Dick Corporation Business Information, Profile, and History

Company Perspectives:

Following in the footsteps of our grandfather, Noble J. Dick, Dick Corporation has grown from its humble beginnings in 1922 to a leader in today's construction industry.

History of Dick Corporation

Dick Corporation, based outside of Pittsburgh, Pennsylvania, is a major contractor, construction manager, and design builder, active throughout the United States as well as the Caribbean and the Pacific Rim. Dick's business is organized under four divisions--General Contracting, Building, Heavy/Industrial, Construction Management--and includes two subsidiaries, Dick Corporation of Puerto Rico and Dick Pacific. The company is owned and by the third generation of the Dick family. Brothers David E. Dick and Douglas P. Dick serve as co-chairmen.

1920s Origins

The founder of Dick Corporation, Noble J. Dick, was born in 1899 in Homer City, a coal town 45 miles east of Pittsburgh. His father did some farming and coal mining but mostly supported his family through construction work. After dropping out of high school Dick left home at the age of 17 and moved to Clariton, Pennsylvania, where he married two years later and found work as a laborer. He worked for a short time at a U.S. Steel mill and a Westinghouse manufacturing plant before he realized that he wanted to work for himself. Using the building skills he learned from his father, Dick soon landed his first job: building a neighbor's garage for less than $100. He briefly formed a construction business with his brother-in-law to build homes and do renovations, then in 1922 went solo again, launching Dick Corporation.

As Noble Dick grew his construction business, he also developed a flamboyant persona. He was partial to wearing different shades of green suits and a Stetson hat. At the same time, Dick was also hard working and driven to succeed, character traits that appeared in later generations of his family, who ultimately grew the company into a $1 billion concern. In addition to construction, Dick also ran a Pittsburgh-area bus line for 20 years and helped start Three Rivers Bank.

In 1942, Noble's son Dorsey went to work for his father. His brother Perry would soon follow suit. In 1970, Noble began to cut back on his involvement in the day-to-day activities of the construction business, gradually turning over control to his sons. It was at this stage that Dick Corporation began to grow beyond its regional base to become a national construction company, a move very much borne out of necessity. The company had evolved beyond home building to school construction and took on large projects constructing Pittsburgh steel mills in the 1960s and early 1970s. In 1971, 80 percent of Dick Corporation's business came from building steel mills.

With the decline of the steel industry in the 1970s, however, Dick Corporation faced a turning point in its history. It could either contract or expand. The decision was made to expand, meaning that Dick Corporation had to become a national player. The most promising opportunity was working for the United States Postal Service, which was launching a program to build bulk-mail facilities across the country. The Dick family believed that because the work was repetitive the company would be able to gain valuable experience and procedures for handling this type of major project. Moreover, it would lend a national scope to the company's resume. In the mid-1970s, Dick Corporation was successful in winning contracts from the U.S. Corps of Engineers to build five bulk mail facilities in Pittsburgh, Atlanta, Denver, Memphis, and Jacksonville, Florida. Dick Corporation was then able to leverage this experience in order to win other contracts around the country, working for both the public and private sectors and different market segments.

The power industry, which was enjoying significant growth at the time, became an important source of new contracts. Dick Corp was able to transfer the expertise it gained from pouring the stiff concrete foundations that were part of the construction of large steel mills to the similar needs of power plants. Other important projects during this period included a power plant in Florida, an amusement park, the Federal Express headquarters in Memphis, and a U.S. Steel pipe mill in Texas. Although Dick Corporation was increasingly looking beyond the Pittsburgh area for important new jobs, it continued to be involved in some major projects at home, including a library at the University of Pittsburgh, Mellon Arena, the Beaver Valley Nuclear Power Station, and the Pittsburgh International Airport.

Third Generation Joins Firm in 1970s

A third generation of the Dick family went to work for the construction company in the 1970s. Dorsey's son David joined in 1971 after earning a business degree from Robert Morris College. He was followed in 1973 by his brother Douglas, who earned a business degree from Nathaniel Hawthorne College. David and Douglas would go on to lead the company; their brother Michael also came into the business. He worked as a bricklayer for 15 years and eventually became the firm's lead estimator before dying of cancer at the age of 54 in 2001. David and Douglas Dick forged a strong working relationship after witnessing the falling out of their father and uncle during the 1970s. David Dick told the Pittsburgh Business Times in a 2002 interview, "We watched two brothers try and destroy each other." In 1979, Dorsey became chairman of the family business, and Perry, at the age of 61, left to start his own regional construction company, P.J. Dick Inc. He would pass away ten years later.

Noble Dick died in 1983, leaving the company he founded in the hands of Dorsey, who maintained he was simply the caretaker of what his father had started. He was far more reserved than his father but proved just as effective in leading the company. He established the marketing plan that helped take Dick Corporation into different markets, and in the mid-1980s he reorganized the company along horizontal rather than vertical lines. Three business units serving as three separate profit centers were established to serve specific markets. Later in the 1980s, Dick Corporation began offering construction management services. Starting in the early 1980s, Dorsey began grooming David and Douglas to succeed him at the helm of Dick Corporation. That day came in 1992 when Dorsey Dick died.

David and Douglas Dick, mindful of the rupture between their father and uncle, took care to work closely together. Nearly every day, they took time to eat lunch together to discuss business. They also delineated their roles, with David, who held the title of CEO, handling operational duties and Douglas taking responsibly for legal and financial matters. Nevertheless, there was a good deal of overlap in their duties. They took over Dick Corporation at a time when the construction business was flat. Although annual revenues at this point were in the $350 million range, the brothers worked out a strategic plan to grow Dick Corporation into a $1 billion company. To achieve this goal, the firm had to expand within the United States as well as overseas. Over the next few years, it landed major contracts building casinos in Las Vegas and took on construction projects in Puerto Rico and elsewhere in the Caribbean. In 1999, Dick Corporation, which had increased annual revenues to $600 million, revised its structure to help the company reach the $1 billion mark. An international division was formed with the hope of one day doing work in Central and South America and the Middle East. Dick Corporation was also very much attracted to the quickly emerging market in India. Domestically, Dick Corporation split its operation into East and West divisions. In looking to use its record in Las Vegas as a springboard for new work in the western United States, it was felt that the company needed an office located closer to those projects. In addition, the company's bridge and highway and power and industrial units were combined into a new Heavy/Industrial Division.

Organizational Changes in the 1990s

Although organizational changes played a role in taking Dick Corporation past $1 billion in revenues, a more important factor was the 1999 acquisition of Honolulu-based Fletcher Pacific Construction Co. Ltd., the largest construction firm in Hawaii. Fletcher was founded in 1939 and was owned by a New Zealand parent company, Fletcher Challenge Ltd., which now wanted to consolidate its construction, pulp, and forestry businesses in the New Zealand markets. Fletcher Pacific generated some $260 million in annual revenues and maintained operations in Guam and Saipan. Major clients included the state of Hawaii, the Department of the Navy, The Federal Bureau of Prisons, Hyatt Corp., Marriott International, Toyota Motors, Sears Roebuck & Co., First Hawaiian Bank, Neiman Marcus, Wal-Mart, and Nike. Fletcher Pacific was not without its share of suitors, with 19 companies expressing an interest, but Dick Corporation had an inside track because the two companies had worked well together on several joint ventures in Hawaii. They also shared a similar corporate culture as well as the same software and comparable training programs. Not only did the addition of Fletcher, which was renamed Dick Pacific, add a significant amount of revenues to Dick Corporation, it served as a base for further expansion further into the Pacific Rim. It also added some flexibility in the use of Dick Corporation's labor, with Pacific Dick's personnel able to move from Hawaii to the West Coast depending on the company's needs at a given time. Former Fletcher Pacific CEO Denny Watts was retained to run the unit and given a great deal of autonomy. Once a month, he flew to Pittsburgh to take part in a management meeting.

Dick Corporation enjoyed tremendous growth in the final years of the 1990s and into the new century. It cracked the $1 billion mark ahead of schedule and outgrew its suburban headquarters. In 2001, the company began construction on a new 90,000-square-foot mixed-use facility located along the Monongahela River in Homestead, but several events took place that hurt the company on several levels. First, the company's reputation for safety was tarnished when in February 2001 an employee was killed and two others injured by a steel truss that collapsed during the construction of the David L. Lawrence Convention Center in Pittsburgh. A subsequent in- vestigation of the U.S. Occupational Safety and Health Administration cited Dick Corporation and the firm that fabricated the truss for safety violations, fining each $19,000. The amount was later reduced to $12,000. The coroner of Allegheny County, in the meantime, recommended that Dick Corporation face involuntary manslaughter charges, a matter which hung over the company for more than year until the district attorney's office finally declined to press charges against corporate officials, maintaining that the matter belonged in civil rather than criminal court.

Challenges in the 2000s

During this time, Dick also faced serious fiscal problems. A natural down cycle in the construction industry was exacerbated by a recession that would only grow worse with the terrorist attacks of September 11, 2001. Dick Corporation also found itself a victim of the Enron scandal, which erupted as Dick Corporation was building a $400 million power plant project near Joliet, Illinois, for an Enron subsidiary, Nepco. When Nepco went bankrupt in June 2002, Dick Corporation had to go to court in an attempt to recover some of the $50 million for work performed for the project's owner, NRG Energy Inc., a Minnesota-based power company that was having troubles of its own and was on the verge of bankruptcy.

Dick Corporation soon found itself in the unfamiliar position of being late in paying its bills and the subject of rumors which claimed that the firm was on the verge of declaring bankruptcy and about to initiate large-scale layoffs. The Dick brothers decided that it was time to bring in someone to take charge of the company and make the changes necessary to keep the business viable. Rather than looking to executives who had dedicated their careers to Dick Corporation, they named Pacific Dick's Denny Watts as the first non-family member to head the company. Not only had Watts performed well at Pacific Dick, he was enough of an outsider to make some difficult but necessary decisions in restructuring the company. There were modest layoffs, 15 in August 2002 and another 34 in October, which Watts attributed to a restructuring effort that streamlined operations and reduced headcount. He also look for ways to cut overhead, which had grown so high that the company had difficulty making money. Thus, after the construction of Dick Corporation's new $10 million headquarters in Homestead was completed, the building was not occupied but instead put up for sale. Watts' larger goal was to move away from risky ventures, such as design work for the power plant industry and international projects, and to solicit more military and government work on the East Coast, perhaps connected to Homeland Security.

In January 2003, Watts brought in more outside help to run Dick Corporation, hiring Stephen D'Angelo to serve as chief administration and restructuring officer. A former CFO at Bekins Van Lines, D'Angelo was a principal at Impact Consulting Group, a specialist in financial turnaround. Company spokesperson Janet Love denied that D'Angelo was brought in to ready the company for sale, maintaining, rather, that he would be "looking for efficiencies in process implementation." Within a matter of weeks, two senior Dick Corporation executives resigned and four other senior executives, including Janet Love, were laid off. The company also announced that it was reducing the number of divisions from eight to six but had no intention of exiting or selling off any of those businesses, especially the highway unit (although it did close the Chicago office).

In 2003, Watts was able to secure a new line of credit, hoping that this would sustain Dick Corporation in the near term and allow it to tackle a $1.5 billion backlog of work. Then, unexpectedly, in July 2003, Watts resigned to "pursue other interests and opportunities outside the region." He agreed to stay on for three months under a consulting arrangement. D'Angelo remained with the company and was named president. Over the next several months Dick Corporation found a buyer for its unoccupied headquarters and in 2004 sent out query letters to highway contractors to determine if there were any interested buyers for its highway division. Beyond these moves, the company's future remained uncertain.

Principal Subsidiaries: Dick Corporation of Puerto Rico; Dick Pacific.

Principal Divisions: General Contracting; Building; Heavy/Industrial; Construction Management.

Principal Competitors: Jacobs Engineering Group Inc.; Peter Kiewit Sons', Inc.; The Turner Corporation.

Chronology

• Key Dates:
• 1922: Noble J. Dick founds the company.
• 1979: Dorsey Dick is named chairman.
• 1983: Noble Dick dies.
• 1992: Dorsey Dick dies, leaving sons David and Douglas in charge.
• 2002: The first non-family member is named CEO.