September 6, 2018

Welcome to the precast podcast, episode five. We are excited to continue this initiative. Today, my name is Hugh Scott. Greg Stratis, Company President, is in the conference room in the headquarters. We’re excited to continue this initiative. Again, we’ve got episodes one through four now in a final place and next week we’re going to have what we’re going to call I guess the hard launch of the podcast out. This continues to be an exciting thing for the company and the new way to tell our story, and keep ourselves out ahead from a standpoint of social media and how we can reach customers, potentially new customers as well.

With episode five, our goal is to talk about, really continue to expand on the company, where the company is, and where we’re going. Greg, as we sit here in the new headquarters building, very exciting for the company, a lot of feedback when I’m out in the field talking to engineers as we have our seminar series occurring. People love to get tours of the building. What is left to be done to get this facility to a final place?

Let me first start off by saying, when we did this headquarters, the last thing I thought we’d be doing is podcasts in our conference room.

I’m excited that we’re doing them. When it comes to the new headquarters, as we mentioned in previous episodes, the headquarters, a lot of it’s precast so the exterior walls, the elevator shaft is precast, obviously out front a lot of the drainage and stuff like that is all precast. We have a retaining wall outside that we made is all precast. We put a lot of our own blood and sweat into making of this building. Part of the goal was for us to get this LEED certified project. The reason for doing that, as I mentioned before, is just the economy. You know what I mean, the environment, is just that we just care about the environment and there’s really no money incentives for doing this. It’s just that we felt it was the right thing to do. It’s been a long project, a lot of couple years in designing it, over a year in making it. We still have work to be done in the parking lot. We have two separate parking areas, ones for customers and ones for employees. The back parking lots for the employees so we need to work on that, hoping to have that done beginning of October.

That would be great. In order for us to submit LEED certification we would need to have that parking lot completed because that’s going to have things like plugins for electrical cars, bike rack for people who ride bikes, a smoking area so many feet away from the building. Stuff like that’s going to be all incorporated into that parking area. Those are items that we need to go for our LEED certification. Hopefully, in another few months that will be a done deal and the building will be done. There’s still stuff we’re doing inside, a matter of fact, we got a company in here just the other day called Plant Works. What they do is they, we’re going to do a living wall.

Not flowers, but sort of plants. Spruce up the place in certain areas to add more vegetation, plants growing throughout the building. Obviously, all that’s part of morale. You know? I think that type of environment is nice to be in for the workers.

They say that plants give off oxygen and stuff like that so it’s better environment all around. Stuff like that we’re going to add. Like I said, we just had somebody in there. That wasn’t necessary for LEED certification but it was just little things that we want to get done to the office. There’s a big logo sign that we’re going to do out of aluminum that we’re going to put in the staircase with the plantings around it.

Hopefully that will all be done before the big tour that we’re going to be having from MPCA convention when that gets here.

Which is beginning of October as well. Yeah, so there’s still a few more things that need to be done to the office. People like you had mentioned are still talking about the office, they love to come by for tours. It’s open to anybody all. All you have to do is just call me, or stop by, and I’d be happy to show them around the office or the production plant.

Still getting a lot of people interested in seeing what we’ve done to our office.

Yeah, that’s great. You know, now having the drone that’s really helped us in terms of being able to take very interesting photos and videos, but being out with design engineers and other folks as well that we present to, having that really good photo that we have from the road that shows the full building, you know with the flag extended, that’s just really a great photo. A lot of folks going to snap to attention when they see that. Also, a lot of folks as we’re talking, will go into engineers offices and will say, “Okay Shea Concrete Products, working on 70 year anniversary, family owned and operated business, concrete precast.” A lot of folks tend to have this assumption or this interpretation that it must be a pretty dirty place, you know it’s precast concrete. When we start talking about the new building going for LEED certification, also have the photos of the main manufacturing facility with the two solar rays on it, people just really are typically not ready for that.

They just don’t assume that a facility like this focuses on those things.

Yeah. I would say we’re a little bit of the exception to the rule. I don’t think every precaster is looking at those things like we are.

There’s definitely ones out there that are.

I would say that most are not. We stand out because of that maybe.

Yeah, yeah. Sure. Just to throw it out, LEED, it stands for Leadership in Energy and Environmental Design. It’s administered by the US Green Building Counsel. One thing too that we’re currently talking to the Massachusetts USGBC based out of Boston so hopefully in the future we’ll be able to host an event up here as well.

Have folks from Boston come up to Amesbury, I know it’s a bit of a trip.

Yeah. No, that’d be great.

Yeah. Yeah, great. Kind of from a timeline standpoint, are there any dates in mind to kind of work on that final submission for the LEED certification?

I would say that we’d have stuff in place by beginning of October.

All along, it’s like an online database that we would enter components of your project as you go. A lot of that information is already entered. The only thing that hasn’t been put into place is things related to that back parking lot.

That’s kind of what we’re waiting for. We’ve just got to enter in those five or six items when they’re completed.

Hit the go button, and then it gets submitted as a project that gets evaluated for LEED certification at that point.

It’s really not a whole lot more to do as far as submission process goes because we’ve already been submitting all along, it’s just hitting that final okay button and getting it done. I would think, I mean I don’t know how long it takes after you submit, I would assume it’s probably a few months before they approve everything but maybe by the end of the year if we submit at the beginning of October.

Maybe we’ll know something by the end of the year in time for our 70th anniversary, right?

Yeah, that’s exciting. Coming up fast.

Yeah, it’s our 70th anniversary. Will be here next year. Yeah, so will be in time for that and maybe we can celebrate both things at the same time.

Yeah, great. Great, okay. Awesome. A lot of exciting things happening with the headquarters facility and a lot of exciting things happening at all four of the manufacturing facilities including here in Amesbury. Let’s go through and talk about. Here at Amesbury, I’m not sure if I say in the process of becoming the headquarters facility. A lot of people think of Shea Concrete Products in Wilmington, Massachusetts obviously.

As that shift occurs. Let’s talk through what’s going down in terms of planning and the potential for expansion at the manufacturing facility.

For Amesbury, we’re almost done with the permitting process. Hopefully, by the time this airs we will be done with the permitting process.

We’re going to be putting an expansion onto our current production building. We have roughly 40 thousand square feet of production, maybe a little bit more now, and we’re adding on 100 by 200 square foot production building onto our existing building. Then that’s going to be able to help with a lot of things. Space is an issues now so we hopefully, efficiencies will increase. We’re moving forms in and out of the building, hopefully we’re not going to have to do that with the extra room. Give a little bit more maneuverability around forms because now we’re kind of tightly packed. Might bring up a couple of product lines that are being made in other plants like our easy set buildings, we might bring them up to Amesbury. This building will be more efficient with making those kind of products. I’m not sure if our product line will expand a whole lot because of this, I think it’s more of an efficiency, we’re running out of room, that kind of stuff right now. When we put this building up in 2007, the previous 30 thousand square feet we added, we thought that was going to be plenty big enough.

It’s only been 11 years and now it’s not.

Who knows? Maybe in five to ten years they might say the same thing, we don’t have enough room again.

You find that if you have space on the floor for something, you usually fill it in with something, right?

I would like to have the guys down in production have more room, be able to get around, be more efficient, be safer, you know stuff like that.

Sure, sure. Now that’s 100 wide by 200 long. That’s two full additional production bays. Is that correct?

Yeah. It’s one large bay that’s 100 foot wide, and then we’ll probably break it up into two separate crane sections over the 200 feet, you know we’ll have two cranes added to that building.

For production, yeah.

Then that’s a fairly simple expansion of the flying bucket track.

All our concrete is delivered, like you said, by a traveling bucket. We have a central batch plant, well it’s kind of corner of the building, but it delivers the concrete to the different areas, production areas by way of our traveling bucket, flying bucket everybody calls it.

Which is pretty cool, delivers three yards at a time.

A site to see so you should come by and check it out.

Yeah. No, hopefully we’ll get some videos up on our social media platform soon showing how that works. Once that’s complete, the ability to perform the majority of mixing, batching, and pouring operations as well as the work done to take the forms off and be able to maneuver the product will be pretty much under roof then at that point.

Right, yeah. The idea is to prevent, or not needing to take forms outside when we’re not pouring them, to make room for other forms. Hopefully, a form will have it’s spot in the building, it will just stay there.

If we need to pour it, we pour it. If we don’t, we don’t. You know?

A lot of time and effort spent moving things in and out. It makes it tough when someone needs something special and that means you’ve got to disrupt production, take forms out, move forms in to make a certain item that you might just be pouring one of.

You know? It just all around, I think it will just make it more efficient.

You mentioned earlier, stay ahead of it.

Were going to try and stay ahead of any bottlenecks.

Yeah, sure. Sure. How many yards a day is typically poured at the Amesbury facility?

I mean, if you look at it over a course of a year, 150, 180 yards a day I guess is typical.

As an average. That plan that we have in there, if all your efficiencies are in place, you could probably come close to doubling that.

You know, it’s a three yard mixer so there’s no reason why you couldn’t be doing 250 plus yards a day.

You need the manpower, which we struggle for that. You need the room to do it, you know?

I think with this addition you could almost get closer to that without necessarily needing a lot more people to do that. Then Wilmington, which we’re already in the process of doing that office, again that should be done very soon. That was the only location that needed a facelift. It hasn’t had one in 20 plus years and it was getting tired. It wasn’t a good environment to work in so we figured we’d just do that one as soon as the Amesbury building was up.

That there is we mimicked a few things as far as color schemes and that kind of stuff go that we did in the Amesbury, we mimicked in the Wilmington office. Might have, we have some extra space there just in case we need to expand with personnel in the office as well because who knows what the future holds. It’s going to be a nice office when it’s done.

That’s great. Yeah, I was done there I guess what, two weeks ago meeting with some other folks. Yeah. No, it looks great. Very busy.

I know a lot going on. Yeah, and a lot of excitement, a lot of folks are excited about how that new space will look.

That facility there, when it comes to yard business is probably the busiest location we have and it’s on the smallest scale. You know?

It has a lot of traffic, it’s in a good location right near 93 and 128 or 95. Not too far from Boston so a lot of people come in and pick up there own products.

That’s what the yard is catered towards is primarily those who pick up.

That’s the kind of products we make there.

We look at jobs, depending on where jobs are, we might make product there just to make it more efficient to deliver the product.

Great, great. How about up in New Hampshire now? Nottingham, a lot of exciting things happening there as well.

Yeah, so that location has been up and running for a few years. Jerry [Mayhew’s 00:16:00] been running that operation. He was from a different company and he came over to Shea Concrete. That plant’s doing very well. It’s small as far as production space goes. We did get approvals to add another building and that building’s primarily, the purpose for that would be to do hole coring and man holes. We’ll be able to take a stock piece of manhole section and core a hole in it. Obviously, the idea behind coring holes is quicker turnaround, better service.

If someone calls up today and they need something tomorrow, we can take a stock piece and core a hole in it the size that they need for their pipe, and we can deliver it right away. We do a lot of whole forming up there now but obviously, that takes a little bit more work to whole form it, a little bit more time. Yeah, so we haven’t started that project yet even though we do have permits for it just because we have so much going on lately.

That we haven’t started that one yet.

Great. Once that’s complete, then that facility will have the ability to core any structure or any product that’s on the ground as well as the facility here in Amesbury.

That’s got a fully functional coring facility.

Which will be great because then we’ll have a backup too.

If one machine goes down for whatever reason, which they do, they break down, we’ll have another machine that’s able to take up any slack because we broke down.

That will be a big plus. Eventually I can see Nottingham getting an expansion on that place for the production building, that’s a small plant relatively speaking. When we had purchased New England Precast in 1999, that land was part of the purchase in Nottingham. We haven’t really done a whole lot up there other than fix things that were broken. We haven’t really expanded or anything like we have here in Amesbury.

How about, last but not least, heading down towards Cape Cod southeastern part of the state? Initiatives to continue to drive the Rochester, Mass facility forward?

Yeah, so Rochester, again another small location but they’re in a good location. They still do a lot of deliveries out in that area in Rhode Island and Connecticut so it makes sense to invest into that property as well. When we first purchased Utility Precast we only purchased the business, we didn’t purchase the land and the building. Then a few years later we decided that this is a good investment, let’s purchase the land and the building. We haven’t done a whole lot down there as far as additions or anything like that. We are looking to update the batching system. Right now they do a lot of batching and use a fork truck to move the material around so we’re looking to change their batching system so that they can use the overhead crane.

Right now it’s difficult to get at the mixer with a crane and be able to just do it that way. We need to make some changes there. We’re also looking to add the capability of doing another type of [inaudible 00:19:28] whether it’s slag or fly ash, or something like that in order to do some DOT work at that plant. A lot of DOT’s require something else besides just cement.

We’re going to, that’s on the burner. I’m not sure when that will happen but we are looking at doing something there as well.

Great, great. Good constant improvement, constantly having quality projects occurring at all facilities.

Yeah, Ed Shea’s always been eager to reinvest into the company whether it’s trucks, buildings, whatever the case, forms, whatever it is. I agree with him. That makes a lot of sense, keeps you ahead of it. It helps all around. It helps with the quality of product, it helps with efficiency, so we try to keep reinvesting into the company.

You know, kind of sticking with that topic here, the idea of being able to stay ahead of it, what kind of right now as things are moving along, any particular things in play, any challenges, anything that’s being navigated through to stay ahead of? I mean, I guess at this point now we’re over a decade of pretty consistent growth, solid construction, solid work being down around this part of New England.

Yeah, not to be negative or anything but it’s always a cycle when we have a downturn. Like you just said, we’ve had 10 years of real good progress, maybe not 10, maybe more like eight. 2008 came and we had a couple of years of just kind of, let’s get by. Over the past say, eight years we’ve seen growth, definitely a few years back, two, three years ago the growth I think was exponentially, very sharp growth. To me, that’s fantastic but to me, that’s an indication that just be prepared in case there’s a downturn again.

It’s all cycles. If you look at when downturns happen, they happen pretty much over the same course of time, plus or minus a handful of years. It’s usually when things are going extremely well.

All of a sudden people overinvest because they feel like things are going well. When that happens, you have a little bit of a crash. I think just always be prepared for that. It’s just something that we keep in the back of our mind that history has proven that it’s going to happen and it’s going to happen again. When the economy’s going well, just kind of keep that in mind that you need to be prepared for when things aren’t going well. I think that’s something that we kind of forecast, or we look at to see what were the indicators in the past. You had something in the ’80s, late ’80s where you had a downturn. Then 20 years later we had another downturn. Those are two major downturns, I guess you’d call them. 2008 was worse. You know, maybe another 10 years or so, eight years we got to just be ready for it. That’s something you should be preparing for now.

Yeah, I mean we’re seeing a lot of big projects going on. Right here in Amesbury there’s a real big project going on for skating rinks. People are investing a lot, there’s all types of residential developments going on right now. I haven’t seen so much about strip malls, that used to be a big thing, but lately I don’t see much of that going on. Commercial buildings, educational kind of stuff like schools and all that. People, a lot of investing going on so we’re watching that just to see. We can’t obviously do everything but we’re looking at the ones that we’re interested in and trying to pick those out, and forecast where’s the good opportunities. Sometimes it’s hard to find out what opportunities are good and which ones aren’t. Sometimes you pick the wrong ones.

That’s a good point too, I mean being able to have the discipline and stay focused on what are the right opportunities sometimes when you have a lot of different things that might come about that you can put effort on and put your attention to. Being able to really be able to stay focused and know exactly where you can make the most impact.

Right. My brother in law Dave’s always saying to me when I’m looking at projects that are out of the norm, “Is this something that we really want to put all our manpower into?”

We’re better off serving our current customers. Obviously, when you take on these opportunities, depending on what it is, it’s going to disrupt things. Even if it’s good paying job or something like that, it still impacts dispatch, it impacts production, you know. I’ve had many of nights where I wake up in the middle of the night thinking about work. You know?

That’s because sometimes I’ve picked projects that maybe I shouldn’t have gone after. Yeah, just got to weigh that out and kind of decide if it’s worth doing. I just looked at a project just yesterday I think it was, yeah, it’s a large vault, three 50 ton pieces make up this vault. That’s going to take up a good chunk of production, it’s going to be … I’m sorry, 25 ton, 50 thousand pound pieces. Three of these sections for this job that somebody wants us to bid. I’ve got to look at that and say, “Hey, what do we got going on?” “How’s it going to slow down production when we start that?”

We love getting those jobs, I mean those kind of jobs you take pictures of them, you talk about them with everybody, they’re exciting jobs to do. It’s just at what cost? You just got to make sure that it’s not hurting you in other areas, that’s all.

We like those jobs it’s just hard to always go after them, you know.

I guess that point, I mean I would assume that would be one full production bay, that would be a lot of the assets in terms of the forms.

No, for sure. Yeah, it’s a lot that goes into the decision making process of where to best put your resources.

Sure. How about right now availability of resources? Everything that goes into making the concrete, the reinforcing steel, things like that. With all the activity going on, is that a challenge right now or is that not a challenge?

We’re starting to see it be a challenge, yeah. With the tariffs, you know some of our costs are going up because of tariffs. We have to be aware of that.

I’m seeing some of the … Since we’re so busy and since the economy’s so busy, and everybody’s so busy trying to get things on the normal schedule that you got them before, it’s taking longer. Even finding for instance, rebar. Rebar prices are going up and not only are the prices going up but the trucking companies that they use to deliver the rebar are too busy to deliver the rebar.

You know, you’re paying more for rebar and you’re having to wait another week or two longer for your deliveries because of that. You’re starting to see that when the economies are good, that normally happens already. Then you throw tariffs into it, and I’m not against the tariffs, I’m just saying we’ve just got to be aware of it that you throw those into it, it’s going to increase that even more. That kind of stuff is the stuff I look at to forecast when the next downturn is to be honest with you.

You know, people need to increase their prices now because the economy’s doing well. They need to pay for … You know, you’re paying more for your help when the economy’s doing well, you’re paying more for the product when the economy’s doing well so your prices go up. It’s a continuous thing you know?

Before you know it … I think it’s manageable right now, I don’t think it’s … As long as we know, you can manage it. It’s the surprises that get you. You know?

We try to make sure our vendors, we stay in touch with them so we don’t get any surprises. We should probably stay in touch with our customers too so that they don’t get surprises as well.

You know, that’s a hard part of business to do that. You know?

Yeah, communication for sure.

Communication, exactly. We can use podcast to do it maybe.

There we go. Looking forward to getting more folks as subscribers and listening for sure.

Great, Greg. Well, that was a lot of great information. As you wrap up episode five, we’re now going to start to focus as we get our podcast out to get a good cadence in terms of actually getting them uploaded and available for our subscribers. More to come on that. Again, we appreciate everyone for listening to this and we’re going to move forward very soon with episode six. We’re going to be talking about the National Precast Association, the Plant Certification Program, how that has affected Shea Concrete Products and different things that we’re working on with that initiative. Again, thank everyone for listening. Greg, thank you for a great episode.

We’ll look forward to working on episode six shortly. Bye now.

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