Wieland-Davco Corporation: Entrepreneurial Education

Construction
Written by Liz Jones
Monday, 01 October 2007
This construction management firm learned from past experiences and is now running at full throttle. When Craig and Scott Wieland joined their father’s Lansing-based construction management company in the late 1970s, Michigan’s economy was in a slump. What was once a fairly large company was reduced to the two brothers and their parents. Thankfully, Mason, Mich.-based Dart Container Corporation, a manufacturer of polystyrene cups, began expanding at that time with the advent of the fast food industry. Don Wieland, who founded Wieland-Davco Corporation in 1958, had a relationship with Dart going back to 1962 and began following the company around the country. It wasn’t long before Wieland-Davco was running at full throttle. From four employees and $2 million in revenue in 1981, Wieland-Davco has grown to 75 employees and is pushing $200 million for 2007, and Wieland attributes that success—at least in part—to three valuable lessons the company learned along the way. In the late 1980s, Wieland-Davco Corporation made a commitment to diversify beyond warehouse, distribution, and manufacturing facilities and created a portfolio that includes churches, automobile dealerships, office buildings, and hotels, to name a few. The reason, Wieland explained, was to create volume and thus better serve its largest customers. Craig Wieland “If we are working on 20 projects and five are with the same client, we can easily expand our contract to meet that clients’ needs. But if we have six projects and five are with the same client, a change in plans could be devastating.” But Wieland knows well that too much diversification can come back to bite you. About 15 years ago, the company embarked on what Wieland called a “deworsification” strategy in which it attempted entering new markets, such as real estate development, engineering, and residential construction. The company even opened a restaurant. “We would get off track and lose a lot of money and say, ‘Let’s never do that again.’ But after a year or two, we would forget and do it all over again,” he said. In 2000, the company decided to get off the roller coaster and stick with what it knew best: construction management. Today, about 80% of Wieland-Davco’s business is repeat. “Once we get a customer, we don’t let them go. We bend over backwards to satisfy their requirements and make the building process a pleasant one.” Wieland-Davco also offers its customers several value-added services that keep them coming back time and time again. For instance, the company keeps all of the blue prints and specifications on Dart projects at its headquarters in Lansing. “We act as an inhouse facilities department for them, which is helpful when they want to expand or renovate an existing facility,” Wieland said. Wieland-Davco also offers its customers the option to lease or buy facilities, and because of its willingness to follow clients wherever their businesses take them, clients don’t have to hire a different construction manager each time they enter a new country. As a result, about 80% of Wieland-Davco’s business is repeat. With a laser-like focus on its core competency, Wieland-Davco began expanding geographically. “Wherever our customers go, we follow,” said Wieland, adding that the company first ventured in to Argentina in the mid-1980s, was working in Mexico by the early 1990s, and was active in the Caribbean by the late 1990s. It is currently building in 15 states and working on its second project in China. Wieland recalled when the company first started taking on international jobs. “There is an old adage, ‘You go to the Caribbean with money and no experience, and you leave with experience and no money.’ We proved that true,” he chuckled. In the past, Wieland-Davco entered into foreign countries without understanding their financial policies, taxes, or regulations. “We shot first and asked questions later.” For instance, Mexico has a strict value-added tax, and if the correct procedures are not followed, a company could end up paying it twice. “The value-added tax in Mexico can be 7% to 15%, but your profit margin may only be 4%. Learning the proper procedures can help you avoid a huge problem.” The company ran into problems repeatedly and played with the thought of retracting back into the US about five years ago. But client demand was too high, so the company decided to take a smarter stance. Wieland-Davco developed a strong relationship with Plante & Moran, one of the largest accounting firms based in Michigan with expertise in foreign relations. Wieland-Davco also has relationships with a handful of law firms that perform due diligence prior to the company entering a new regulatory market. “Although establishing a general counsel and accounting department internally might be cheaper, you might find that your lawyer understands regulations in Mexico inside and out but isn’t familiar with the Caribbean or China. We ask a law firm what their expertise is in these countries, and if they don’t have any, we ask them to find someone who does, and we hire them on a case-by-case basis.” Long before Jim Collins wrote Good to Great, Wieland discovered a fundamental business truth: success comes from having the right people in the right positions. To that end, the company is constantly gauging its employees’ aptitude, performance, and attitude. Wieland was also sure to point out that he and his brother, Scott, are team players. “We don’t sequester ourselves in a corner office and expect our employees to run the company while we are out playing golf. Years ago, I discovered that when management is engaged, employees are engaged and typically make better decisions on behalf of the company.” Wieland also learned early on that to keep good people, you have to treat them right. “Sometimes, if an employee is experiencing performance issues, it may just be because he is homesick—he hasn’t been home in four weeks. In that case, the answer might be to find him a job closer to home. You have to be aware of these types of issues, and that goes back to Scott and I working alongside our employees each and every day.”

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