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Eagle Concrete Soars
COMPANIES by Jean Gruss | Editor/Lee-Collier
Michael Leannah left a high-powered corporate post to become an entrepreneur. Now his concrete company is fast becoming a major player in Southwest Florida's commercial-construction industry.
As a high-level executive with Waste Management, the giant Houston-based commercial trash company, Michael Leannah got things done just by picking up the phone and giving orders.
"Now, if I have to get something done, I have to do it," says Leannah, chuckling.
Leannah says that was the hardest part of the transition he had to make when he became an entrepreneur after years on the upper rungs of the corporate ladder. Leannah is president and co-owner of Eagle Concrete Systems in Fort Myers with his wife, Carmel, the chief financial officer. Both are 54.
But their small entrepreneurial company is becoming a big player in commercial construction from Sarasota to Naples, supplying concrete used to build hospitals, schools, warehouses, shopping centers and supermarkets.
When they bought the company in 2001, Eagle had $2.7 million in revenues. In 2006, the company reported revenues of $22.8 million, up 29% from $17.7 million in 2005.
Although neither Leannahs knew anything about concrete when they bought the business, they both had finance backgrounds and Michael knew how to run a large enterprise. They developed a business plan that refocused the company on commercial customers and away from residential construction, a prescient move. "If you take care of the customer, the rest takes care of itself," says Michael Leannah.
The couple also wanted to leave Boston and move someplace warm where people were friendlier. "We've never lived any place as long as we've lived here," Carmel says.
Certainly, Eagle Concrete doesn't have the plush corporate offices of Waste Management or the perks of living in London or Milan, where Michael Leannah turned around acquisitions. Eagle's cramped building is in a run-down neighborhood of Fort Myers with a fence to keep thieves from snatching concrete blocks. The area is no place to be after dark.
But the Leannahs are building a 25,177-square-foot headquarters building in the more upscale Gateway area of Fort Myers. This will give them room to grow the company and expand into other products.
Internet search leads to Fort Myers
While living in Boston, the couple scoured the Internet for a company they could buy and grow. Eagle Concrete fit all the criteria: it was the right size and it was located in booming Fort Myers.
They bought the business using loans from the Small Business Administration and SouthTrust in October 2001, barely one month after the terrorist attacks of Sept. 11. "We had a rough first year," Michael Leannah recalls. "We put our savings on the line."
Thankfully, the business was cash-flow positive the first year. "It was very tense, but we had enough to get through the tough times," Leannah says.
What's more, Leannah had to obtain his contractor's license and learn everything about concrete and subcontracting. Fortunately, he had retained the previous owner on a two-year contract to ease the transition.
As he was getting a handle on the business, Leannah shifted the strategy away from supplying homebuilders to commercial builders. His reasoning: "Residential will always go down." It took four years, but Leannah's residential forecast has become reality.
Commercial development always lags the residential market by a few years. "There will be a substantial dip" in commercial construction and it won't rebound until next year, he concedes. But Leannah says large companies will continue building and leasing space because they look beyond the inevitable downturns.
Commercial shift
After the Leannahs took over, they began to shift toward commercial work in 2002 by doing small jobs. Their big break came in 2003, when they were chosen to add three floors to Lee Memorial's hospital in Fort Myers.
Leannah knew that if Eagle could land the job and do it well, it could earn the reputation to work on large commercial projects. He could use the experience of a complicated hospital construction project to sell his services to other large contractors.
The contractor on the Lee Memorial job was global construction firm Bovis Lend Lease and Leannah persuaded the company to give Eagle the job. "The contractor took a risk on us," he concedes.
Obtaining a bond on the job was tough because Eagle had no track record of doing such a significant project. Leannah won't go into the details except to say Eagle obtained the bond "in increments."
Leannah says one of the reasons Eagle landed the Lee Memorial job was because of his corporate background at Waste Management. The Bovis executive in charge "was a corporate guy and I could communicate with him."
From his years at Waste Management, Leannah knew that Bovis was looking for three attributes in a subcontractor: safety, quality and completion in a timely manner. Leannah had spent two years creating corporate-style safety and quality programs at Eagle. He had also hired superintendents and an estimator who had experience building commercial structures.
Leannah knew he could complete the Lee Memorial job in the time allotted and personally supervised the job. "I was there an unbelievable amount of time," Leannah says, knowing that the future success of his firm depended on it.
Eagle's success at Lee Memorial led to other jobs, just as Leannah had hoped. The firm landed jobs on projects such as the private Canterbury School in Fort Myers, Orion Bank's Fort Myers office building, a Publix Supermarket in Cape Coral and Colonial Bank branches up and down the Gulf Coast.
Despite the slowdown in commercial construction, Leannah says Florida's continued population growth will continue to spur large corporations to build in the area. Based on his experience at Waste Management, Leannah says national firms look beyond the downturns when they expand.
There's one wild card in his forecast, however: local government's increasing tax burden on builders. For example, Lee County commissioners recently tripled taxes on new construction to pay for roads and proposals to make commercial builders pay even more taxes for affordable housing.
Leannah argues that additional taxes will halt new construction in Southwest Florida and threatens one of the area's leading provider of jobs. For example, when Lee commissioners raised taxes on new construction in February, Leannah says he would have had to pay $200,000 in "impact fee" taxes and that would have scuttled his plans. Fortunately, he filed for a building permit before the February deadline and paid $60,000 in taxes.
Looking ahead, Leannah says permit applications for commercial construction have dropped by 90% and the county's coffers will feel the impact at the end of the year.
New directions
By September, Eagle Concrete will be in a new headquarters building in the Gateway area of Fort Myers. Leannah says the company plans to expand beyond concrete to other products within a year, but he declines to say more for competitive reasons.
The company doesn't plan to make acquisitions. "In acquisitions, you've got to spend a lot of capital," Leannah says. "But with organic growth, it gives people an opportunity to grow with the company."
Leannah says it's critical to give employees a chance to move up with the company if they have the drive. For example, one employee who started as a carpenter is now a superintendent. "If they see upward mobility, they'll do better," he says.
Concrete
marketing
If you're in the concrete business, why not build your headquarters building out of the stuff?
The entire exterior of Eagle Concrete Systems' new headquarters building in Fort Myers will be made of concrete, from the floors, to the walls and the roof. Even the fence encircling the place will be made with concrete.
And when the next hurricane hits Fort Myers, you'll know where co-owners Michael and Carmel Leannah will be bunkering down. The new building will be able to withstand winds of up to 150 miles per hour when it's completed in September.
Although the building will be solid, it won't look like a bunker. Leannah will be using all the latest techniques that make concrete look, well, not like concrete. There are curved walls and floors that look and feel smooth like linoleum.
Leannah hopes to use his building as a way to market what the company can do for customers. And it's not just developers of new construction who may be interested.
A new concrete roof on an older existing building will make it easier to get insurance. Owners of older structures either can't find insurance carriers and if they do it's too expensive. But put a new concrete roof on the building and there'll be a line of insurance agents at the door, Leannah says.
REVIEW SUMMARY
Industry. Construction
Company. Eagle Concrete Systems
Key. Focus on customers with long-term outlooks.
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