A family-owned Minnesota business, quietly expanding over the years, has provided the foundation for many people’s daily lives — literally.
And now Wells Concrete, through its acquisition last month of Hanson Structural Precast in Maple Grove, is engaged in what is arguably one of its most visible projects ever.
Sam Nesius will tell people what they will see of his company’s products at the new Vikings stadium in Minneapolis starting in 2016.
“Everything they are standing on or walking on as they watch the game is our product. We do all the precast concrete that forms the bowl of the stadium. So it’s pretty noticeable.”
Nesius is vice president of corporate development for Wells Concrete; his grandfather, Leo K. Nesius, was there at the beginning, when Mankato-based Guaranteed Gravel & Sand Co. purchased a ready-mix concrete plant in Wells, Minn.
With the acquisition of Hanson Structural Precast, the company added 180 workers, a plant in Maple Grove and a good chunk of market share; Wells immediately began consolidating its Golden Valley operations there. They do business in nine states and Canada, going as far west as Montana.
Terms of the acquisition remain confidential.
In a recent interview, Nesius discussed his company’s past and future. His responses have been edited for context and clarity.
Tell us about the Vikings stadium project and the timing of your acquisition of Hanson.
“The acquisition was post-award and mutually exclusive from the stadium. Wells did bid separately on the stadium from Hanson.
“They just really filled us out geographically. We were absent in two markets, primarily, in our geographical area. We were not competing in the stadium market, and we were having a hard time competing in the high-rise office building or condos or residential markets.
“And the Maple Grove facility, and their team, was the main player in those markets. The Maple Grove facility produced Target Field, TCF Bank Stadium; they did the remodeled Xcel Center. Actually, I think they did the original construction on Xcel, Saints stadium and Target Center as well.
“They really dominated that stadium/sports arena marketplace. And for us to become competitive, it became a lot easier to try to acquire that experience than to try to grow it organically.
“And the same thing, but to a lesser degree, with the high-rise office building market in Minneapolis. Maple Grove was the leader there, as well as a competitor out of Sioux Falls. So for us to leap-frog over the pack, over two competitors, is going to be pretty difficult. So once again, acquisition made a lot of sense.”
How did the acquisition come about?
“Our CEO was able to have a conversation with some of the folks from their parent company.
“They’re ultimately owned by Heidelberg, which is a big German conglomerate; the parent company was primarily into building commodities, such as aggregate and cement powder, and when they bought Hanson, they kind of inherited these three precast plants around the country. One was in California, one in Utah and one in Maple Grove.
“The upshot of it was they decided that they were going to divest their building products division; they sold the first one in California a couple years ago, and we took over the second one here in Maple Grove.
“With the recent acquisition, we’ll be on pace to do approximately $140 million this year, and the acquisition of Maple Grove probably will improve our top line revenue by about close to 25 percent.”
You’re moving the Golden Valley offices to Maple Grove. Did you also acquire new production facilities?
“With the acquisition we’ve got the production facilities and the offices, that pretty much was the whole point. There’s contractors and engineering firms right here in the Twin Cities. And it’s a lot easier for an engineer or contractor to drive to Maple Grove than it is to Wells, Minnesota, or Albany, Minnesota, for face-to-face interactions.
“We’re experiencing that already. We acquired a relationship base as well as a production facility and an experienced sales team and work force, so the Maple Grove facility really had a lot to offer in terms of enhancing our position in the market.”
Tell us about your product and markets.
“We do precast concrete. What product we end up providing depends on the structure being built — anywhere from wall panels, floor systems, columns. You would encounter our products in any type of building application from commercial, retail, education; we do a lot of schools, gymnasiums.
“We also have some medical applications, and we really dominate the market for food processing.”
What are the biggest challenges you’ve seen coming out of the recent recession?
“Obviously the recession hurt everyone and particularly the construction industry, because of what led to it, with the bubble in the home industry; we felt it very acutely, our entire market area did.
“The metro area was affected much more so than the outstate areas.
“I think the rural areas had a little bit more help from agriculture, in terms of their economy, especially in the Dakotas.
“But what really helped get us through those struggling times was the emergence of the Bakken oil formation in western North Dakota. We do a lot of work out there.
“Now with this acquisition, we feel like we’re in the front end of a rising tide, and certainly are seeing an increase in construction activity in our market in the Twin Cities, and it looks like it’s going to continue at least in the short term.
“And by that I mean the next couple of years.
“We’re having conversations with architects, industrial firms and engineering firms and general contractors that are planning projects out that far.
“And through the recession, nobody was looking past the next six months, or how they’ll get through the next quarter.”
What about staffing?
“Every business faces the challenge of their experienced people retiring. And due to the fact that hiring was put on pause for a number of years, not a lot of new people are coming in.
“In general, in the construction industry, labor is extremely tight.”
So what do you do? Do you recruit? Promote training? Wouldn’t raising wages put pressures on your margins?
“Yes, yes and yes.
“We offer a competitive wage; we try to really sell the fact that we’re a stable company.
“We don’t do layoffs, recalls, layoffs, recalls. We’ve had a couple of layoffs due to drops in volume over the past three years, but it’s by no means routine.
“In conjunction with Precast Concrete Institute, our trade group, we just opened a new precast design studio with Minnesota State Mankato.
“We work very closely with their civil engineering department and their construction management department to give students the opportunity to get hands-on experience.”
