Difficult Challenges, Innovative Solutions
Thomas G. Dolan
March 2007Why would someone who majored in both biology and psychology with minors in chemistry and sociology start his own drywall business immediately after getting his college degree?
For Jerry Reicks Jr., president, Jarco Builders, Ltd. in Sioux City, Iowa, the answer turns out to be pretty simple. His father had started Tri-State Drywall in 1963. Reicks started going to work with him when he very young; he grew up stocking and hangin wallboard. He continued to work on weekends and summers while he was attending Briar Cliff University, also in Sioux City.
When he graduated in 1971, the highest offers he got for a career in psychiatric social work was an annual $9,000, but he had earned $6,000 doing drywall part time. His father’s partner at the time, who did not have children, had earlier negotiated the provision that the owners’ children could work for the company but not become officers. A few years later his father liquidated his company and retired, but in 1971, Reicks saw his best option for the future was to start his own company, which he did.
It turns out that Reicks’ liberal education—in which he studied subjects totally unrelated to what would become his business, served him well. That background gave him a way of thinking about problems and coming up with innovative solutions.
That unique way of thinking helped him make a dent in an industry-wide problem: finding qualified help.
"Since 1996 we had been growing at the rate of $500,000 to $1 million a year,” he says. "I identified the number one obstacle to our continuing to grow and maintaining our quality standards was finding qualified help.”
Though Jarco is a nonunion shop, Reicks has learned from talking with his fellow members of the Association of the Wall and Ceiling Industry, especially those in the Business Forum to which he belongs, that unions can provide a good education to people interested in a construction career. When he mulled over the idea of education, it was natural for him, a college graduate, to think of an educational institution. So he approached the West Iowa Technical College in town. In itself, this is not unusual. Employers often partner with community colleges to provide the curriculum employers ask for, and in turn, help graduates find jobs.
Reicks is, in fact, one of the five top construction employers in terms of sponsoring programs for the school. But he took to the school a somewhat radical variation of the traditional approach. For one thing, the course work is very industry specific—structural and light gauge steel framing, attaching drywall to wood and metal, and acoustical ceilings.
Students go to school only one day a month. The rest is on-the-job training. Currently five foremen are in charge of 10 apprentices, or two each. A school facilitator is on the job site one day a week teaching safety or another relevant subject. The project is funded by both Jarco and federal monies. The school facilitator is paid with federal funds. Since a government program involves a lot of paperwork, the foremen are in charge of it, but they get paid extra by the government. They have a checklist and check the apprentices off weekly on what they should be accomplishing.
Apprentices are not working for an associate’s degree, but after one year they earn a federal apprenticeship degree. And the program can be extended to two years.
The project began three years ago. To date, three apprentices have graduated from the second year, three are in the second year, and eight have gone through or are in the first-year program. "We’re trying to start with 10 new apprentices each year, with the hope of five making it through the entire program every year,” Reicks says.
Another challenge, Reicks continues, is the work force becoming more and more Hispanic. These workers have the reputation of being hard workers and willing to learn. But there is often a language barrier. Therefore, the courses are bilingual. What makes this situation a bit easier for Jarco than some other companies is that several of the Jarco foremen have come up through the ranks, and, among these, the top two foremen and the EIFS foreman are Hispanic.
This wasn’t the first time Reicks came up against a tough challenge. "We’ve had some hard times in the past,” he says. One of his competitive challenges from the start, he explains, is that he’s not situated in a high density area. He typically works within a 70 miles radius. "The competition changes depending in which direction you go,” he says. Sioux City is in Northwest Iowa near the borders of Nebraska and South Dakota where he often goes, as well as well as south into Iowa.
Jarco started as a residential drywall company and stayed that way until the 1980s, which he recalls as a time of a sinking economy and really hard times. In response to competitive pressures he expanded his market radius to 300 miles. He also added more and more services.
"We remained a residential drywall company until about 1982 when we did our first metal stud project,” he says. "A couple of years later we added our acoustical division. In 1995 we added a retail sales division and hired an outside sales person to handle that. We also started doing EIFS and light commercial. In 1995 we stopped doing residential work and started selling to smaller drywall companies. In 1996 we added another estimator. We’ve since added two other divisions, spray fireproofing and poured gypsum floors.”
Reicks adds, "In this part of the country you’re either very large or very small and residential. We’re a fairly good size, having a range of 60 to 90 employees. Now we have about 70. As we’ve added new divisions and diversified, we’ve grown in size, and have utilized a combination of techniques to keep us number one in this market. Our buying power has helped us immensely.”
But about three years ago, when the business was flying high and doing well, Reicks decided to pull back from actively running the company. He delegated much of his authority and devoted more attention to several outside projects that were taking up more and more of his time. Then disaster struck. In 2005, with gross revenues of $4.6 million, the company lost $90,000.
Take-Charge Kind of Guy
"When I got back into the books, I saw that in February 2005, we did $140,000 worth of volume, which was unbelievable since we should easily have done $400,000 to $500,000.
When asked whether this discovery frightened him, Reicks replies, "After having the business for 34 years, I’ve been through a lot more difficult times, but it did come as an awakening experience.”
There were some external factors, but a key factor, he says, was that "decisions were not made when they should have, so problems grew rapidly.” As a result Reicks let go his president, general manager and warehouse manager, and he took over those responsibilities himself.
"It was basically my fault,” Reicks says. "The buck stops here.”
He cut overhead. The salaries of the three he let go added up to a significant savings. And he took a number of other measures, such as reducing his truck fleet from 30 to 24, getting rid of six older models.
"When I took back charge, I got our books updated, straightened them out, found out what our costs were, and reviewed our bidding process.” Here his experience served him well. For, to get work, he lowered his margins so that he still made money, though not as much as he would like, then as the jobs started building up, he added 5 percent to his margins, and kept doing so, still managing to get work. "This continued up to two months ago, when we had to come down a little bit in our margins.”
The results of all these efforts? "2006 was our best year ever, with $7.4 million in sales and over $400,000 in profits,” Reicks says.
Reicks is also a problem solver in a more ongoing, less dramatic way, by coming up with innovative solutions to difficult jobs. This attribute, along with an emphasis on quality control, has resulted in his receiving awards for his work. One project he is especially proud of is the Irving Elementary School in the city.
"There was a lot of curved soffit and curved acoustical work that was very difficult,” he says. "What is unique about this project, a very large school, is that there are green, red and yellow tiles leading to the first three grades, each pod in the atrium identified by a 10-foot high crayon made out of lightweight gypsum casting materials. All the child has to do to find his way is follow his color.”
Away from the Job Site
Three years ago Reicks took up golf for the first time. He now enjoys being in a league, but it is one of the activities that drew him away from the business.
A wrestler in high school and college, Reicks began coaching in the schools where his four children were growing up. Eleven years ago he started refereeing free-style and Greco-Roman wrestling, building himself up so that five years ago he was qualified to referee international matches, traveling to places like Athens, Greece, and Belgrade, Serbia.
About four years ago he became involved with the American Subcontractors Association, which has been working with the Associated General Contractors of America, on white papers for issues like risk management.
Reicks has returned full-time as manager of his business, typically working 10-hour days, but he still taking the time to participate in these other activities.
One activity Reicks says he will always find time for is his AWCI Business Forum. Since he believes many AWCI members might not be aware of the forums, he explains how his works: "We started a second forum six years ago. Recently a fifth forum was added. Each forum has between seven and 10 individuals, mostly business owners, presidents or key individuals involved with AWCI. The only rule is that your competitors are not in the same forum. AWCI’s members come from diverse parts of the country. Forum members commit to coming together at least twice a year to discuss their business and share ideas.
"Our forum has meetings for twice a year in conjunction with two of AWCI’s major meetings, and we’ve added a third separate meeting of our own, where we meet at a forum member’s company. When we are there, his financials are laid out, we can go through his operations and see how it’s run and make comments.
"Our forum has added such a dimension for all of us, of knowledge for ourselves and appreciation for our colleagues’ businesses. As for AWCI, I can’t say enough about how it helps us all meet the challenges facing our industry.”