A&K: Balance is the focus in downturn
The balancing act involved in shrinking a company, Bart Hiatt says, has proven to be just as challenging as the balancing act in growing it.
A&K Earth Movers Inc., the big Fallon-based contractor that’s been owned by Hiatt’s family for more than 50 years, has reduced its workforce to 125 these days compared with 275 at the peak of the construction boom.
At the same time, the company has whittled its fleet of equipment to keep its overhead in line with annual revenues that now run about $30 million, down from $50 million at their peak.
“It’s hard to get your payments down quickly,” says Hiatt, the plain-spoken president and general manager of A&K Earth Movers.
And it’s all the trickier, he says, because the company needs to keep the right mix of equipment on hand to successfully bid on the trickle of jobs that surface during the recession.
Because bids are so competitive on public works jobs which account for much of the business these days the cost of renting equipment can be enough to knock an earthmoving contractor out the running, Hiatt says.
The company also relies heavily these days on Cashman Equipment, whose Reno maintenance operation pledges timely delivery of Caterpillar parts to A&K to reduce unscheduled downtime and works to provide regular maintenance services to keep the fleet going.
Much of the work these days is tied in one way or another to government funding, says Hiatt, as he lists recent jobs:
* Improvement of the Fallon airport, funded by the Federal Aviation Administration.
* Numerous jobs at Naval Air Station Fallon, where’s the company’s security clearances mean it’s routinely invited back.
* A project at Schurz, funded by the Bureau of Indian Affairs.
* A geothermal project developed by Ormat Technologies at Jersey Valley, work that’s encouraged by federal incentives.
* A water line at Eureka, a state highway job at Reno, and a water line in Hawthorne …
What’s missing from the mix, Hiatt says, is private sector work installation of utilities for new subdivisions, development of retail sites, sales of drain rock and structural fill from its pits in northern Nevada.
Its biggest private-sector job in recent months was site preparation for the new Walmart Supercenter at Glendale and U.S. 395 in Reno.
The company doesn’t expect the northern Nevada construction market to rebound anytime soon maybe growth of 3 percent a year for the next couple of years, 5 percent a year after that.
That sort of market will place a premium on squeezing costs.
Hiatt and his brothers Mike and Scott, vice presidents of A&K Earthmovers question every expense these days. A reduction in the number of radio-equipped vehicles, for instance, trimmed operating costs by several thousand dollars a month.
The three brothers took over management of the company in 1987 after the retirement of their father, Kelly, a founder of A&K in 1957.
In its early days, A&K focused largely on agricultural projects and land-leveling around its home turf in Churchill County, and Kelly Hiatt often claimed that the company never turned a profit for the first 25 years.
When his sons joined the company in the 1970s, A&K began diversifying. It took on underground utilities work, then launched a crushing operation, added paving services and acquired hot-mix plants.
Even in the tight credit markets of the early 1980s, A&K was able to finance that growth with $6 million in financing from a banker who was sold on the close involvement of family members in the business as well as their willingness to invest in all brand-name equipment such as Peterbilt and Caterpillar.
Even after it shrank during the recession, A&K remains one of the five largest private-sector employers in Churchill County.
And it’s likely to stay close to its roots despite advice from outsiders who suggest that A&K should chase business in Texas and other relatively healthy markets.
“It’s hard to move into other markets,” says Hiatt.
Instead, the company looks to build its future by doing what’s always done but doing it better.
“We’re going to be leaner, and we’re going to be more efficient,” says Hiatt. “Our team is stronger now, and we’re smarter.”
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