Odessa-based Bauer Foundation Corp. was chugging along comfortably building foundations for condos, doing groundwork for major developments and utilities, and building bridges in the Southeast.
Then real estate collapsed.
Before the crash, Bauer was looking to balance its portfolio of work. President and CEO Charles Puccini says he fought with his sales staff to keep the company in balance between utilities, condominiums and bridge-building.
But when the red flags started going up on condo projects that were delayed or put on hold, Puccini decided to quickly switch energies and look for federal government contracts -- an area the company had not pursued. Puccini was insistent the company spread its net and push its technological advantage. Like everyone else, he did not see the entirety of what was coming.
“In 2007, the world changed — the music stopped — and depending on what you were doing that day set your future,” he says.
In a stroke of good fortune founded on his insistence on seeking federal government work and new technologies, Bauer had just won a contract for a Lake Okeechobee project that involved using Bauer's soil-mixing technology. The process utilizes what is available in the ground to create instant cement walls. “We turn the ground into concrete,” he says.
The original contract was for $7 million, but it was an indefinite contract depending on performance. Bauer performed, and is nearing the finish of the project through a series of five contracts that have totaled $97 million since 2007. It will finish in 2013.
“That carried us right through” the recession, he says. “This was part of our repositioning in the market...it was all about being innovative.”
“If a company was still trying to sell what it was selling the day the music stopped, it had no chance,” Puccini says, using his favorite metaphor. “Remember, we are in Florida in the construction market. This is the bottom of the totem pole in the market right now.”
There has been no large construction for several years. Utilities stopped spending because their customer base was shrinking. State and local governments cut back, meaning there was no bridge-building work. All of the old avenues -- balanced or not — were drying up.
Puccini knew Bauer had to keep changing and pushing.
“You have really got to be innovative to win market share. We are well into the price-cutting, throat-slashing, back-stabbing,” he says. There is nothing left in that area.
He turned to the parent company, a leader in manufacturing the foundation-building equipment that Bauer uses, in an effort to go after highly specialized, major dam-repair projects that involved drilling deep and building or repairing dam walls hundreds of feet beneath the surface.
Bauer came in second on bids in Kentucky and Missouri in 2007 and 2009, but finally won a $107 million contract with the Center Hill Dam near Nashville, Tenn., in 2011. That took a year of work to enter the bid and go through the selection process.
But the Center Hill Dam is an example of using the highest technology in the industry to gain an advantage.
For instance, normally to measure an excavation, companies drill a hole and drop a measurer. Bauer uses sonar-like devices to image the shape of what is underground and what Bauer will be putting in, to make sure the walls are consecutive and tight at about 300 feet deep. The technology is similar to sonar on submarines, but instead of measuring distance in the ocean, it measures a 10-foot diameter 300 feet down.
“We're trying to advance the technology of measuring,” he says.
At the Center Hill Dam, the company is excavating in clay and wants to use the clay in the process. But the technology is not good enough. “So now I'm in the solid fluids separation industry, trying to improve it,” Puccini says with one of his frequent laughs. “This is 2012; 2011 technology is not good enough.”
He is even pressing his parent company to improve its technologies. He is using Bauer equipment in ways and places it has never been used before, to basically break up the bedrock, build a wall at 300 feet and capture all the data.
The Center Hill Dam contract went through what's known as a “best value,” selection process. This means the U.S. Army Corps of Engineers, in charge of the project, ranks companies on a list of criteria. Rather than choosing a company based on price, the criteria include a company's past performance and safety record. It is no longer just low bid wins.
“Which goes back to if you still do things the way you did when the music stopped, you have no chance whatsoever,” Puccini says.
The traditional business of Bauer now makes up less than 25% of the company's revenues. Those are mostly roadway, bridge and small building projects, including a building at the Port of Tampa.
But the company is looking anywhere in the country for these more specialized jobs. Specifically, Puccini is in California, where he says dryly “they have no feeling or conscious about spending money and borrowing money. They have many projects coming up.”
Bauer is bidding on subways in San Francisco, a five-station subway package at the Los Angeles Airport where the company would put in the walls for the underground stations, and of course the massive high-speed rail in California.
Plus, Bauer is bidding for work on a levee system in need of repair in the Sacramento Valley, similar to the work at Lake Okeechobee.
Puccini says he evaluates every project to determine if it is something on which Bauer has a competitive advantage. If it does not have a value advantage in technology or machines, the company does not spend time and money bidding it.
Plus, he emphasizes it's important whom the company teams up with.
“Almost everything in the world now is a team, partners,” he says. “It's almost impossible to go alone.”
Bauer generally partners with an engineering firm during the bidding phase. Some of the sewer and water projects that were part of the Obama administration's initial stimulus package are just now coming online. Bauer has contracts to build the ingress and egress pits for that work, which it bid as a team with a tunnel-boring contractor and underground engineers.
On the Bauer side, the company focuses on instrumentation, quality control and equipment technology.
For example, on the Center Hill Dam in Tennessee, there is a high level of scrutiny on how the data is collected and reported by the U.S. Army Corps of Engineers. A competitor got data wrong on an earlier dam, and Puccini knows he has to get it right to win future contracts.
One of the key ways it does that is to make the project's data available in real time to the government's project manager.
All of Bauer's machines are set to broadcast to anyone who is given permission to monitor the machine's work. Inside the various machines, the operator is surrounded by computers. The government manager of the project can watch what is being done 300 feet below ground in Tennessee from his iPad in Washington, D.C.
In addition to pursuing a different portfolio of work, Puccini did what a few others had the fortitude to do in the recession -- he added sales people.
Bauer now has three full-time business development people in Odessa who scope out projects and do initial vetting to see if they might be worthy of the company's bid.
“When the music stopped, we were reactive -- answer the phone, check your email. Now we are proactive,” he says. “That is one of the biggest differences in staffing.”
But the whole sales mindset has changed, and for no one more than Puccini. He travels the country as a speaker, attending Corps group meetings and other industry gatherings, making himself an expert and promoting his company's capabilities.
“I go to conferences and gives speeches to show that we're the leader in the technology,” he says. “Going forward, I have to spend way more of my time selling, and that means pushing the technologies.”
Bauer is also thinking further ahead with projects than it ever did before.
“Instead of 30 or 60 days out, we now chase opportunities well in excess of a year out,” he says. “I'm looking two, three years out. Which ones will be funded?”
Puccini started as an accountant because he was good with math. But his skill set was much broader. And he loved the work that Coastal Caisson did. “I should have been an engineer.”
And now, he practically is, plus a salesman, an inventor and whatever else his company needs him to be.
Bauer's Charles Puccini had high hopes for the proposed high speed rail in Florida — not that the project was wise so much as he expected his company to get major contracts from it.
“We would have gotten a huge portion of that,” he says, adding: “I have no idea if a train would ever have gone down those tracks.”
After walking the planned line to decide how to bid the project, he determined it was going to need several times more elevation change than was called for in the contract. He says this would have elevated the project's price beyond what was estimated.