A True Family Firm
George Reed Inc.
George Reed Inc. is a general engineering contractor from Modesto, California that has been around for over seventy-three years providing services that include grading, paving, concrete work, asphalt and aggregate. It is the go-to contractor for emergency repairs aided by three asphalt plants and four rock quarry supply sites. In the off-season, when the ground is too cold, the company has to find other ways of occupying its time, which it does by entering the private market. Construction in Focus spoke with Director of Business Development Chris Marr.
George Reed Inc. began in 1944 and was incorporated in 1962. George Reed’s son Wendell joined the firm in 1953 after college and became president in 1974. He passed away last December, but the contractor is still overseen by the Reed family.
“George Reed is a general engineering contractor, which also has aggregate and asphalt sources. They also have sister companies that do pavement maintenance, ready mix supply and pavement maintenance machine manufacturing. They are all under the umbrella of Basic Resources, and all are run by the Reed family,” says Chris.
Currently, George Reed Inc. is in its third generation of family ownership as Jeff Reed is now running the firm, but the fourth generation has already begun working alongside him, so the legacy continues.
The scope of George Reed’s work includes many city, county and state asphalt paving projects. This is, of course, driven by the company’s three asphalt plants and four rock quarry supply sites, which process aggregate for the asphalt and aggregate base used by construction, but also sell to competitors. George Reed is getting back into the private sector with subdivisions and large warehouse work.
“If you have a 700,000 square foot warehouse site, we would go in and do all the grading, underground, sidewalk, curb, gutter and paving. Someone else would come in and build the actual structure, as we don’t do any of that,” says Chris.
Typically, the company employs around three hundred people during the summer months. The work is seasonal, and being in Northern California, the temperature changes have an effect. For paving, the temperature on the ground has to be around fifty degrees Fahrenheit or more.
In the winter, there may be paving in some areas. It varies, but many years will not see any paving work from October to March, as it is just too cold.
In the off-season, the private projects start. If it is not raining every day, then grading can still be performed as well as putting down aggregate base and installing concrete curbs, gutters and sidewalks. Many plant upgrades are performed during the winter months on the rock plants and asphalt plant equipment.
“It’s a good time to do that maintenance because they are not working twelve to twenty-four hours per day at this time of year. There is a lot of time for upgrades and maintenance, besides the normal daily maintenance or changes to the daily aspects of the plant,” says Chris.
The upgrades and maintenance entail large investments. Last year, over $4.5 million was spent for the aggregate and asphalt plants to increase efficiency. The highest cost of asphalt is oil, so many of the upgrades have to do with reducing the oil content.
Chris has been with the company for two and a half years and was brought on to seek private market opportunities. “KB Home is an example I can use to explain how I look for opportunities to bid on a subdivision project. KB Home has housing companies throughout the country. A lot of the times, the hardest part is that these companies don’t even know who we are, being out of the market for so long, so I introduced George Reed back into it,” says Chris.
KB Home has used George Reed on various projects and has seen that it is a qualified, competent, engineering firm. When Chris arrived, the company was doing a couple hundred thousand dollars a year in private work, and now it is doing around $13 million.
The goal is to grow by about ten to twenty percent per year, and the ultimate aim is to make somewhere in the area of $200 million per year in ten years with about half from the public side and half from private work.
Finding the right workforce is a challenge that companies are having throughout the country. The average laborer is now in their fifties, which is a concern.
“The younger population is not going into construction. By that, I mean drywallers, mechanical, electricians or framers. It’s hard work, and they shy away from that. It’s decent money, but you have to work your butt off,” says Chris.
If a student plans to attend college, the counselors will plan accordingly with applicable classes. If the student is not going to college or junior college, counselors are not very well equipped to help that student get into the trades. George Reed holds presentations at high schools on construction work to inform students that may not be going to college.
There are many construction jobs. Coming out of high school, a student can earn anywhere from fifteen to forty dollars per hour. Right now, it is estimated that there is a need for ten thousand homes in Northern California alone. Only three hundred to five hundred are being sold every month because there are not enough people to build more.
“Part of the reason the younger generation stays away from this industry is due to the tech age. There is a host of different jobs in which you can sit on your ass and play on a phone or keyboard. You would not have to go out and sweat and work hard on a job site where it may be one hundred degrees on a daily basis,” says Chris.
Chris says that it is not all that bad. Once people realize that a college education can also help within the industry, it becomes more appealing. All of George Reed’s estimators and project managers have college degrees. Some even started in the field, became superintendents and moved on to take positions as estimators or project managers.
Suppliers play a key role, and Caterpillar is the primary equipment source for George Reed. “The local distributor and service location is phenomenal. Obviously, Caterpillar is world renowned, and we have had a relationship with them for as long as the company has been around. In our fleet, well over seventy-five percent comes from Caterpillar,” says Chris.
“Sometimes, what gets lost is that for every really good [general contractor], you have to have successful, qualified and competent subcontractors. Everybody on the team has to be quality because if your underground subcontractor doesn’t do a good job, that means we did not do a good job,” says Chris.
Competition is an issue every day. On the public side, it is low bid. George Reed bids against competitors that also have their own aggregate and asphalt plants. On the private side, relationships, quality of work and money are always issues. It can come down to low bid, or if it is close, past relationships or quality of work on a past project can help the company to overcome obstacles.
Chris cited Highway 49, heading into Yosemite, as an example of a challenging project for the company. This past winter, the road was washed out, and George Reed had to rip out the road, re-bank the entire hillside, put in more drainage, build back the road structure, repave and get the road open.
For this time-sensitive endeavor, George Reed had to work around the clock for a month. It was an emergency job for a state and federal highway. There was no bid necessary, as the contractor was contacted and told to start work immediately.
“We have a reputation especially in Northern California and the foothills. We’ve been around for a long time. At the time, we were already performing a federal highway project in the valley floor of Yosemite, so based on our reputation and the location of our crew and equipment, they asked us to go to it. They were very happy with the job,” says Chris.