Employee-Owned Firm Builds on Nearly a Century of Success

Builders Steel Company

Builders Steel Company of North Kansas City, Missouri, which specializes in structural steel fabrication and erection, can trace its roots back nearly a century. If there a ‘secret’ to the longevity of Builders Steel Company – besides doing excellent work – it would likely boil down to two main things: collective ownership and a customer focus.
~
“We’ve always been an employee-owned company. We’re not a family-owned company, but we treat each other as if we were family-owned,” explains Executive Vice President Brent Herzberg.

“We also have a high level of service-oriented people here. I think we go over the top in making sure that our customer receives the best possible product he can. It goes back to trying to work out problems and conflicts early in each job. We’re a customer-service oriented company rather than a tonnage, out-the-door, mass-production kind of company,” adds Vice President and Sales Manager Barry Neill.

The firm operates a 70,000-square-foot structural steel shop and 30,000-square-foot shop for miscellaneous and ornamental fabrication work. Fabrication shop assignments might involve “miscellaneous stairs, hand-rails, spiral staircases, you name it,” says Shop Fabrication Manager Dennis Freed.

The fabrication division uses three computer numerical control (CNC) machines but does not use laser welders. The company prefers to do “free welding,” says Freed. Laser welders are expensive, and since Builders does so much custom work, it would be time-consuming to set up a laser welder for individual, specialized assignments, he explains.

The steel erection division primarily works in the Kansas City region of Missouri. All ironworkers at the firm are unionized and belong to Iron Workers Local 10. Builders’ officials like this arrangement because it means any ironworkers brought on board are going to be well-trained and industry-certified. Partnering with a union also gives the company a reliable pool of talented laborers to tap into whenever workloads increase. The union connection goes farther than just iron-work too; the company uses truck drivers who belong to the Teamsters Local 541, and shop employees who belong to Shopmen’s Local 853.

Last year, revenue was split, with roughly thirty-one percent coming from steel erection and the remainder coming from fabrication. This is largely a reflection of the nature of steelwork, rather than company priorities. “The reason for the offset in those percentages is it that it takes more dollars and hours usually to produce the material than it does to erect it,” explains Neill, who notes that material and shop costs can add up quickly.

Achieving an even split between steel fabrication and erection “is not feasible for us at this time,” he continues. “Every job has a two-thirds, one-third type [of ratio]. It’s just the way our product is.”

Builders does high-end work regardless of whether a job involves “a piece of handrail or a large structural project. We treat them all the same,” Herzberg states.

The company takes on jobs in a variety of sectors including retail, academic, and commercial. Of these, commercial would be the largest in terms of revenue brought in, says Herzberg. Regardless of the market involved, the company’s work is self-performed.

The steel fabrication and erection divisions are both certified by the American Institute of Steel Construction (AISC), which means, of course, that both have successfully lived up to some very high industry standards. Company certifications include AISC’s standard for steel building structures, the advanced certified steel erector with metal deck installation endorsement, and the standard for bridge and highway metal components.

“Being with AISC, we are audited every year. We have a quality procedures manual. Next week, we’re having our AISC audit for three days. We’re AISC-certified in the shop and field. [The audit is] one day for the shop, two days for the field. We have this audit every year,” says Herzberg.

On top of this, welders at Builders are all certified by the American Welding Society (AWS). And ironworkers go through an apprenticeship program run by the Builders Association of Kansas City.

Intensive safety training is part of the apprenticeship agenda. Beyond that, Builders operates in-house safety programs for fabricators and erectors alike. There is also a welding inspector on staff who is certified to AWS-standards and ensures that safety and quality standards are maintained.

The company has been in business almost one hundred years. “In 1927, they started as a miscellaneous fabrication only shop, and over the course of the years, they evolved into a structural miscellaneous erection shop. At one time, in the sixties, seventies, and early eighties, we also served as a service center. That stopped in the early eighties. We’re totally fabrication and erection today,” states Neill.

“The company was founded by a gentleman named Karl Schmidt. He partnered with four other gentlemen. Each threw some money in the pot. From there, the company has always been owned through a system of personally held stock,” Neill explains.

An employee stock ownership plan (ESOP) was introduced in the 1970s, so that “all the other employees,” could become owners, he continues. This self-ownership model has been key to the company’s success.

“I think it’s been a benefit to us. Over the years, we’ve been able to draw and keep the employees here. We have several people in the last ten years that have reached over forty-five years of service in the company. A couple are close to fifty years. I think the ESOP program enhances our ability to keep employees and bring them up through the ranks of management. So, I think it’s been a success, yes,” states Neill.

The company currently employs roughly thirty-five people in the shop and office and about thirty ironworkers in the field, the same total as last year at this time. However, the number of field personnel sometimes fluctuates, depending on workload.

New hires need to have an appropriate skill-set and mindset. “I think what we obviously look for is somebody that has the skills,” says Neill. This means shop workers who can weld, office people with accounting backgrounds, sales staff who are good with people and numbers, and much more.

Added to this is an emphasis on finding a person “that has the personality and desire to be part of a group. We’re more of a family than a bunch of employees. We know each other’s kids, dogs, and cats. Sometimes it’s just a matter of getting the right person with the right motivation and the best personality,” he explains.

The firm also seeks a good fit with suppliers. The company looks for suppliers who deliver on-time and “comply with all our requirements for [industry] certification,” says Freed.

The company says engaging in frequent work bids and belonging to trade associations are largely sufficient for its promotional purposes. “Our AISC membership is a good form of advertisement. Certain projects require AISC certifications to even bid on them,” explains Neill. Having a reputation for doing good work is also an extremely good tool for promotion, he adds.

Builders was affected by the trade disputes between Canada and the United States, but not to any major degree. Last year, the U.S. imposed tariffs on imports of steel and aluminum. The Canadian government promptly slapped duties on a variety of American goods, including steel products. All of this went on against the backdrop of negotiations of a new North American free trade deal.

“The prices for steel did increase after the tariffs were announced, but it didn’t seem to slow down the work. I don’t think there was anybody out there that was thinking about building a building that decided not to build it because steel was ten cents a pound higher,” states Neill.

The company does face a challenge in “keeping quality employees. The steel industry is a very competitive marketplace,” states Herzberg.

The company has no intention of adding any new services, opening any new branches outside of North Kansas City at present, or moving into areas beyond steel, preferring to concentrate on what it does best. Working in steel has served the company well, and changing focus might negatively affect the bottom line. The firm does hope to enhance its existing offerings and maintain its status as an employee-owned operation.

“As far as future growth is concerned, we want to go slow. One of the things that we need to do is upgrade equipment. As we proceed through the years, we have a plan to [upgrade] as profits allow,” explains Neill.

“I just think it’s important to recognize we’ve been an employee-owned company since inception, and it’s our plan to continue that. No one that has not worked here has ever had any ownership of the company. We’d like that to continue,” adds Neill.

Industry Changemakers

The construction industry has historically been slow to evolve, drawn to tradition over technology. As the industry is in a state of rapid innovation and advancement, organizations like the Toronto Construction Association (TCA) are working tirelessly to build strong member businesses that won’t fall behind.

June 18, 2019, 4:15 PM EDT