Riches to rags
By Steve Schultz
For J.C.
Zimmerman Engineering Corp., working on Milwaukee's deep-tunnel
project should have been the pinnacle of the company's success.
But the Greendale business was forced to close its doors in August
- buried by the project that was supposed to have been the highlight
of its portfolio.
The collapse
of the 40-year-old civil-engineering firm has left behind more
than incomplete projects and an ongoing Chapter 7 bankruptcy
case. Former employees say they've taken away lessons of how
even a thriving business can suffer from fatal flaws. Although
they wished to remain anonymous, several former workers said
that getting the word out might prevent other companies from
following in their footsteps.
According
to former Zimmerman employees, some of the company's most significant
problems 
started following
its work on the Milwaukee Metropolitan Sewerage District's Water
Pollution Abatement Program, known locally as the deep tunnel
project. The $2 billion program created three large underground
tunnels where wastewater is stored until it can be treated.
In 1977,
a predecessor company to engineer CH2M Hill Inc. signed a contract
with the district to plan, design and manage construction of
one of the three tunnels. J.C. Zimmerman Engineering signed on
to the project in 1982.
The North
Shore Inline Tunnel was started in the fall of 1987, but stopped
six months later when flooding reached an unexpectedly high level.
The tunnel opened in 1994 - three years late and millions of
dollars over budget.
The district
sued three affiliated companies of CH2M Hill for $58 million
in 1997, claiming that professional negligence was to blame.
In December, the suit was settled for $24 million and J.C. Zimmerman
Engineering received a $448,000 bill for its share.
'Just couldn't
compete'
Before
the start of the deep tunnel project, J.C. Zimmerman Engineering
was a mid-sized consultant. Taking on the district job enabled
it to add more staff, but management decided not to take on another
large project as that work ended. According to John C. Zimmerman,
the son of the company's founder and who last held the title
of vice president of administration, it was a mistake.
"They
were content where we were and where we had been, and I think
today's marketplace requires that a firm is progressive and is
willing to expand," he said. "If you become complacent,
you are subject to being just beat out."
Within
its southeastern Wisconsin home, J.C. Zimmerman Engineering attempted
to expand its clients and diversify its services. But the marketing
effort was unable to attract new business. Part of that came
from the deep-tunnel project and some from personnel issues.
"That
has created a lot more consultants in the area, so there's more
consultants to do less work," according to an employee who
had been with the firm for years. "They just weren't able
to land the work, and I think it had to do with growing big with
the Pollution Abatement Program and getting bigger salaries.
We just couldn't compete with guys who went out on their own,
spun off and started out small and drew in customers that way."
A bad name
And because
of the retrenchment following the deep tunnel work, several key
staff members began to leave. As a result, projects on hand couldn't
be completed in time, former engineers say, and new work was
becoming more scarce.
"It
was a double-edged sword," said an employee who was there
the day the business shut down. "Their reputation more or
less preceded them. As you had discontented employees leaving,
they kind of spread the word around."
The lawsuit
became another facet in the firm's trouble and the "icing
on the cake," as one engineer put it.
"I
think a lot of the firm's resources, from a managerial standpoint,
were preoccupied with trying to find a way to reach an agreement
with CH2M Hill," Zimmerman said. "Whether we were actively
in discussions with Hill at that point, it was always on the
back burner, on your mind."
The lawsuit
also producedto a secretive atmosphere both inside and outside
the office, according to some. One of the most severely affected
clients was the City of Greenfield, which had used J.C. Zimmerman
Engineering for several years. While some projects were delayed,
former employees were able to start with new businesses and then
work for Greenfield.
But telling
clients sooner would have helped. "I'm sure once they make
that decision, their attorneys tell them not to say anything,"
said Dan Kinnick, the assistant city engineer. "I would
assume you're kind of caught between what you might assume is
a moral obligation and what's a legal obligation. But basically,
when we had such a long relationship, it would have been nice
to know."
Growing distrust
Inside
the business, a lack of communication contributed to the loss
of experienced employees, several people said.
"A
lot of people have a very deep loyalty to the company,"
a former company engineer said. "Keep people in the loop.
You need to be upfront with your employees and tell them what's
going on with this. Don't blow smoke. They're trusting you. You
have to trust them."
Zimmerman
said he believed employees were adequately informed and that
the industry shared in staff problems. "It's a very competitive
market out there, our people were always being approached by
other firms," he said.
Once it
became apparent that the company would have to file for bankruptcy
because the lawsuit would exhaust its resources, management tried
to help employees. The shutdown was timed so that workers could
find new jobs at the height of the construction season, Zimmerman
said. Only a few staff members still are without jobs, Zimmerman
and others said.
"Could
we have done something a year ago? No," Zimmerman, who is
now searching for a job himself, said. "Could we have done
anything in the recent history? Given our understanding of how
things were being resolved, we felt that we had followed a prudent
course of action."
