World of Opportunity

By Chris Thompson

Finances, geography, market stability and customer base blend with luck and patience when construction companies expand successfully within a region or across state lines.

"You have to spend a lot of time in terms of strategizing how you want to grow and why," Dan Dolsen, DeMattia Group vice president of business development, said.

Dolsen said his group, based in Detroit, launched its expansion into Milwaukee in January 1999, only after an extensive internal gut check. The company, he said, needed to decide whether it wanted to expand on its existing customer base or diversify its clientele.

"If we're trying to grow the same base then we go geographically where they are going," Dolsen said. "In Milwaukee, there are clients we were doing work with, but it's a more diversified base. As you're looking at other markets, that's part of what you evaluate."

Many construction firms expand by chasing building booms around the country, where they gather a share of the work and then move on, he said. That opportunity-driven approach doesn't always work for medium-sized firms looking for relationship-based, long-term expansion.

"When we're going into a market, we look at the overall size and what share we need to capture to sustain an office," Dolsen said. "We can't afford to go to the hot markets. We go to those that demonstrate sustainability."

A firm also needs to make sure its philosophy matches that of its target market. The DeMattia Group uses design/build, a delivery method mired in varying degrees of controversy nationwide.

"We had to look at whether people were neutral, hostile or accepting of design/build," Dolsen said. "Why do people buy the products they buy? Is it just price or is it based on quality?"

Choosing the right market is merely the first step in a long process of pulling in enough work to sustain an expansion. Dolsen said it's key to have a "hot start," such as an immediate job, as well as local people running the new office.

"When we go into a new market we need a project to attach ourselves to because it builds a level of trust," he said. "We also go in looking for the leadership of someone who knows the area because it takes time to get into the circles where decisions are made."

Nobody said it would be easy

After two failed attempts to expand from Kenosha to Illinois in the mid-1960s Camosy Inc. finally struck upon the right strategy when it bought out an Illinois firm, company President Raymond Camosy said. The buy out accomplished a variation of Dolsen's strategy because it provided local leadership as well as a "hot start."

"They (DeMattia Group) did all those things up front, but by taking over a company all those structures were intact," Camosy said. "But we were very much aware of the market when we expanded, and when opportunity meets preparedness that's the definition of luck."

Expansion over state lines carries its own brand of internal problems, Camosy said. His company deals with two state sales taxes, various unions and different building codes.

"It's going to create problems and it is expensive because it's like starting a new company," he said.

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