Jeff Hansen, chief executive and Brad Hendrickson, Midwest president of Golden Valley-based Adolfson & Peterson Construction.
By: Dee DePass | July 11, 2021
Being a worry wart has paid off for Golden Valley-based Adolfson & Peterson Construction (AP).
Remembering the Great Recession, officials at Minnesota’s third-largest commercial construction firm started worrying three years ago about the possibility for yet another recession.
“For three years, we thought another recession might hit. So we had been preparing [by] building up our [project] backlogs,” said AP CEO Jeff Hansen. By the time the U.S. pandemic hit full force in March 2020, “we had the highest backlog in the company’s history,” he said.
That’s unusual. While other big firms ensure their jobs mix is well diversified, “I have not heard a lot of other people developing long-term plans just in case a recession hits,” said Dave Lyste, president of the Minnesota Construction Association.
Hansen’s team scurried to win new jobs across all five states where AP operates: Minnesota, Colorado, Wyoming, Texas and Arizona. The hustle paid off.
Signed contracts jumped 30% to create a $1.3 billion backlog. That cushion helped as COVID ravaged the U.S. economy.
Adolfson & Peterson Construction and Knutson Construction will finish Metro Transit’s new $117 million and 400,000-square foot Minneapolis Bus Garage in 2022.
As COVID shut businesses, cities, concerts, ball games and much of public life, several AP clients delayed long-standing building projects. Others canceled jobs all together.
But thanks to extra hiring and aggressive bidding that padded the “to-do” list, Adolfson & Peterson retained enough business that revenue increased 25% in 2020 to $1.1 billion.
Hansen was pleased. “We don’t want to be known as the organization that only grows when the economy is good.”
The banner year coincides with AP’s 75th anniversary and stemmed from several education, senior housing and health-care construction projects that marched ahead despite the pandemic.
With the exception of behemoths such as Ryan Companies and Mortenson, many other construction firms were not so lucky.
U.S. construction starts for factories, offices, warehouses, institutional and other non-residential buildings sunk 19% between May 2020 and May 2021, according to construction industry tracker Dodge Data & Analytics.
To avoid the same fate, AP Midwest President Brad Hendrickson said his company avoided recession-sensitive clients and focused on those with strong balance sheets in the years leading up to the pandemic. “We have a lot of work in our pipeline and we are chasing [more],” he said. “We have done a pretty good job of collecting work in this fiscal year.”
AP Arizona saw a burst in medical building jobs, while AP Texas enjoyed a surge in office construction. Colorado experienced population gains from other states, prompting a flurry of bonding bills for several school construction projects that landed with AP.
In Minnesota, AP won 13 renovation and expansion projects in North St. Paul and other east metro school districts worth $254 million.
It recently won a job rebuilding an outdoor plaza at 3M’s headquarters in Maplewood.
Many of its 600 workers are busy building Flagstone Presbyterian Homes residences in Eden Prairie; the 185-apartment Bower Residences in Edina; and a five-story parking garage that is part of a larger expansion project at West Lake Quarter (formerly Calhoun Towers) in south Minneapolis, Hendrickson said.
AP is also building a nursing home in Bemidji and continuing its work on Metro Transit’s $117 million Minneapolis Bus Garage in north Minneapolis, where AP is building the 400,000-square-foot structure in conjunction with Knutson Construction.
The garage is expected to open next year after 30 months of construction.
Even so Adolfson & Peterson couldn’t escape all of COVID’s mayhem.
“Wood prices are four times what they were two years ago,” Hansen conceded. “And now we are seeing that a $2 million [price quote]] for supplies is good for only two minutes. Suppliers no longer hold their [quoted] prices for60 days and that has really caught everyone off guard.”