Slow Growth Leads to Big Growth

Thomas G. Dolan

January 2006

Daniel Andersen, president, Andersen Interior Contracting, Inc., Fairfield, N.J., was clipping along with $20 million a year in annual sales in the mid-1980s. But, he says, "the growth was faster than it should have been.” Andersen sold that company, and a couple of years later, he started it again, determined to grow at a much more modest rate and to manage that growth carefully. His current annual volume is $35 million.

To see how this unusual story unfolded, let’s go back to the beginning.

In the late 1960s Andersen went to work for Circle Industries, a very large drywall company growing rapidly in the New Jersey and New York markets. He worked from 1968 to 1973, becoming an estimator and project manager, while Circle became one of the biggest players in the area. Andersen worked on most of the major buildings going up in Manhattan during that period, including the World Trade Center.

In January, 1973, Andersen left Circle to work for Morlot Con­struction, to help this fledging business grow in the New Jersey market. After a year, in January 1974, he decided, though only in his mid-20s, he wanted to go into business for himself. He started the Andersen Corporation in his basement in Riverdale, N.J., doing estimating jobs. After several months he was able to hire his father (who passed away in 1983) and older brother Carl (now retired), both union carpenters.

The company grew, and, in the late 1970s, diversified from its core business of drywall and acoustical ceilings into Dryvit. Andersen was the first to introduce Dryvit into the New York and New Jersey markets, was a major player, and did hundreds of buildings. But in 1983, Andersen decided he was growing too fast, so sold his entire business to a group of investors. They ran it until 1985 when they shut it down.

In 1985, because there was a noncompete clause in the sale, Andersen regrouped and started his present business. "We decided that after our venture into Dryvit panelization, we were diver­sifying too much,” Andersen says. "It’s not a bad business for some people, but it was not returning the profits we needed. Do we decide to stick with drywall and acoustical ceilings, which we do well? There is fireproofing and a lot of other things we could get into, but we don’t. We stay with the basics that work well for us,” he says.

Staying within these parameters, services include metal stud and drywall partitions, taping and spackling, wood and light gauge steel framing, insulation, acoustical ceilings, rough and finished carpentry, and fine architectural woodworking. The latter might almost be considered a diversification, but Andersen considers it a rounding out of the complete package. It has, in fact, been formed into a sister company, Corporate Woodworking, Inc. CWI projects include custom cabinets, reception desks, bank teller counters, wall panels and doors and frames. Field installations of the finished pieces are done by AIC.

CWI is a member of the Architectural Woodworking Institute, follows their exacting guidelines, and is one of the few companies in New Jersey to be certified by that organization. Four office staff and 10 mill shop workers are employed by CWI at the modern facility they share with the parent company. The 30,000 square foot facility has 27 people in the office and about 300 in the field. There is a fleet of seven well-maintained trucks. Drivers arrive at work at 6 a.m. and are on the job by 7 a.m.

The Best Projects

One of Andersen’s favorite projects in recent years is the new State Farm Northeastern Regional Headquarters in Parsippany, N.J. AIC, working with Gale Construction Company, LLC, was responsible for drywall installation, carpentry, millwork installation and acoustical ceilings. This $4 million contract was not only large but also had a very aggressive schedule as well as a number of innovative design features. It took an estimated 9,000 pieces of drywall to complete the work in the 400,000 square foot building. Some of the other challenges were a three-story high lobby and a great deal of open space in the building layout. An interesting feature was the dining area—designed to simulate a park-like outdoor setting, including trees made of reinforced gypsum products.

The project was completed in 16 months and employed about 40 carpenters and six tapers. CWI fabricated the millwork for the project, including the copy area, the pantries, the kitchen, the lobby and the reception desk. Toward the end of the project, about 20 millwork installers were working seven days a week. Andersen points out that while the sophisticated carpentry is now an integral part of the AIC package, it began as a very small shop in the late 1980, and grew slowly and naturally.

Although AIC keeps itself focused on the particular disciplines it does best, where it has diversified is the type of facility served. This has been good for the company’s long-term customers who have diversified over the year. And, although the original focus of AIC was office interiors, this emphasis has broadened over the years.

Lead-lined walls was the new and interesting challenge faced by AIC as they helped Premier PET (Positron Emission Tomography) imaging of New Jersey open the first nonmobile PET facility in Parsippany. PET is a noninvasive procedure for cancer screening, which requires patients to be injected with radioactive tracers.

Many of the rooms in the facility required lead lining to keep the radiation from leaking through the walls. AIC and CWI worked with Reckson Construction Group on this 3,500 square foot project.

In addition to its high quality work and reasonable costs, what sets AIC part is speed.

"We pride ourselves on our speed in two very different but critical areas,” says Andersen. "Our ability to provide accurate, competitive quotations in a matter of days is exceeded only by our ability to mobilize and execute projects in the shortest possible time.”

Schools are another new area AIC has taken on in the past couple of years. The company worked on a redevelopment project for Ramapo High School in Franklin Lakes, N.J. AIC responsibilities here included exterior framing and installing high-end ceilings and drywall soffits. The company worked on a science addition, enlarging the gymnasium, adding a greenhouse, plus re-doing the auditorium, the music center and the entranceway.

Another new area for AIC and CWI is restaurants. In one of several recent projects, all of the drywall and acoustical ceilings as well as FRP (waterproof fiberglass reinforced paneling) were done for Fleming’s Prime Steakhouse & Wine Ear in Edgewater, N.J.

Quality Employees

But perhaps the biggest new area, and one likely the cause for its biggest spurt of recent growth, was its purchase of Morlot Construction, from the son of the man Andersen worked for in 1973.

"Morlot had focused on a niche that we were not strong in—medical buildings, hospitals, public buildings and apartments,” Andersen says. "The marriage has worked very well. We’ve been able to increase our customer base significantly. We’re now working with almost an entirely different set of con­tractors, and we gain our strength in estimating and other aspects, because those employees are all now a part of our firm. So we were able to grow through acquiring additional quality people as opposed to just bidding to get more work and then having to find new hires.”

Rather than face the difficulties of finding good new employees, Andersen works hard to keep the ones he has. Most of his 27 office personnel have been there 20 years. "People say it a lot, but I really mean it when I say our employees are the key to our success,” Ander­sen says. "Once we identify somebody as good, we treat them well financially and in other ways. I just go by the golden rule. I remember how I felt when I was an employee, and I know what I didn’t like. I try to keep in mind how my policies and actions will affect those working here. We want employees to come to work and work hard but enjoy it, not spend their time watching the clock and waiting to go home.”

Andersen strives to create a family atmosphere because AIC, though a large business, is a family business. Andersen’s brother, John, is vice president and co-owner, and his younger brother, Max, is one of the top men in the field.

Andersen and his wife of 34-years, Ruth, have two children, both graduated from college and then got married. Their son, Michael, who has provided a three-year old grandson, Erik, works at the company in accounting. And daughter Michelle runs one of Andersen’s hobbies, now grown into a business—an auto racing team that competes nationally. Nephews Steve and Jim are also involved at AIC.

Just as important as building relationships with employees is building relationships with customers. "We stay very reach­able—there aren’t any middle-management layers insulating us from our customers,” Andersen says. "Our customers feel like they’re the only customers we have. We’ve positioned ourselves as the largest, small contractor, so no job is too big or too small. Small projects benefit from the experience our employees gained while working on large projects, and large projects still receive the personal, hands-on management that is more often found on small jobs.”

What about AI’s future plans? Andersen says, "We are comfortable where we are. We would like to expand modestly over the next few years, but have no plans for rapid growth.” And based on experience, that’s what works for AIC.