BE&K, Inc.

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BE&K, Inc.

2000 International Park Drive
Birmingham, Alabama 35243
U.S.A.
Telephone: (205) 972-6000
Fax: (205) 972-6651
Web site: http://www.bek.com

Private Company
Incorporated: 1972
Employees: 7,700
Sales: $1 billion (2004 est.)
NAIC: 233320 Commercial Building Construction

BE&K, Inc. is a major U.S. engineering and construction contractor serving the pulp and paper, cement, chemical, petrochemical, power generating, environmental, and telecommunications industries. The Birmingham, Alabama-based private company does business through a group of subsidiaries, including Allstates Technical Services, Inc., providing engineering and information technology outsourcing solutions; As-Built Services, which offers such high-tech services as 3D-CAD modeling, digitized photography, and computer analysis; BE&K Building Group, provider of construction services for commercial, health-care, industrial, and institutional projects in the Southeast and Mid-Atlantic region; Enprima, serving power companies, municipal utilities, and other clients with consulting, design, engineering, and project management services; MEI Consultants, Inc., dedicated to the hydrocarbon sector, providing a variety of engineering services related to oil and gas production, pipelines, terminals, and storage; NorthStar Communications Group, Inc., providers of wireline and wireless telecommunications services, including engineering, network installation, construction management, maintenance, and staffing; QBEK, which tests equipment and offers other quality assurance and quality improvement services; Rintekno Group, primarily an engineering and contracting company in the Life Science and Chemical Process industries; BE&K's Saginaw Warehouse, which offers a full line of construction equipment for rent; SW&B Construction Corporation, offering general contracting services primarily to the pulp and paper industry; and Terranext, LLC, an environmental consulting and engineering service company.

Formation in Early 1970s

BE&K was incorporated in April 1972, its name drawn from the first letters of the last name of the company's three founders: C. Peter Bolvig, William F. Edmonds, and Ted C. Kennedy. Of the three, Kennedy, longtime chief executive and chairman, was the driving force behind the company's growth. The son of an ironworker, Kennedy worked for his father at Birmingham's Rust International as a water boy when he was a teenager. He studied at Duke University, where he graduated Phi Beta Kappa with a civil engineering degree, then returned home to work for Rust. He stayed for 20 years before growing frustrated with Rust's bureaucracy and elected to strike out on his own with Rust colleagues Edmonds and Bolvig. They also took on a fourth, silent, partner in Henry Goodrich, a Rust senior vice-president. Goodrich's son, T. Michael (Mike) Goodrich, also joined BE&K in 1972, serving as assistant secretary and general counsel, destined to one day succeed Kennedy as CEO and chairman.

Although BE&K has grown into a large organization, the founders' intent was to remain small, but the firm's ability to attract and retain talented employees all but forced the company to continue growing. Kennedy also took charge of the new firm, convinced from his experience at Rust that union wages and restrictive rules were making it increasingly difficult for builders to remain competitive. According to some, BE&K was founded intentionally as an open (nonunion) shop, although Kennedy, who insisted he was not actually antiunion, disagreed with that assessment, telling Engineering News-Record in 1999, "That was the growth part of the market." Regardless, he did not hesitate to cross a picket line to take a job, a fact that down the road would lead to controversy and make him a marked man for union organizers.

In the beginning BE&K concentrated on providing engineering and construction services to the pulp and paper industry. The first major contracts, won during its first year of operation, included a job for South Carolina Industries to expand a linerboard mill. It also landed a big job with Southern Energy as well as 19 smaller contracts, enough business to establish BE&K as number 285 on Engineering-News Record 's top 400 construction firms. Two years later BE&K ranked number 64. It was in 1975 that the company firmly established itself as a leader in the pulp and paper industry after it succeeded in installing a newsprint machine for Southland Paper in Lufkin, Texas, 33 days ahead of schedule. Other major pulp and paper projects in the 1970s included serving as construction manager of a corrugating medium mill built for Inland Container Corporation and the expansion of a bleachboard mill for Continental Forest Industries, both in 1975; the design and construction of an expansion for Weyerhaeuser's paper mill in Pine Bluff, Arkansas; the building of the first recycled newsprint mill in the South, built for Southeast Paper Manufacturing Company; and the introduction of the tube conveyor, first installed in the Jackson, Alabama bleached paper mill owned by SCM Allied Paper.

Diversification Picking up in 1980s

Although BE&K was now very much identified with the pulp and paper industry, it made inroads in the energy sector as well. In 1977 it won the design and construction contract for a Louisiana oil and gas processing facility for Sonat Corporation. A year later BE&K formed an Industrial Power Division to handle this new line of work. It was not until the 1980s, however, that BE&K began to actively pursue diversification, evolving from a pulp and paper business into an industrial design and construction firm. In 1981 the company formed Poyry-BEK, a joint venture with the Finland-based company of Jaakko Poyry Group to serve as a high-technology consulting firm to the pulp and paper industry. The following year BE&K acquired Brazos Construction Company, forming a major part of subsidiary BE&K Construction Company. BE&K also won a major communications job in 1982, selected by Media General to serve as the construction manager for one of the country's largest cable television installations. In 1983 the company launched BE&K Communications in Atlanta to pursue cable television, fiber optics, and other communications projects. That same year the company started an industrial maintenance division and completed another significant acquisition, picking up Danco Construction Company to form BEK-Danco in Lynn Haven, Florida, which quickly became a leader in plant shutdown work. BE&K also solidified its relationship with Jaakko Poyry, which bought a 15 percent stake in the company as part of a technology exchange agreement. Two years later, in 1985, BE&K teamed up with another Finnish company, Polar Construction Company of Helsinki, to form a real estate development joint venture, Polar-BEK. In that same year, Poyry-BEK formed PBI Maintenance, a joint venture with Sweden's Idhammar Konsult involved in industrial maintenance consulting. Also of note, the first of the BE&K founders, Peter Bolvig, retired.

In the second half of the 1980s BE&K continued to enjoy strong growth. Sales reached $650 million in 1986, $870 million in 1987, and then leaped to $1.3 billion in 1988. Highlights during this period included the construction of the $423 million Project Gamecock mill in Cattawba, South Carolina, for Bowater Carolina Company in 1986, BE&K's largest project to that point; a 1987 steel mill modernization project in Pittsburg, California, for USS-POSCO Industries; a major expansion of a Dublin, Georgia mill for Southeast Paper Manufacturing Company in 1987; and in 1988 the company established its first Canadian operation. In 1989 BE&K completed a major acquisition, picking up the 1,300-employee engineering firm of Allstates Design & Development Co., heavily involved in the chemical industry.

The year 1989 brought the retirement of William F. Edmonds, who had been the firm's chairman, a post turned over to Kennedy, who remained CEO while Mike Goodrich was promoted to president. BE&K also garnered unwanted publicity in 1989, the result of its contentious relationship with labor unions. Engineering News-Record offered a picture of BE&K's reputation in a 1990 article: "BE&K arguably is the country's most aggressive open shop contractor. Some building trade unions claim that the firm markets itself to owners as a 'union buster.' " In 1987 during the Pittsburg steel upgrade project, for example, BE&K brought in out-of-state non-union workers, leading to a confrontation with unions, which held up the project and caused cost overruns by filing a host of environmental, permit, and health and safety petitions. BE&K sued the labor organizations, claiming unfair labor tactics, resulting in a series of back-and-forth filings in a legal squabble that would not be resolved for another decade. Also in 1987, BE&K became involved in a strike against an International Paper Co. mill in Jay, Maine. BE&K maintained the paper machines that the supervisors manned while replacement workers were hired. The strike ended in failure after 16 months, leaving many union members without jobs and harboring animosity toward BE&K. In addition, Kennedy had become president of the Associated Builders & Contractors, representing 23,000 open-shop companies. According to the Wall Street Journal, "Kennedy became a lightning rod. His speeches drew pickets. Protesters threw beer on him and once clubbed him with a picket sign."

Kennedy's relationship with labor became even more strained when Boise Cascade named BE&K the general contractor for a $535 million paper mill expansion at International Falls, Minnesota, close to the Canadian border. Not only was it the largest project in the history of BE&K, it was the largest industrial investment in the history of Minnesota, a strong union state, and with BE&K involved it was guaranteed to receive a great deal of attention. The project was hit with wildcat strikes by union workers of some subcontractors upset that BE&K was bringing in out-of-state non-union workers, who lived in what was called the "man camp." One night the camp was set on fire in a riot between union and non-union workers, causing an estimated $1.3 million in damages. Smaller acts of violence continued in the weeks that followed. In the end, 58 men pled guilty to charges connected to the riot, although few served jail time. BE&K was also pitted against elected officials, whom the company claimed were currying favor with union workers by making life difficult for the firm and by strictly imposing a number of work rules.

Company Perspectives:

BE&K's three founders began business with a simple philosophy: support our clients, our employees, and our community. Over 30 successful years, providing engineering, construction, and maintenance services for clients in a variety of markets, attests to these core values.

It was around this time that Kennedy, according to the Wall Street Journal, began to have private misgivings: "He feared the warfare was weakening the industry, that cost cuts had gone too far. 'We'd reached the point where we weren't paying a fair wage to our employees, or providing them with adequate benefits.' he said. He soon "turned his artillery on his own side. In a 1992 convention speech, he attacked fellow contractors…. "We could all raise craft wages a reasonable amount, provide benefits we're not ashamed of, create a career for young people instead of a revolving door,' he told a stunned audience. He also extended an olive branch to unions, offering $500,000 for a joint training venture. He got no takers." According to the Wall Street Journal he embraced "other policies that belied his hard-line image. When workers told him child-care problems forced them to quit, he started work-site facilities. The company also began offering some workers a guaranteed annual wage to ease on-again, off-again construction schedules." As a result, BE&K would gain recognition as one of the best places to work. In the words of the Journal, "Kennedy brushes aside questions about his transformation. He says simply that over the years, he's learned that you have to have faith that investing in people yields better work."

Further Diversification in 1990s

BE&K continued to grow and diversify its business in the 1990s. The company launched a new Construction Management Department in 1992, as well as Fibertech, a full-service recycle fiber facility, and As Built Data Inc., which provided photogrammatic data on process plants. BE&K also established SBE Environmental Co., serving pulp and paper, semiconductor, consumer products, and general manufacturing companies in need of high-tech solutions for the treatment of pollutants. Another 1992 startup was QBEK, a quality-control inspection service. A year later QBEK expanded with the incorporation of SBE into its operations. BE&K also looked to international markets during the first half of the 1990s. In 1993 BE&K forged an alliance with a major French engineering firm, Technip S.A., and in 1994 the company became involved in the Polish market through its long-term relationship with International Paper, which bought a pulp and paper mill in Poland and needed an experienced hand in optimizing and then maintaining the facility. Out of this project emerged BE&K Europe in 1995, established to provide engineering, repair, and construction services to International Paper and other customers in Poland and elsewhere in Europe. To serve International Paper's expanding business in Russia, BE&K Europe and BE&K International formed BE&K East in 2000, dedicated to providing construction and maintenance services to customers in that market.

Mike Goodrich was named CEO in 1995, replacing Kennedy, who stayed on as chairman. The change did nothing to slow the company's growth, however. BE&K acquired SW&B Construction Corporation, a Maine-based company that focused on mid-size projects and paper machine rebuilds. It was subsequently merged with Danco, creating the paper industry's premier small project firm. BE&K added to its environmental business with the acquisition of Terranext in 1997, the same year that BE&K Maintenance became BE&K Industrial Services and BE&K Telecommunications was established. The telecommunications business was further strengthened by the acquisition of North Star Communications Group Inc., a Bellevue, Washington-based company with five West Coast offices. In 1999 BE&K Telecommunications adopted the North Star name and continued to grow through acquisitions, picking up California-based Trans Tec Concepts, Inc. and Oregon-based Pacific Inter Tel, Inc. a year later in 2000. Also in 2000, BE&K expanded its hydrocarbons business with the purchase of Houston-based M-E-I. Other significant acquisitions in that year were Industra Engineers and Consultants, Inc.

Despite a sputtering economy in the early 2000s, BE&K continued to grow, winning important contracts in a variety of markets. In 2004 the company established a pair of new business groups—BE&K Building Group, providing construction services to the healthcare field, and BE&K Government Group, geared toward work for the federal government—in an effort to make up for declining business in the industrial markets. In the meantime, Kennedy turned over the chairmanship to Goodrich in 2003, but continued to remain involved with the company. During his more than 30 years with BE&K Kennedy saw the company grow from start-up to one of the top engineering and construction firms in the country, generating more than $1 billion in sales each year.

Principal Subsidiaries

Allstates Technical Services, Inc.; As-Built Services; BE&K Building Group; Enprima; MEI Consultants, Inc.; NorthStar Communications Group, Inc.; QBEK; Rintekno Group; BE&K's Saginaw Warehouse; SW&B Construction Corporation; Terranext, LLC.

Principal Competitors

CH2M Hill Companies, Ltd.; Parsons Corporation; URS Corporation.

Key Dates:

1972:: Company is founded by Peter Bolvig, William Edmonds, and Ted Kennedy.
1978:: Industrial Power Division is formed.
1983:: Danco Construction Company is acquired.
1985:: Bolvig retires.
1989:: Edmonds retires.
1992:: QBEK is launched.
1999:: North Star Communications Group is acquired.
2003:: Kennedy retires.