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Business Observer Thursday, Apr. 2, 2009 11 years ago

Power Surge

Mitch and Dana Permuy took Power Design from a two-person electrical contractor shop in St. Petersburg and made it into a regional player.

Mitch and Dana Permuy took Power Design from a two-person electrical contractor shop in St. Petersburg and made it into a regional player.


Industry: Electrical contracting
Business: Power Design
Key: Do quality work for clients, then follow them where they grow.

The Power Design Inc. growth strategy is simple: Do great work as an electrical contractor then follow those clients as they grow in different markets.

It has worked.

After starting as a husband-and-wife team with two employees in 1989 in St. Petersburg, Mitch and Dana Permuy now have 775 employees working in 14 states from Pennsylvania to Florida and west to Arizona.

The company does a lot of business with developers and more than 80 other clients, some of whom have done work with Power Design for 10 or more years.

And it has mined new clients for 20 years and never printed a brochure to do it.

“It's a lot easier to go into new areas with people you know versus working with a client that does one job,” says Mitch Permuy, 49, president and chief executive officer and a certified master electrician. “When we started the company, we didn't visualize. We were just always committed to growing the company. We're good at what we do.

As CEO, Mitch Permuy handles developing goals; operating plans; corporate policies; short- and long-term objectives; establishing organizational structure; advising other executives; and reviewing results of business operations.

Dana Permuy, the CFO, handles all fiscal aspects of the company, including overseeing financial plans; accounting practices; cash management; accounting; budgeting; and tax and audit activities.

Dana grew up in St. Petersburg. Mitch was born in California and moved to St. Petersburg when he was 12. Mitch did not graduate from college, but learned the electrician's trade and set out to become an entrepreneur.

“If you provide quality service for customers, they will keep using you,” Mitch Permuy says. “It's the nature of the business. We've grown the company through word of mouth. If you do a good job and not lose customers, it's amazing how your business will grow.”

And that's what happened.

But that's only what happens when you have the right people in place.

Part of the Power Design growth strategy has been to retain good employees. If some electricians are with a company that is not growing, they may leave. Some want more responsibility and want to learn new skills. The key to retaining some customers is keeping good employees that they like. High turnover can hurt that.

“If you don't grow the company, they may go to another company to grow their career,” Permuy says. “It's like being the backup to Brett Favre. You have to leave and go to another team to get into a situation where you can get some playing time. We don't want that to happen here.”

That's why it has included a 12,000-square-foot training center in its new headquarters building. The center trains existing employees looking to learn new skills and advance as well as new employees going through the orientation.

Power Design outgrew its headquarters, so it moved into a new 70,000-square-foot corporate headquarters in July on six acres in the Gateway area of St. Petersburg, less than a half mile from its previous offices.

The company has 140 people there, from Bradenton, Tampa, Pasco County and St. Petersburg. Power Design also operates a 100,000-square-foot distribution center in Atlanta, where it brings in electrical products from domestic and overseas suppliers, including China, inspects and packages them and sends them to work sites around the country.

It also has full-service in-house engineering, computer-assisted-design, pre-construction, information technology, accounting and legal departments. That is what sets it apart from other electrical contractors: one-stop shopping for electrical-related needs. Power Design even does low-voltage electrical testing, which some contractors sub out to other companies.

It installs fire alarms, security, structured wiring, telephones and all other wiring needs.
“We do as much in-house as we can,” Permuy says. “We do wiring, equipment and programming. We do it all.”

Giant competitors

Despite its size, electrical contracting is an industry with some giant competitors, some larger than Power Design, such as Emcor Group Inc. and Houston-based IES, with 6,000 employees. Then there are dozens of smaller independent contractors.

Some, like Connecticut-based Dyna Electric, are owned by Emcor. Tri-City Electrical Contractors is based in Altamonte Springs. Permuy considers Power Design the largest independent electrical contracting company in the country.

“All work with similar pricing structures,” Permuy says. “There is fair and friendly competition. Companies don't want to give all their jobs to one company. Tri-City does good business.”

Some of the larger companies have approached Power Design about an acquisition, but Permuy was not interested.

“We enjoy what we do,” he says.

Power Design revenue has been steadily growing the past 10 years and topped $200 million in 2007 and 2008. But because of the falloff in development, the company expects a tougher year this year, with revenues down to about $150 million.

As a result of the construction decline, it has had to trim its staff. Power Design had close to 1,000 employees at one time and now has 775.

“Unfortunately, because of the nature of the industry, you do experience some cuts,” Permuy says. “We saw it coming last spring. We have also been shoring up our efficiencies, have a quality control initiative and will continue to do that through the end of 2009.”

However, Power Design has a backlog of jobs it is still working on this year and expects to get back into full-growth mode in the first quarter of next year.

Ninety-five percent of its work is new construction, such as Signature Place, the 36-story condominium in St. Petersburg. It's work includes large high-rise office and residential buildings; hospitals; remodeling; medical offices; garden apartments; assisted-living facilities; mixed-use projects; and military and student housing.

“We have such a large geographic footprint that we have a good mix of product,” Permuy says. “No one has done as many high-rise projects as we have the past five years. We get sought out by most general contractors.”

Power Design gets new jobs, even though Florida's construction industry has been in the deep freeze. That means that the Florida staff is mobile and travels wherever Power Design needs them. Power Design negotiates most of its contracts, with Permuy doing the negotiating. It rarely has to bid on jobs, even the military housing projects.

Besides its resources and reputation, Power Design has the financial backing to get and finish projects. It has one of the largest performance bondings — a form of insurance for contractors — in the country.
“You have to be stable,” Permuy says.

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