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Brad Hendrickson is optimistic about the future of construction.
He’s the president of the Midwest region at Golden Valley-based Adolfson & Peterson Construction and despite the challenges facing the construction industry, he said “I think we’re going to be just fine.”
Demand is strong and his company has done what it can to recession-proof its operations. He’s been in the industry for more than three decades and said “it’s always something.” But just because there are slowdowns doesn’t mean construction stops — especially if the state brings forward a budget that stimulates building.
Brad Hendrickson spoke with Finance & Commerce about sustainability and challenges facing the industry.
This interview has been lightly edited for length and clarity.
Q: You guys were named the number one green builder among Minnesota contractors and recently completed your 100th LEED-certified project. Tell me a bit about how your company has shifted to more sustainable building practices.
A: It’s always great having been in the business for three decades and seeing how the world has evolved with things like safety and stuff like that. It’s great to see us starting to become better stewards.
There’s lots of things that we’ve started to do and are doing, whether it be trying to get more electric vehicles into our fleet. We’re certainly diverting all of our trash away from landfills. But even to the extent — we had a customer this year that had a really big landscaping package that had a very unique kind of wood they wanted to use on a bench, which comes from a rainforest. And we said we’ve got a better idea, let’s go with something that kind of looks like it — it’s not wood, it’s plastic — but it’s recycled material, it’s reclaimed, and I think it’s a better product all the way around. And they went for it.
In a lot of cases, we’re not the designer, we’re not the specifier of the product, but we don’t let that stop us. We try and find products that are local, so that they take less time on the road to get to us, so they’re not hauled from some coast. If there’s something we can get locally here that will fit the bill, we propose it.
When we started our green initiative team here when I got here, I thought, ‘well, this is gonna be great. We’re gonna have a bunch of young people that are going to really fall in love with this.’ And they did. But it was amazing to see people that had actually been at AP for 30 years jump on board going ‘you know what, here’s something we could do.’ The energy that we’re getting out of that is really good for our team.
We’re trying to baseline not only our carbon footprint, but the typical carbon footprint of a project so that we can look at what things can we change to even reduce it further. One of our important goals as a company going forward is environmental stewardship. We’ve recently started helping and working with Great River Greening. I have groups of people even down on the Mississippi just cutting buckthorn. Part of our thing is we always say we build communities, trust and people. So when you’re building and you want to live those things, it’s what you do in your own community that really matters.
Q: Things are tough in construction right now. Can you speak to some of the challenges that are occurring?
A: It’s like we can’t catch a break. We’ve had a couple of years of pandemic.
Then you’ve also got what happened because of it. The supply chain is much different than it was, and it seems to change every month. One day, it’s copper; the next day, it’s glass; the next day, it’s drywall. So products we need to actually go out and build are stressed. So that’s really bad.
Labor — we don’t typically have to call the [hiring] hall because we have some great union employees that work for us. But if we do have to call the hall, there’s just not the people — everybody’s busy. It certainly is hurting delivery times, schedules and then being able to actually put our finger on what things should actually cost if you don’t know who’s building it.
On top of that, now we’ve been through this spike of interest rates. So the people we’re doing work for, if it’s a developer-driven project, now all of a sudden, where they were getting money very cheap, it’s not cheap anymore. Then that causes projects to delay and, in some cases, even stop. There’s certain markets like the multifamily market, there’s lots of those projects out there. I don’t know that, financially, they’re going to all get built — at least not today.
Q: How are you responding to some of these challenges?
A: I always try and look at things half full. I think that the pandemic certainly taught us how to — like, our job sites have never been cleaner. So that’s a good thing, we learned something. We’ve also learned that if you have something that you’re scheduling, you have to make sure that you can get it. The days of going ‘I don’t need it for a year, I don’t have to worry about it,’ you can’t do that anymore.
I always tell people in my three decades of construction, it’s always something. It’s never been easy. It’s never been like this, but back in the late 80s, when I started in this business, it was something else. I’ve certainly lived through a couple of recessions and stuff like that in my career. So there’s always something out there. I think one of the things that has helped us is most of our customers are repeat customers. So we’re more than willing to have that conversation with them and say, ‘hey, look, there’s a supply chain issue here, here’s the options.’ Let’s lay everything on the table, let’s come at it like a team would and go from there. I think, by and large, that’s really saved us.
Q: Do you think there’s an impact just from the changes that are happening in how the market works? There’s been a boom in demand but also these challenges. How have things changed in this ‘post-pandemic’ world?
A: If there’s a recession, or if we’re in a recession right now, one of the things that is not lost on us is that construction typically trails by 12-14 months in a recession. We have all this work that’s in the pipeline right now that still needs to get built. So if the economy is doing something or if you believe we’re in a recession, then in 12 months, that’s when it’ll hit my house.
So we are pivoting, trying to make sure that we’re not leveraged into just one market sector. We try and recession-proof our business. We have an office in Duluth that specializes in certain types of work. Down here, we specialize in about five different types of construction, whether it be K-12, whether it be developer-led work, multifamily type work, municipal work, correctional work and water infrastructure work. So having all of those puts us in a great spot. If one part of the market falls off, we can deal with what happens next.
The other thing I would say is, because we didn’t get a budget passed last year, I think there’s still a bunch of state work that’s out there. Once they can come to some agreement on that, there’s going to be another little in influx of new work, which is good for us. It’s good for Minnesota.