldt Co. has established a reputation for strong ethics.

The company won the 2006 Wisconsin Better Business Bureau's Torch Award for Business Ethics & Integrity in the category of companies with 100 to 999 employees. Boldt was one of only five winners from among more than 150 applicants throughout the state.

Only one other major commercial contractor, Milwaukee-based The Bentley Co., has received the honor (twice) in the competition's four years, in addition to specialty contractors, architecture/engineering firms and home builders.

The award is more than a bauble due in part to the often shaky state of ethics in construction.

For instance, the Reston, Va.-based American Society of Civil Engineers announced in July the adoption of an amendment to its 92-year-old Code of Ethics that calls for "zero-tolerance for bribery, fraud and corruption." The ASCE adopted the amendment in part because of an expected increase in infrastructure construction worldwide and the concomitant temptations and noted that 10% of the approximately $4 trillion spent annually worldwide for engineering and construction is lost to corrupt activities.

"In a market that's booming, there might be people who say you don't need ethics when it's like this," says Robert Cox, department head and professor of building construction management at Purdue University in West Lafayette, Ind.

"But at the same time, ethics goes beyond day to day. It goes into the decisions you make that affect not only today but tomorrow. Ethics are paramount."

Indeed, companies with poor ethics often suffer the long-term ill-effects, such as turnover. Employees often disdain an unethical employer.

Turnover at Boldt ranges only around 3%, says Thomas Boldt, chief executive officer.

This compares with an industry average for companies with more than $250 million in billings of 17.4%, says Jeff Robinson, president of Saline, Mich.-based PAS Inc., a construction consulting firm.

Rather than being pie in the sky, Boldt's ethics are grounded in realism. Potential customers, for example, get accurate bids.

"Sometimes that hurts us," says Bob DeKoch, president and chief operating officer. "On the day of giving the customer a price, he is getting three or four more optimistic prices. He looks at us and asks 'Why are you so far off?'

"We say, 'We're trying to tell you what you need to know, not what you want to hear.'"

Unrealistic bids tend to have a rippling effect: Companies may not be able to deliver projects during construction for the prices they had promised during the bid, ultimately coming back to haunt the owner.

Responsible bid ethics extend to subcontractors, Thomas Boldt says. The company will not shop bids among subs to try to get the lowest.

"We have found them to be absolutely straightforward as a contractor," says Roger Becker, vice president of the Precast Division of the Waukesha-based Spancrete Group, a precast concrete producer.

In fact, Spancrete chose Boldt as the contractor of the 50,000-sq-ft expansion of its plant in Valders, Wis., in 2005. The choice was significant because of the role reversal: Spancrete was the owner, and Boldt was the supplier.

SIDEBAR

A Dynamic Company

A key trait of The Boldt Co. in Appleton, Wis., is its dynamism.

The company is willing to investigate ideas and carry through on them to help establish trends.

Boldt is an advocate of lean construction. The concept, which derives in part from Toyota Motor Co.'s legendary status for quality, is an attempt to incorporate in construction some methods that have been used successfully in manufacturing for productivity, quality and efficiency improvements.

"Six or seven years ago when we were in strategic planning on productivity improvement, we knew the Toyota production process was out there," says Bob DeKoch, president and chief operating officer. "One of our executives was in charge of innovation and research, and he and us were having the same thoughts about how we could apply the lean Toyota production model to a business like construction."

As Toyota conceived it, there are five elements to the lean system: product design, customer relations, production, enterprise management and, finally, supply chain coordination.

In the old days manufacturers would order parts in bulk and inventory them in bulging warehouses. If there was a defect in individual parts, the flaw would make it into the final product during assembly and be repeated until it was caught-often, months or even years after the final product had been in the market. The manufacturer's reputation for quality would suffer, as the U.S. automotive industry did as a whole vs. its Japanese counterparts in the 1980s and after.

Contractors often order materials in bulk, have them delivered to a sometimes constrained jobsite and handle them numerous times.

"When you've handled it three or so times, you've damaged 5% of it," DeKoch says. These materials have to be replaced, and reordering adds to delays, costs and headaches.

In the lean construction method, materials are ordered at the last responsible moment and handled once.

The benefits of lean can add up in terms of time and cost savings. DeKoch says that statistics show average project cost is reduced 5% when lean is used.

Boldt and a number of other companies were founders of the Louisville, Colo.-based Lean Construction Institute. The organization does research and aims to disseminate in construction techniques developed in manufacturing.

SIDEBAR

A Company with Art

The Boldt Co. has made the science of construction into an art.

The firm is a major contributor to arts funding and education throughout Wisconsin, and it recently received recognition for its activities.

In October, the Boldt family-Oscar C. and Patricia and son and daughter-in-law Thomas and Renee-were named recipients of the 2006 Governor's Awards in Support of the Arts, the Madison-based Wisconsin Foundation of the Arts announced. They were honored in the Individual Leadership category by Gov. Jim and First Lady Jessica Doyle at the Executive Residence in Madison.

"We have always felt strongly that we had an obligation to support the community," Oscar Boldt says.

The company has supported the arts for two generations, but it did not want to disclose its level of financial support.

Among the company's recent activities: