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REVIEW SUMMARY
Company. J.L. Wallace Inc.
Industry. Construction
Key. Diversification helped construction firms survive the downturn.
When he was undergoing the rigorous training required to become a sentinel at the Tomb of the Unknown Soldier at Arlington National Cemetery, Jerald Wallace had to memorize a creed.
Line six of the sentinel's creed carried special significance: “My standard will remain perfection.”
For anyone who's watched the changing of the guard at Arlington (if you haven't, just search on YouTube), the honor requires intense focus, precision — and perfection. “It was very, very intense,” says Wallace, one of just 600 soldiers who have served as a sentinel at the tomb.
So it's little wonder that the Lee Building Industry Association awarded Wallace, president of Fort Myers-based J.L. Wallace Inc., its coveted Contractor of the Year award in 2010.
Wallace is one of a handful of commercial builders in Fort Myers who has steered his company through the recession, a feat considering the drought of commercial construction here in recent years. Many of his competitors are out of business.
Wallace credits his military training in part for his success navigating the downturn. “The military taught me I had a knack for leadership,” he says.
“Value is one thing, but loyalty and integrity is another, and you've got to have all of it. That's why he's survived in the marketplace,” says Darin McMurray, Florida division president for homebuilder Lennar. McMurray says Wallace has built more than 20 clubhouses for the homebuilder's communities over the years.
The projects that Wallace is most recently known for aren't generally flashy. They're drugstores, banks and churches—buildings that continue to be built despite the tough economy.
Military family
The contractor of the year award isn't the first accolade that Wallace has earned. He was named Soldier of the Year in 1979 for the Third U.S. Infantry, the oldest active unit in the U.S. Army, and won special dispensation to serve as a sentinel at the Tomb of the Unknown Soldier despite his shorter height. At the time he was serving, sentinels had to be at least 6 feet tall. But Wallace was allowed to become a sentinel even though he's an inch and a half shorter than the minimum. “I broke the 6-foot barrier,” he chuckles.
Besides serving as a sentinel, Wallace also served in the Honor Guard Casket Platoon, serving in high-honor funerals for Hubert Humphrey and Omar Bradley, among others. The son of an Army officer, Wallace, 52, was born in Italy and attended high school in Panama, moving every couple of years. “I've lived all over the world,” he says, another valuable experience. “It made me adaptable,” he explains.
A week after he graduated from high school, Wallace joined the Army's 82nd Airborne Division. He broke his thigh bone on a parachute jump and although doctors told him he could never recover to jump again, he did so six months later. “If I set my mind to something...” he says.
This wasn't his first accident. Wallace was severely injured in a motorcycle accident in high school and was unable to play football for two years, returning to play his senior year despite the injuries he sustained.
After the army, Wallace attended the University of Florida with the idea of becoming an architect because he excelled in math and art. But a professor dissuaded him from that path by asking him if he'd be satisfied sitting behind a drafting board indoors for hours. Preferring to work outdoors, Wallace got a bachelor's degree in building construction and later earned an M.B.A. at the University of South Florida.
After marrying his wife, Joanne, in St. Petersburg, the couple preferred small-town life and moved to Fort Myers. Wallace became a project manager for Hutchings-Wilt and later W.G. Mills.
In December 1987, Wallace and a business partner, Gary Wilkes, formed their own company, Wallace Wilkes. Their first project was a $75,000 bathhouse for the city of Cape Coral. Nearly 10 years later, Wallace sold his shares of the company to Wilkes. “Partnerships are a lot like a marriage,” Wallace says of the amicable split. “I needed to be on my own.”
Wallace Inc.
When he moved to Fort Myers, Wallace never expected growth to occur the way it did. “I knew when I moved here in '85 there would be great growth, but the boom I could've never envisioned,” he says. “I didn't have visions of grandeur.”
Initially, growth was slow and steady. That's in part because Wallace always made sure he had bond insurance, which guarantees the firm will complete a project. Insurance companies won't provide this kind of insurance lightly; builders must demonstrate a record of financial and operating performance over extended periods.
Initially, Wallace groaned about the demands insurance companies placed on him. “It forced you to have liquidity,” he says. But later, especially during the downturn, that kind of financial discipline helped the firm get through the tough times. “I appreciated the demands they put on us,” he says. Today, Wallace can bond $30 million per job.
As great as the construction boom was in the mid-2000s, Wallace says finding qualified labor proved to be a huge challenge. “There wasn't adequate talent locally,” says Wallace, who recruited employees from all over the country. Unfortunately, when the downturn struck the region, Wallace had to shrink his staff from 35 to 17 people. “We haven't had the luxury of raises for the last couple years,” he says.
But Wallace managed to adapt to the worsening economy by shifting to more public projects and to those that were sure to become repeat customers. “I'm a firm believer that you have to stay diversified,” he says, noting that even during the boom he was bidding on public projects.
Unfortunately, Lee County is one of the few counties on the Gulf Coast without a local-preference ordinance that gives bonus points to locally owned firms. Finalists for projects at Southwest Florida International Airport, for example, are frequently based out of the area, Wallace complains. Meanwhile, Wallace is at a disadvantage in other municipalities outside Lee that favor their own.
Besides boosting public projects, Wallace focused on drugstores such as CVS and banks such as SunTrust and Chase. “Once we get a project, then we get a repeat client,” Wallace says.
That includes Ave Maria University in eastern Collier County. “I look for people who aren't trying to get rich off one project,” says Skip Doyle, the university's director of construction who selected Wallace for several jobs. “When you've got multiple projects, it can get hectic, so I don't need to be arguing. I need people who work with me and not against me.”
Revenues at J.L. Wallace in 2010 rose about 7% to $16 million, but Wallace says he expects flat revenues this year. One of the big challenges is that customers can't get financing to build. “It's been survival 101,” he says. “This downturn demands we cut the fat.”
Some tentative signs of a recovery are starting to emerge, however. For example, churches and community clubhouses are showing some signs of a rebound. “We've seen an uptick in both and we're excited about that,” he says.
Churches are one of Wallace's specialties, and he's been building them for 20 years. As anyone who has served on a church committee knows, it takes special skills to push a project forward. Wallace is a certified church consultant and regional director for the southern states' National Association of Church Design Builders.
Wallace says he's scouted for business opportunities as far as Orlando and Tampa, expecting economies there to be better than Fort Myers. But he says he was disappointed. “They're suffering as much as we are,” he says.
To keep up the morale, Wallace reminds his staff that there's much less competition today because many firms are out of business. Wallace says he keeps an “attitude of gratitude,” reminding himself and others at his company that: “We have so much to be thankful for in this country.”
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