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Business Observer Thursday, Mar. 5, 2009 12 years ago

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Neal Nowe stiff-armed a marketing budget for years. Now it's his best salvo in the battle against the recession.
by: Mark Gordon Managing Editor

Neal Nowe stiff-armed a marketing budget for years. Now it's his best salvo in the battle against the recession.


Neal Nowe, who has run a large electrical contracting business for more than 25 years, fully realizes the benefits in maintaining a diversified customer base.

He just can't practice that philosophy right now, courtesy of the recession.

In fact, Nowe's customer base at Venice-based NCN Electric is anything but diversified: The school boards in Sarasota and Charlotte county made up about 75% of the company's $14.6 million in 2008 revenues. NCN is in the middle of a multiyear contract to implement the wiring and electrical systems at Riverview High School in Sarasota County and Charlotte High School in Charlotte County, a pair of schools undergoing large renovation projects.

On paper, it looked great and made for a record year at NCN, an 82-employee operation that specializes in electrical work for large institutions, such as hospitals, prisons and of course, schools.

“But when those jobs are done,” says Nowe, “there's not much left in the fire.”

Indeed, Nowe is projecting at least a 35% drop in 2009 revenues, to about $9 million, as some of the school work winds down this year.

Nowe isn't planning on extinguishing NCN however, a business he founded in 1981 by working as one-man outfit wiring pools for new homes. Instead, he's taking a combination of survival steps to hang on during the remainder of the downturn.

“Anybody that wants to survive the next few years is going to have to realize that if you can make your overhead you're doing pretty good,” says Nowe. “There is just not going to be much profit.”

More marketing
The survival steps are a combination of cutting back in some areas while increasing spending in other ways. In the cutting back department, Nowe has had to whittle down NCN's employee base from a little more than 100 as of the third quarter in 2008 to its current count of 82.

But on the spending side, Nowe recently completed a $30,000 marketing makeover of his company. Actually, it was more of a start than a restart of his marketing efforts. “I never did much in the way of marketing,” says Nowe. “But when I saw the downturn coming, I realized it would be more important.”

Nowe spent four months with Sarasota-based LeBlanc Studios, a business marketing and portrait firm, in improving the company's image with customers. The project included a new Web site, new brochures and an improved logo.

As much as Nowe resisted spending money while he was trying to conserve, the move paid off. He said the marketing materials and Web site were the main reason a national prison-building company in Maryland found out about NCN.

That company chose NCN to be the electrical contractor for a new job in wiring the insides of a prison for violent sexual offenders in Arcadia. It was a $5 million job that ended earlier this year.

New marketing materials, however, only go so far in a standstill economy, Nowe has learned. Like many others in the construction contracting industry, the biggest challenge facing Nowe right now is finding work.

Nowe is pinning a lot of his hopes on the same school boards the company has been working with the past few years. Two big jobs, at Booker High School in Sarasota and Venice High School in Charlotte County, are expected to come up for bid later this year.

But two lingering issues temper his enthusiasm: First, competition is up significantly during the downturn, as yesterday's mason wants to be today's electrician in the constant struggle to survive. That means Nowe is working against cash-poor companies who will bid low just to get work, an industry-wide situation.

At the same time, school boards are wise to the recession and have been bargain hunting. Nowe expects that even if he wins the bids, his margins will be down.

In addition to scouring for work, one other issue has recently come up for Nowe as he navigates the recession. That is the slowdown of his own workforce as some employees, weary of layoffs, drag out work to make jobs last longer.

Doing that, of course, rubs off poorly on NCN and endangers its ability to get more work. While Nowe used to have a supervisor check crews every four hours or less, he now has them check work on a constant rotation.

The extra supervision is a necessary evil, Nowe says, in the fight to survive. “In our business,” he adds, “we are selling labor.”

REVIEW SUMMARY

Businesses. NCN Electric, Venice
Industry. Construction, electrical contracting
Key. Neal seeks to diversify the customer base at his Venice-based electrical contractor firm.

BY THE NUMBERS

NCN Electric
Year Revenues % growth
2006 $8.53 million
2007 $11.93 million 40%
2008 $14.60 million 22%
2009 $9 million (projected)
Source: NCN Electric

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