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Building the Biggest and the Best

The Donaldson Acoustics Company, Inc., based in Hauppauge, N.Y., with an additional office on Madison Avenue in New York City, was founded in 1906 and has grown into one of the largest interior contracting firms in the United States providing lath, plaster, ornamental plaster, spray-on fireproofing, acoustical and metal ceilings, drywall, carpentry and architectural millwork services. The company has long been in the forefront of northeast construction, and the New York City skyline especially reflects its long substantial history of producing great interior landscapes in magnificent structures.

The company has provided interior finishes on such prestigious structures as the Museum of Modern Art, Carnegie Hall, the Metropolitan Museum of Art, The Lipstick Building, JFK Terminals 1 and 4, Times Office Tower plus corporate headquarters for IBM, Morgan Stanley, Random House, CitiBank, Bear Stearns, Merrill Lynch, Lehman Brothers and many of the major hospitals, malls, hotels, schools and colleges built in the metropolitan area.

Robert Tanic Donaldson started the company a century ago in his New York City garage, doing lathing, plaster and ornamental plaster. His son, James Clements Donaldson Sr., a World War II veteran and Normandy invasion participant, with his son James Clements Donaldson Jr., took the business into Long Island and helped build more than 400 schools there in the post-war building boom period.

The founder’s youngest grandson, Duane Robert Donaldson (Bob), a Long Island University business graduate, started in the business in 1968. He returned the focus of the business to New York City in the late 1970s and early 1980s, and grew the annual volume 20-fold. In 1996 he became president, CEO and 100 percent stockholder. At age 55, he is still president and CEO, while his son, representing the fourth generation, Douglas Robert Donaldson, who will be 33 in May, is executive vice president and also part owner.

General Management

Donaldson says preparation, effort and passion for your people and your clients are the must-have ingredients for building a successful business. Good, solid management is the food for growth.

All management programs must be based on truth and undeniable facts. These programs must stand up to the tests of time. Once the field and the inside know that truth and fairness will support their positions, a camaraderie of purpose develops throughout the company. Once this purpose becomes the fabric of your company, hold on and prepare to improve your management skills because your company will take you to heights you only dreamed of, says President Donaldson.

He continues, “We do massive projects, in the range from $100,000 up to $25 million. We might be doing four to five projects of great magnitude at any one time, with the total annual number of projects about 50.” The range of employees at any one time ranges from 400 to 800, including subcontractors.

A key dynamic in the success of the company is managing so many projects of this size and complexity. The way he does it, Donaldson says, is through a strict compartmentalization of different disciplines. “We have a true separation of the estimating, sales, purchasing, operations, accounting and administration departments,” he explains. “This compartmentalization simplifies the manager’s ability to properly allocate responsibilities; probably the hardest goal to achieve in building a business structure.”

“Large job management structure is our forte,” Donaldson says. We spare no management investment. In addition to myself and/or my son overlooking the progress, usually an account executive with a project manager and assistant is allocated to a large project. Also, a field supervisor with a general foreman oversees the employee’s installation, constantly monitoring productions and quality. This is the hierarchy we maintain and how we coordinate size and complexity,” Donaldson says.

To keep landing these important jobs, Donaldson says, “We have to work day and night to please our clients. We have to deliver what we promise on time and do what we say we are going to do. That’s the only way to build trust. Once trust is built, your reputation develops and the securing of prestigious projects gets easier.”

On the other hand, Donaldson says, “One of the things we learned along the way is that we have to be cognizant of whom we’re doing business with. We don’t want to do business with just anybody.” Since, as a subcontractor, his main business is done with the general contractors and construction managers, he says, he wants to do business with those general contractors and construction managers “who are trying to deliver value to their customers.” If the builders do not maintain high standards, Donaldson continues, that will negatively impact his company. Also, he adds, “When I was younger, I was always trying to figure out what the competition was doing. Then I finally decided I should just focus on doing the best I could. Now my competition is trying to figure out what I do.

Money Management

One might assume that with a company of Donaldson’s size, cash flow concerns are a non-issue. Not so, Donaldson says.

“Cash flow is critical and it must be managed proficiently or disaster is around the corner. For this reason we have monthly cash flow meeting managed by the executive vice president, with the CFO, head of operations and his staff in attendance.

“Though one of my basic business tenets is ‘great management makes great companies,’ you must sweat the details, especially with cash flow to be successful.”
Once a job is closed, the first priority in cash management is the proper negotiation of the contract language regarding timely payment, requisition process, retention, change order process and final payment.

“It’s your duty, he says, “to negotiate these items to the best of your ability and to your company’s benefit. Certainly a prompt payment schedule is desirable; however, a trade payment breakdown approval is mandatory. Retention reduction should always be reduced upon 50-percent completion of your project, and a diligent change order process is paramount. Finally, make sure your final payment is not held up due to unnecessary arcane restraints.”

Further mention should be made of the change order process. Donaldson says, “On large-scale projects, changes could number in the thousands of dollars, with impacts in the millions. All subcontractors have to control this process positively or else it could be financially disastrous. Make sure all changes are put in writing and a change order is processed within a certain number of days (at most, 60 days from receipt of bill by your client). Then this change order should be requisitioned as soon as approval is secured. This process is cumbersome at best, and all subs must concentrate on the process to make it as streamlined as possible. If you produce a quality product on time, you deserve to get paid on time.”

New Markets

A company wanting to grow always must address new markets. Donaldson offers this advice: “[New markets] might be geographical or service oriented in nature. However, whatever new market you decide to address, make sure you’re more than properly capitalized, you have prepared, prepared and then prepared more, and you have the stomach and fortitude to handle problems you never prepared for.

“Markets should be aimed at supporting weaknesses in your existing markets. This will smooth out your economical journey.

“Construction is a hard, gut-wrenching business, but it’s my experience that if you fully support worthwhile people throughout the construction process, most will ultimately succeed and become leaders themselves and perpetuate the process.

“This feeling of inspiration and fulfillment as I watch these young dynamic leaders forge their path leaves me content in knowing that Donaldson Acoustics is in good hands for the next 100 years.”

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