Business

Hentzen Contractors fills commercial void with residential work

When Bud Hentzen founded Hentzen Contractors in 1963, the company's focus was on fire restoration work.

"You had to have a can-do attitude," company president Bernie Hentzen said, "because those are some of the toughest jobs.

"You're dealing with an adjuster, a distraught homeowner and sometimes even neighbors."

Much has changed over the past 46 years.

Bernie and his brother, Bob, took over the daily operations from their father in 1985.

Hentzen Contractors still does fire repair, but it has expanded its work to include new construction and remodeling for commercial and residential.

But the can-do attitude remains. Indeed, it's a required tool for the construction industry in these difficult economic times.

"No job is too small," Bernie Hentzen said.

In Wichita, the number of building permits issued by the city is down 25 to 40 percent — depending on the area of work — for the first 11 months of this year over the same period in 2008, said Kurt Schroeder, the city's superintendent of central inspection.

About 60 percent of Hentzen Contractors' work is commercial with the remaining 40 percent residential. So with its commercial down 30 percent this year, that represents a significant bite. But a strong finish in residential construction is expected to allow the company to match its average annual sales of $10 million over the previous three years, Hentzen said.

Just nothing like 2008, when the company had a record year of nearly $13 million in sales.

Offsetting challenges

Hentzen has a theory about why residential work, particularly remodeling, has picked up since July. He said it's misleading to say the upswing is the result of an improved economy.

"I believe people really got scared when their 401(k)s dropped, their investments fell to a fraction of what they were," he said. "They started thinking, 'Hey, the economy is in the pits. If I'm going to put my money somewhere, I'm going to put it in my house. At least I'll be enjoying it.' "

The commercial side is a different story. Finding financing has been a problem. And if it can be found, it comes with a demand for a large down payment. Wichita bankers say they generally require commercial customers to put 30 to 50 percent down.

Two large church remodeling projects gave Hentzen Contractors' commercial side a boost, helping keep the company's 40 full-time employees fairly busy. But the general contractor still felt the pinch.

Hentzen Contractors' largest commercial client is McDonald's. Hentzen said the company has built about 65 stores for McDonald's over the years throughout Kansas and in Branson, Mo.

"I believe this will be the first year we haven't built at least one new store for them in 15 years," Hentzen said. "McDonald's slowed way down."

To offset the challenges, Hentzen Contractors has looked for ways to work leaner and develop or expand other markets.

"We take a look at how we put our crews together," Hentzen said. "We make sure we have the right people on the right job. My staff tends to work longer hours. Bob and I attend as many functions as we can fit in to tell our story. We also try to make ourselves available on projects to answer questions and help out.

"But we're not cutting out paid holidays or cutting back on mileage. We watch it real close. I won't pay for anything that's not there, but I haven't considered saying, 'Well, I won't fire any of the crew if you all take a buck an hour less.' We won't do that."

Hentzen Contractors has also picked up the pace on doing outdoor spaces, such as patios. The company has custom-built one "green" home annually in four of the past five years, but Hentzen said he thought the company could do four yearly.

Hope for 2010

Hentzen doesn't harbor any illusions that 2010 is going to bring a dramatic economic turnaround. And he understands construction's place as a barometer of the local economy.

"I don't believe construction is a real good indicator of Wichita's economy," he said. "It depends on aircraft manufacturing and all the companies connected with it. Second is the oil business. That's big in this town."

At the same time, he looks at his company's prospects for 2010 and sees hope.

"We think we're going to be able to hustle enough that we can hit our average of $10 million," Hentzen said. "We have plenty of work to carry us to February. And we expect the commercial is going to come back a little bit. McDonald's is going to have to build something somewhere."

The price tag to build a new McDonald's store is about $1 million.

"So if we could get two of those," Hentzen said, "we'd be thrilled."

The economy isn't the only challenge Hentzen Contractors faces in 2010.

With the state's unemployment insurance fund expected to run out of money by January because of the recession, the average assessment for business owners is projected to double in 2010. The cost of providing a health care plan for employees will also continue to increase.

A good safety record had allowed Hentzen Contractors to enjoy a 30 percent discount on the premium it paid for workers' comp insurance. But two claims were filed by employees this year, so Hentzen said he expects to see his premium jump $30,000 in 2010.

"It's always a challenge," Hentzen said. "I don't think the Wichita economy is too bad, per se. I thought it might be a little worse by now, but it's not too bad. Just have to keep hustling."

While doing it with a can-do attitude.

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