Growing the bottom line

Northern Sierra Construction Inc.

has doubled its revenues since 2002, but Mike Grashuis isn't convinced

that revenue growth is all it's cracked up to be.

Far better, he figures, for the construction company based at Washoe Valley to keep its revenues about where they are today $11 million in 2004 and instead focus on building profitability.

And there's more to that than a simple New Year's resolution to chase more profitable business.

It dictates some fundamental changes in the way Northern Sierra Construction positions itself in the market.

Founded in the early 1960s in Washington State by Grashuis' grandfather, the company moved to northern Nevada in 1987.

It's owned today by Dave Grashuis, its president, and his son, Mike, who

serves as vice president.

Since its arrival in Nevada, Northern Nevada Construction has been a successful player in the arena of public construction.

It's handled school projects from Zephyr Cove to Eureka.

It's built Air National Guard facilities.

It's handled sports complex projects from Minden to Sparks.

And all those projects, Mike Grashuis says, are a tough way to make a living.

Public jobs call for competitive bids where margins are shaved razor-thin or even thinner.

"A lot of times, the winner is the company that left the most stuff out of its bid,"Mike Grashuis says.

He's joking.Maybe.

And thin margins don't tell the whole story.

It's expensive to prepare bids figure a couple of employees pulling together figures for a couple of weeks for each significant project and second-place finishers get to eat their entire cost of preparing a losing bid.

Small wonder that Mike Grashuis and his dad want to point their company in the direction of increased amounts of negotiated work with private owners.

That way, they figure, the company and its 25 employees during peak seasons a figure that's doubled in recent years can handle about the same volume of work without adding to overhead.

But more dollars will drop into the bottom line.

The company isn't entirely a stranger to negotiated work.

It's handled six projects for Wells Fargo Bank, and a division of Northern Sierra Construction that handles projects of less than $500,000 including some tenant improvement work was a strong performer last year.

"We've got our foot in the door," says Grashuis as he gears up to make sales calls and build the connections that will give his company a bigger opportunity to sit at the table with private owners.

He doesn't delude himself, however, that negotiated work is a land of milk and honey.

The negotiating that goes on behind closed doors, Grashuis says, puts just as much pressure on margins as a public bid process.

At the same time, the company wants to continue building its position in some less competitive aspects of public works where margins are higher.

Northern Sierra Construction is a specialist, for instance, in renovation of historic buildings, a field in which it typically faces competition from only a half dozen other firms.

The company handled a piece of the renovation of the Fourth Ward School in Virginia City and won the contract for renovation of the Lander County Court House.

Grashuis says the company also can compete well and profitably on public works jobs in which it can utilize its in-house strengths in general engineering and concrete work.

Those jobs, too, tend to be less competitive than traditional building projects.