Business Lessons From California’s Oltmans Construction: A Billion Dollar Company With True Family Values

2022-07-30 19:43:20 By : Ms. Evelyn Zeng

(L-R) President Charles Roy, Chairman Emeritus Joseph Oltmans II, and Chairman of the Board and ... [+] Chief Executive Officer John Gormly, three of the leaders of Oltmans Construction Co

There has been a lot of talk the last few years about "family values." Unfortunately, most of the people doing the talking are just that, nothing but talk. So when you find a company that actually demonstrates those values it is worth celebrating and learning from them.

California-based construction company Oltmans Construction Co. is celebrating its ninetieth anniversary this year as a family business. A family business that has worked with the likes of Toyota, Home Depot,and Amazon.

How old school is Oltmans? Of the three men I spoke with in their Whittier headquarters — Chairman Emeritus Joseph Oltmans II,President Charles Roy, and Chairman of the Board and Chief Executive Officer John Gormly— Roy is the newbie with just over 40 years.

You don't see that kind of company loyalty anymore in 2022. Even Gormly says this is likely the last generation that will spend 50 years with one company. But when you find people that actually do represent family values given what a valuable and rare commodity it is, as I said, it needs to be commemorated. And more importantly when you have three gentlemen running a billion-dollar company with over 140 combined years of experience, damn straight you’d better heed what they say.

This is what the trio had to say about how they have succeeded in business and why Oltmans is still prospering nearly a century in.

Steve Baltin: How long have you been with the company?

John Gormly: I started in 1975. Charlie started in 1984 and Joe in 1964.

Baltin: As you look back from then to now, what have been the things that keep this fresh and interesting for you, and keep you wanting to be here for this long?

Gormly: The Oltmans family set it up this way.We're honest, we're transparent, we have a great sense of fairness in a tough business—we try to take the sting out of the construction process. Our business is 80 percent repeat clients. Some guys say, "Call me when you're done," and some people want to audit everything we do. We're fine either way.There's a lot of integrity here. We have four generations of field folks who do quality construction. They have no incentive to cut any corners. We want to leave the best possible product behind that we can. That's the way the company was founded and it's the way it still is today.

Baltin: I became very good friends with the people over at Vans, the shoe company. There are a lot of similar traits. One is because it was a family business.Even though it became massive, there still is a lot of flexibility and freedom. Do you think Oltmans has that same feel?

Joe Oltmans: Well, it's not a public company, for one thing, so the fact that we're privately held gives us a lot more freedom. And over the years, I think people that have gravitated to this company just have the same values. I think we have a culture here, from my viewpoint, that's pretty consistent.

Baltin: How would you describe that for people who are coming in?

Gormly: It's a culture of quality in the work we do and integrity with our clients. Some companies strive to make maximum profit on every single project. You're going todo that to the detriment of your client at some point. That's not it. We're in it for the long haul. We're interested in making a good, solid, honest profit on the project we're doing, and we're interested in their future projects. We're also interested in helping them get the best value for their dollar.There are a lot of different products and ways to do things in the construction business. If you can steer them in the right direction to use a certain product or method and save them some money, that's very helpful to them. We just approach it that way. Our incentive is to do an honest, straight-up job.

Baltin: That's a good tie-in to talk about some of the repeat business that you Oltmans has done. Look at Amazon, who you have done over 20 projects with. It has to be very gratifying when you see a company like Amazon come back that many times.

Gormly: It is. Amazon is very schedule-driven. They want their project on a specific date, and we've always delivered it to them. They've been a challenging but a good client.

Oltmans: We have one client that we've done over 100 buildings for. Companies sort of come and go, it ebbs and flows. But I think it's our reputation, that people feel safe coming to us. I don't think anyone has a better reputation than our company does and we really work at it.

Gormly: I'll give you an example of a favorite job of mine.The Stater Bros project. We built a big campus for them in San Bernardino. They bought land next to the old San Bernardino airport and they moved their entire operations there. They hired an out-of-state architect who sent them design-wise down the wrong road. They were designing for snow loads that don't exist. They were designing from electrical feeds that the Edison company wouldn't and couldn't do. They were doing redundancies that made no sense. We were the contractor and we could see it was headed in the wrong direction. Just as an example, the buildings we build are made out of concrete—the wall of the building is also the structure of the building. They couldn't get that. They had to design a steel building and hang the concrete outside of it. It's very expensive to do it that way. So the project kept going in the wrong direction and the budget kept climbing. At one point we went to Stater Bros and said, "This isn't a good situation. This isn't going to end well and it's probably best that we're not a part of it." And they said, "What would you do?" I said, "I would take those designs and redo them with a local architect. It'd probably save you 30 percent of what you're doing here." And they said, "If that's what you would do, do that." And they hired us to do that. So we brought on local architects and engineers and redesigned the buildings to look identical. If you built the two buildings next to each other and walked in, you wouldn't know which was which. But basements with chillers in them, we don't build those here in California. There are things that we do that they don't do. And so we ended up building the project for half of what the budget was. We didn't save them 30, we saved them 50 percent of what it would have been.

Oltmans: They knew enough to really understand what we were doing for them. Because remember, they were in the building business, so they knew.They knew the service that we were providing them.

Baltin: In most industries everybody knows everybody, and word gets around very quickly. So when you do a project like that and you are able to save them so much, how do you then see that come forward into other projects?

Oltmans: Everybody has a reputation. I think ours is reliability, quality, and integrity.Contractors who are cheap have the reputation of being price-driven. Some clients like that, so that's where they go.

Gormly: We've had clients come back and say, "We hired the cheap guy, but at the end of the day, it cost what you quoted us." But Stater Bros wasn't about tooting our own horn at the industry. That was about doing a good job for someone. That's where the reward of that project was. That was a real home run as far as we were concerned.

Baltin: John, you have been here 47 years, and Joe, you have been around the business 56 years. I imagine there are many changes but a lot that has stayed the same as well.

Gormly: Well, boil it down to the builders. The real builders are our field superintendents and their teams.The business, as far as they're concerned, probably hasn't changed that dramatically. There are new products, more efficient cranes, a lot more safety than there ever was before. Of course, in the days of COVID, there's a lot more of that influence, but the basic building parts, the carpenters, the concrete and, although there is finishing equipment and equipment that makes the buildings better, the basics of it are the same. Our job is to manage the risk, to take care of the contracts, and to find the work. Then there are the people who actually build. You can make a case that we work for them. We can't lose sight of that. We've got four generations of those guys out there working for us. It's really something to get together with those guys.Every year, we have a big dinner for the field guys. They have the same sense of integrity and quality that we do, it permeates.

Oltmans: The feeling of family, that's what we're trying to promote. We're a big family operation in the widest sense.

Baltin: And what are some of the biggest current changes?

Gormly: There are software companies dedicated to the construction business, the financial tracking is incredibly more sophisticated than it's ever been on a month-to-month basis. And there's an element of fraud coming in with it that we have to deal with. There's a lot of money that goes through the tills here. And we've got to have our guard up considerably as a result of some of these benefits that have been created by the software systems. It's an interesting time.

Baltin: What are those things that most take you back to the beginning and that still excite you?

Oltmans: Believe it or not, a big part of it is the people I get to deal with here. I mean, we have a great family here and it just makes it great to come to work. I'm retired, I don't have to come in. [laughter] But, as John knows, I'm here quite often because I just like being around these people. And it's always fun to sell a project. That's always a thrill to go pick up a big project to sell.

Gormly: There's a little bit of deal junkie in all of us.

Oltmans: Yeah, a good term.

Baltin: As deal junkies what have been the recent projects that excite you?

Gormly: We try not to be too myopic in the types of buildings we build. So, we're always reaching out looking for other opportunities.We're doing private school and medical work, which is something we haven't done in a long time. There's a residential element to our business that we're creating, and we're working with some non-profits which is very exciting. That's a lot of fun. There's an apartment project that we're heavily involved in with a non-profit that’s a win for everyone—the land owner, the non-profit, the neighborhood. It's fun to do that. We also have a 1,400,000-square-foot building that we originally built in two phases that we're tearing down to construct a new two-million-square-foot facility. So you're taking a building that's—how old is that thing? 45 years?

Oltmans: Yeah, and it was state of the art at the time when we built it.

Charlie Roy: I'm more operations and relationships and keep that end of things going. Plus, I was on the real estate side for a while and there were a lot of fun lease deals there, too. We manage about a hundred buildings.

Baltin: What have been some of your favorite relationships over the years?

Roy: I get a kick out of it now when we go back and see some of the guys we've been dealing with forever, some of our old clients. They've moved into different positions out in the real estate and construction communities.The folks that we've dealt with for years here, even our own associates and employees and whatnot. There are plenty of them out there.

Gormly: And our subcontractors.Those are relationships that are so important for us to maintain. The relationships that we've built with the subcontractors are invaluable. A good part of our success comes from them.

Oltmans: My focus in the last few years, because most of my clients are retired (their being my age), has been in corporate governance, obviously, so involved on the board level. And in our charitable organization, the Oltmans Foundation. This year, we're going to be doing some work for the Orange County Rescue Mission, which is a major charitable organization that takes in homeless people and puts them back on their feet, gives them an education, and gets them back out in the world. That's where I’ve been in recent years.

Baltin: As you've had the success what are some of your personal nonprofit endeavors that you've been really excited about?

Roy: Oltmans has made big strides with the help of some of our younger folks that have come in. They created our culture committee, which within that exists a charity committee. And to Joe's earlier point, there's the Oltmans Foundation that we contribute to which has been around for over 20 years. It encompasses our bricks and mortar charitable projects. We see an opportunity that we can help with and we'll jump in there. We have other charities that we enjoy supporting as well including Olive Crest, KidWorks, Big Brothers, and Big Sisters. A couple of our team members who are now retired have been very instrumental to Olive Crest. Jim Woodside is currently Chairman of the Board.We try to focus our efforts and what we're giving to. If our employees have been working in a specific area,if they’re a part of an organization closer to home, we try to help out, keep it local and community-based.

Oltmans: Our younger employees—it's really been fun to watch how enthusiastic they are about doing charitable things. They come up with all kinds of new ideas. It's fun to see the energy.

Roy: It's fun to see the generational shift. I've been with the company getting closer to 40 years now, but from when I came in, the mentality that was there then versus where we're at in today's world, it's a great shift.

Baltin: I love the fact that you've mentioned multiple times the younger generation. Talk about what you look for in the people that you work with and the people that you bring in and what it brings to each of you from an energy standpoint.

Roy: Skillsets. Some of the younger folks we're bringing in, you look at the education, you look at the resumes and you're just blown away. They have all these other skill sets that never even existed when we were around. So that's fun to see. We always look for good ethics and work ethic. That's something that was still there 40 plus years ago. Work hard, get your job done.

Gormly: We have reached out to schools that have construction management programs, and then we set up internships. We've kept many of our interns.

Oltmans: I think the final analysis, though, is you can have all the ability in the world, but they've got to buy into our culture. It's really important that we're all pulling the same direction.