Business

The McCarthy Construction Difference: On Time & Under Budget

Missouri’s employee-owned builder may have a common mantra, but they’re a rare example of efficiency and experience in today’s world.

The phrase most often associated with McCarthy—the oldest privately held construction company in the country—is “ahead of schedule and under budget.” And it’s true, time after time.

This spring, McCarthy Construction will celebrate 150 years in business. A company that began as a lumber business in Ann Arbor, Mich., today has a major presence in Kansas City, just a few hundred miles from its St. Louis headquarters. And while its “on-time and on-budget” mindset is renowned, McCarthy believes its success is really driven by its 100 percent employee ownership status.

“Our pitch to clients is that we think employee ownership makes a difference,” says Scott Wittkop, president of McCarthy’s central division. “We’re never late. We’re never behind on schedule or budget. A lot of companies say that, but when you own the company, you have a deeper, personal commitment to making it true.”

As part of McCarthy’s award-winning safety program, employee-owners gather for a construction site safety meeting.

The multi-billion-dollar construction firm has come a long way since Timothy McCarthy, an Irish immigrant, founded the company as a lumber business building farmhouses and barns. In 1907, his sons formerly incorporated the McCarthy Lumber and Construction Co., taking new risks by expanding to new towns and venturing into commercial projects. By the 1920s, the firm won the contract to erect the Missouri Building at the World’s Fair in San Francisco. Later, the brothers traveled to Alaska to build the Anchorage post office and courthouse in 1939.

Even during times when the American economy was weak, McCarthy Construction forged ahead. During World War II, McCarthy won government contracts in the Panama Canal Zone where the firm worked on Army and Navy lock and canal facilities as well as the Air Base at Coco Solo. By the 1950s, McCarthy took another risk that helped the firm survive the recession of that decade. It diversified and purchased the Rock Hill Quarries Co., a profitable operation for nearly two decades.

In continuing its risk-taking tradition, McCarthy added bridge and heavy construction to its expertise and continued to expand in cities across the U.S. Today, its Phoenix and Irvine, Calif., offices are ranked among the top two builders in Arizona and California. Another growth move now includes McCarthy expansion into the semiconductor, bio-pharmaceutical, educational, research and development, and general manufacturing markets. In fact, McCarthy has become nationally noted for its ability to build technically challenging laboratory and process facilities.

Today, Mike Bolen, an Air Force Academy graduate who started with the company as a carpenter, serves as CEO and is the first in the company’s history without the last name McCarthy. Yet, the McCarthy name and expertise continues to fuel its growth and expansion, placing the firm among the top 10 U.S. commercial builders. With offices in 13 locations, McCarthy has 2,600 employees and $3 billion in annual revenue. According to Wittkop, who has been with the firm for 28 years, McCarthy has worked in 44 states. More than 70 percent of its business is from satisfied, repeat clients.

“It’s a good place to be, but I’m a little biased,” Wittkop admits. “I didn’t expect to see a big cultural shift to full employee ownership, but since the switch 10 years ago, people have really upped their commitment even more since becoming owners. Our work as a company is a direct reflection on them.”

Serving up a slice of McCarthy’s teamwork culture, Central Division President Scott Wittkop, Project Senior Manager Daniel Joseph and Treasurer Dan Dillon man the grill at the company’s annual Employee Ownership BBQ.

Wittkop recalls one of his first projects with the firm. It was the redevelopment of Kansas City’s historic Quality Hill neighborhood, which he says launched the metro’s downtown transition in a positive direction. One of Wittkop’s favorite projects was Children’s Hospital Colorado in which the McCarthy healthcare construction team supervised a 1.5 million square-foot, nine-story replacement facility.

Closer to home, McCarthy is currently involved in a “sweet” deal with the construction of the MARS Chocolate North America manufacturing facility in Topeka. The 550,000-square-foot, one-story food grade production and manufacturing facility is located on a 150-acre site and includes seven structures that will house production, administration, central utilities and rail buildings, as well as a guard house, waste water treatment plant, fire pump house and a 286-car parking lot. McCarthy is working to achieve LEED Platinum certification for the project. “We expect to have Snickers out by the end of this year and M&Ms rolling in by first quarter of 2014,” Wittkop reports.

The McCarthy-built MARS Chocolate North America plant just south of Topeka, Kan., opens this month. The 350,000-square-foot facility is Mars’ first new U.S. plant in 35 years.

Another national, high-profile McCarthy Construction project located near Kansas City includes the National Bio and Agro-Defense Facility in Manhattan, Kan. Because of its expertise in building biocontainment labs, the U.S. Department of Homeland Security tapped McCarthy for the future animal research lab. The facility will house advanced research, diagnostic testing and validation, countermeasure development (i.e., vaccines and anti-viral therapies) and diagnostic training for high-consequence livestock diseases. It will also provide the necessary infrastructure to improve understanding and preparedness for potential bioterrorism employing foreign animal disease and zoonotic disease pathogens that may be accidentally or intentionally introduced in the United States and will develop capabilities to improve protection against such threats.

McCarthy is currently working on the 87,000-square-foot, stand-alone central utility plant that will house primary heating and cooling systems to support the facility at Kansas State University. Construction of the utility plant is expected to be complete in the fall of 2015. “The more challenging the project, the more we like it,” Wittkop says.

One such challenge—and a project that brings pride to McCarthy employees—is the rebuilding of St. John’s Mercy Medical Center in Joplin, Mo. The hospital—and the town, for that matter—was destroyed by a tornado in 2011. Prior to the tornado, the 370-bed hospital represented a 114-acre campus that included 160,000 square feet of medical office buildings, a 40,000-square-foot behavioral health center, a daycare center, hospital foundation building and ground floor shop.

The effects of the tornado on the hospital were devastating. The campus took a direct hit, completely destroying its infrastructure, generators, communication and utilities, while leaving massive amounts of debris scattered throughout. The challenge, Wittkop says, “was knowing where to start.

“Within seven days, we had boots on the ground, erecting a tent hospital and soon replacing that with modular sectionals and a component hospital for that first winter,” he says. “Currently, we are ahead of schedule [and] working on constructing the replacement hospital, which is expected to be complete in February or March of 2015.”

Healthcare, in fact, represents 50 percent of McCarthy’s business. The contractor is considered one of the top two or three experts in the country, Wittkop says. So it was no surprise that the University of Texas MD Anderson Cancer Center selected McCarthy Construction for a 500,000-square-foot, design/build vertical and horizontal expansion and renovation composed of a 12-story addition above and 24-story elevator tower next to the existing, still operating hospital. The expansion includes 240 new inpatient rooms, pharmacy, facility support space, observation deck, three shell floors with room for 144 future patient rooms, as well as renovation of existing spaces and upgrade of existing structure and infrastructure to support the expansion.

McCarthy partners network and participate in training during an annual shareholders’ meeting.

Building on top of an operational 12-story hospital posed a variety of challenges, including a tight site with room for only one tower crane when normally three would be used. While still completing the project on time and on budget (not even Hurricane Ike in 2008 was enough to put this project behind schedule), McCarthy’s work resulted in a world-class hospital facility designed to make the patient journey as comforting as possible. “We love to hear people say it can’t be done, and then we figure out a way to do it,” Bolen tells clients and prospective clients.

While quality work and adhering to budgets and schedules is important, McCarthy also spends considerable time keeping its employees and work sites safe. According to Wittkop, the firm continually focuses on programs to enhance safety. Specifically, McCarthy has taken a team approach to a new level by partnering with OSHA and becoming part of its Strategic Partnership Program (OSPP)—moving away from traditional enforcement methods and embracing collaborative agreements.

Through OSPP, OSHA and its partners agree to work cooperatively to address critical safety and health issues. This unique approach is proving to be an effective tool for reducing fatalities, injuries and illnesses in the workplace, Wittkop says. “We are fanatic about safety for our people and everyone who steps onto the job site so that everyone goes home to their loved ones each night,” he stresses.

The McCarthy reputation for quality work and safety has caught the eye of potential employees too, especially those who want to be a part of an employee-owned firm. Most new employees who attend orientation sessions are surprised to learn just how transparent the firm is with a wide range of topics and issues. “When new employees visit Kansas City for their orientation, we have a question box that senior leadership answers directly,” Wittkop says. “With the exception of personal HR issues, there’s nothing off limits.”

Additionally, McCarthy routinely hosts employee roundtables at company functions to allow all employees an opportunity to discuss topics that are top of mind, Wittkop says. Once every five years, McCarthy conducts an employee survey as another method of communication and transparency with its staff. “We have an honest culture and we’re always working on showing our employees what their opportunities are going forward,” he says. “We really promote taking on more responsibility.”

Sharing the benefits of an employee-owned business, McCarthy celebrates Employee Ownership Month each October, hosting a variety of activities. Most recently, Wittkop hosted a “Wittstock” event (a salute to the famed Woodstock) with food and music to celebrate employees.

The firm also participates in local and regional charitable events. It began with a community day in October but has since grown to year-round interests. For example, McCarthy employees pitched in to help its MARS Chocolate client in its food and toy drive, while often forming teams for walks and runs throughout the community.

As an added perk, McCarthy offers employees a free week of accommodations at any one of its five vacation condos around the country. According to Wittkop, senior leadership has even steered away from using the condos so that employees will always have access to the properties.

Story by Susan Fotovich McCabe