JULY 2008: OREGON'S PRIVATE 150
Change agents
Oregon’s top private companies diversify to stay ahead of
the downturn.
By Ben Jacklet
Workers for Vigor Industrial (Private 150 Company
No. 92) remove a piece of metal welded to the rudder
of a military vessel. Vigor reported sales increased
50% in 2007.
PHOTO BY DENISE FARWELL
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Frank Foti sprints up a flight of rusty stairs to a gritty
rooftop with a panoramic view of Portland’s shipyard.
Down below, workers in hardhats are pedaling bicycles from one
job site to the next, through a maze of huge cement blocks, oil
drums, spools of wire, pipes and beams. The air resonates with
a purposeful hum of ventilation systems, forklifts, trucks and
cranes. A half-dozen boats are docked for repairs, including a
dredge ship, a tugboat, a tour boat and several military
vessels. A huge new barge, the 360-foot, 6,000-ton
Maka’ala, is nearly ready for launching.
“This place was dead,” says Foti, CEO of Vigor
Industrial. “It was dead. And now we are
thriving.”
Foti was widely criticized in 2002 for selling the
shipyard’s most valuable asset, the largest dry dock on
the West Coast. But in his view the sale was a vital first step
toward reform. “The market for ship repair changed, and
we had to adjust,” he says. “Selling the dry dock
gave us an opportunity to regroup and to find a profitable
niche. We are now back to the sales levels we had before,
except we have gotten there profitably, and we have
substantially reinvested our profits to build more
infrastructure and develop new businesses.”
Five businesses under the umbrella of Vigor Industrial operate
on this sprawling waterfront property, in addition to 17
industrial companies leasing space here. There also is a new
training program set up by Portland Community College and, most
significantly, the growing barge-building company, U.S. Barge.
Founded in 2005 by Vigor Industrial and Clackamas-based Oregon
Iron Works, U.S. Barge has grown quickly to 160 employees and
has jobs lined up well into 2009.
Revenues for Vigor Industrial rose 50% in 2007, making
Foti’s diversified industrial group one of the best
performers in Oregon’s Private 150. But Vigor (No. 92)
was not the only private business to adapt successfully to the
challenges of globalization and an economic downturn. In a year
that will be remembered for its ominous mix of mortgage
meltdown, housing crisis and fast-rising energy prices, many
private Oregon companies prospered.
An example is Portland-based Fortis Construction, founded in
2003, the youngest company to make the list and tied for the
fastest growing, with a 108% jump in revenues. Over five years
Fortis (No. 105) has expanded from a startup run out of a
basement room at Portland State University to a $40 million
company partnering with the University of Oregon, Oregon State
University and Standard Insurance. The firm’s highly
visible $25 million renovation of the state capitol is on
target to be completed this fall, ahead of schedule and under
budget.
Fortis president Jim Kilpatrick says the company benefited
from its roots as the Portland office for DPR Construction, a
national leader in general contracting. “We had the
capabilities and experience to do much larger projects than
what we started with,” he says. “Now we’re
finally getting to a place where we can stabilize with the
kinds of projects that we are well equipped to do.”
A helicopter is refurbished at the maintenance
facility of Columbia Helicopters in Aurora.
PHOTO BY DENISE FARWELL
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Fortis also has invested heavily in sustainability, with a
large percentage of LEED-certified green building specialists
and a goal to gain eventual accreditation for all managers and
superintendents. These green credentials have helped Fortis
benefit from the latest wave of commercial and public works
projects in Oregon.
But it is unclear how long the money will keep flowing. As a
hedge against an eventual slowdown, Fortis is aggressively
pursuing technology data centers, which store servers for
companies expanding their Internet capabilities. David Aaroe,
executive vice president, explains that these buildings appear
simple from the outside but are incredibly complex inside.
“Envision a 150,000-square-foot building with 88,000
servers in it and 47 miles of underground conduit,” he
says. To further complicate matters, Aaroe notes that the cost
of the copper wire required for that building went up $1.7
million in 90 days, a jaw-dropping example of the price
increases that are hammering builders as well as the broader
economy. Fuel costs are just the beginning; prices are up for
everything from steel and wire to carpeting and plastic
pipes.
In spite of rising costs, Kilpatrick predicts 2008 will be the
company’s most successful year yet. Beyond that, he
predicts, “The economic slowdown will eventually reach
commercial building.”
Already it has hit homebuilders hard. Several major Oregon
homebuilders have gone bankrupt, and two veterans of the
Private 150 list, No. 82 Matrix Development (dba Legend Homes,
which filed bankruptcy in June) and No. 102 Buena Vista Custom
Homes, saw revenues fall by 30% and 42% respectively. Likewise,
the housing slump has taken a toll on forestry and wood
products companies. Perennial powerhouses Ochoco Lumber, (No.
93) North Pacific (No. 6), the Swanson Group (No. 32), Bright
Wood Corp. (No. 48), Hampton Affiliates (No. 7) and the Collins
Companies (No. 50) all saw double-digit drops in sales.
But some businesses long reliant on timber money have
sidestepped the downturn by expanding their horizons.
Aurora-based Columbia Helicopters (No. 56), which made most of
its fortune in helicopter logging, followed the money into oil
exploration projects in South America and Southeast Asia, in
addition to fighting fires in Southern California and beefing
up its maintenance and repair operations. The result was a 39%
jump in revenues.
Columbia Helicopters president Mike Fahey says the maintenance
and repair side of Columbia’s business has doubled over
the past few years and he expects that growth to continue.
Columbia also is pioneering a new method of airborne
firefighting that uses buckets rather than tanks for storing
water, making it easier to refill quickly. “We used this
system to fight several fires last year and we were lapping the
tanked aircraft,” says Fahey.
Peter Shaw of Fortis Construction works on the Fir
Acres Theater at Lewis & Clark College.
PHOTO BY DENISE FARWELL
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One of Columbia’s main competitors for future
firefighting contracts will be Evergreen Aviation (No. 9),
another perennial front-runner on the Private 150 list. After
investing more than $50 million in research and 20,000 engineer
hours, Evergreen has begun marketing its massive new
firefighting “supertanker,” a Boeing 747
retrofitted with water nozzles to blast huge volumes of liquid
onto forest fires. This new approach to firefighting represents
the latest innovation for the one-of-a-kind McMinnville-based
company that specializes in everything from unmanned aerial
drones to hazelnut shells.
Even the king of the Private 150 has had to diversify to stay
on top. Closely held Jeld-Wen, headquartered in Klamath Falls,
rose to the top of the list in 1996 after years of double-digit
growth and has stayed No. 1 ever since, building name
recognition through a sponsorship spending spree targeting
Australian Rules football, NASCAR, an OHSU leukemia research
program and, of course, golf. Millions of television viewers
see ads touting Jeld-Wen’s doors and windows while
watching the Jeld-Wen Tradition and the Player’s
Championship. Jeld-Wen also has deepened its expansion into the
leisure business, opening a huge new water park at its
destination resort in Idaho and an upscale resort called
Suncadia in Washington where homes are selling for up to $3.25
million.
Gresham-based Allegro Media Group (No. 101), which matched
Fortis Construction’s 108% sales growth, is another case
study in strategic adaptation. The Gresham-based entertainment
distribution company has quadrupled its business over the past
five years to $100 million in sales and 100 employees by
delving into every genre of music imaginable, from classical to
New Age to indie rock, distributing digital music and videos
through major Internet sites as well as CDs and books on tape
through Wal-Mart, truck stops, Nordstrom and other
retailers.
Between its new 131,000-square-foot facility in
Rockwood, its recent acquisition of a company that specializes
in marketing music and videos to the Armed Forces and a new
infusion of $37 million in equity, Allegro is well positioned
to avoid the misfortunes plaguing less nimble players within
the music and entertainment industry.
“The entertainment industry isn’t dying,”
clarifies Allegro CFO Vince Micallef. “It is changing.
And if you’re not changing, you’re probably
dying.”
Therein lies the challenge for Oregon’s private
companies, large and small: to remain ahead of the game by
adapting intelligently, even as fuel prices continue shooting
upward, home values keep sliding downward and banks, businesses
and consumers look for ways to cut back.
That seems like a tall order for any business, but from
Foti’s perspective overlooking the humming docks of a
shipyard once given up for dead, anything appears possible.
“Those of us who have been through the hard times at the
shipyard are especially grateful for the times we have
now,” he says. “And we have a stronger belief in
ourselves and our ability to be resilient and adaptable.”
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