Name: Paul J. Choquette
Position: Chairman, Chief Executive Officer, Gilbane Building Co.
GILBANE’S Chairman and CEO Paul J. Choquette relaxes in his office.
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PBN: You just won a prestigious entrepreneurial award, which seems somewhat strange considering that Gilbane has been around for years.
CHOQUETTE: That’s what I said when I received the honor up in Boston. I said isn’t it terrific that a 127-year-old company could be so honored, but I think that’s a characteristic of this organization, that we are looking for change all the time. We are a different company today than we were last year and we’ll be different next year than this year.
Doesn’t that strike at what business ought to be doing.
Reinventing itself all the time.
When you lose that spirit?
You begin to whither and die.
You became executive vice president in 1975. We’re 25 years later. How has this company changed and how do you expect it to change in the future?
In terms of change, I think the variety of services that we offer our customers is one of the most dramatic changes that has occurred since 1975. In 1975 we were essentially a general contractor, building buildings for customers. We are much more than that today. We offer relocation services, we offer strategic alliance services. Our real estate company is joined at the hip with our construction forces, so that the spectrum of services we can offer our customers, from soup to nuts is dramatically different. The second big change is the whole world of technology as it’s come to Gilbane. We’ve made tremendous investments over that time frame. Getting back to 1975 we could see what computers could do for us – even as long ago as 1975. Today it’s dramatic what’s going on in this organization in terms of Web site development, in terms of instant communication with our customers, in terms of tying our customers and ourselves inextricably so that we are singing to the same tune all the time. I think we have developed what I would call a professional management approach to our business, while maintaining a family owned flavor and culture. That’s not always easy to do. We’ve mixed some family people. The deals are the same for family people as they are for our other professionals. Compensation is the same, incentives the same, so we have a good mix of some family people, but predominately outside family people who are running this business today. Where we were a central organization in 1975 with my uncles controlling the business, typical of that kind of enterprise as it existed in 1975, today, we are a decentralized company, operating all around the country with senior people running those units having the power to make decisions. We work with them, support them, but it is a very different organizational structure than it was in 1975.
How many employees?
Close to 1,300.
How many in Rhode Island?
Maybe 350.
Those mostly corporate people?
No. We try to keep our corporation organization, lean. Not mean, but lean. We’ve got 30 corporate, the bulk of them are in financial and information technology. We don’t want to duplicate what’s here in corporate with what’s already out there in our regional offices.
How has technology changed this business?
It’s just given us instant access to data. I would suggest that construction, almost more than any other business, needs that kind of instant access because decisions have to be made at the job when an issue arises. It’s not something people take back to a committee. We do our jobs now, developing a Web site, the architect, the owner, the principle subcontractor, ourselves, they are all tied in together, communicating in real time through a Web site, and so we don’t wait for decisions. There’s no FedEx, it’s all bang right through the Web site electronically, fed to the jobs and the jobs have the authority to carry forward the necessary decisions that come out of those communications, so it’s a wonderful way of giving us the feel of the pulse of everything that’s going on in this organization. Personally, I know what’s going on. Each of our regional offices has its own Web site. Each significant job has a Web site. I can plug in to any job in this company, just by that little old computer. So I’m better informed today by far than I was five years ago when the company was a third the size it is today.
Are you involved in e-business, e-commerce?
We are. We continue to explore how a portal type of Web site could be utilized within our industry in general. We’ve seen it happen in automotive. We’re working with some of our major customers to see how it might work in construction. It is a very challenging industry because we are so fragmented. When you think about a construction project, you have the owner, the construction manager, then you have to have 40 separate subcontractors all on that construction site. With a changing workforce that may be there today, but not next week. So I think it is more of a challenge than some of these more stable, consistent industries.
As I understand the automotive one, Ford and GM were separate initially, but came together to order bulk parts. Is that what you’re envisioning for the construction industry to work with competitors to buy in bulk?
We’re looking at that possibility. We’re not certain it’s going to happen. There are a half a dozen efforts right now, kind of pilot projects right now going on to try and make this kind of thing happen. We’re not sure which one is going to win the race. The other thing (is that) in our industry all the different architects are designing buildings, specifying products to go into buildings. It’s not a business that lends itself to that kind of bulk decision that automotive does. You’ve got all those automobiles spinning off the factory. We’re playing with it right now. We want to make sure the train doesn’t leave the station. We’re not convinced yet there is going to be a train.
Gilbane is Rhode Island’s largest private company. Any thoughts that Gilbane would ever become a public company?
No. We like the way it is. The family is set up to have it go on for the indefinite future the way it is. We think our people like being part of a family business. They know who they’re working for. We have no need for capital. We have a solid balance sheet. We can fund our growth that we are all committed to.
Committed to Rhode Island?
Absolutely. I’ve often thought, ‘what if the company had been situated in New York City or Boston?’ We might have grown faster, but I don’t think we would have had the deep roots that we’ve grown here in Rhode Island. That little plaque up there. I don’t think I’m ever going to take it down. My great grandfather was president of the Chamber of Commerce, my uncle was the president of the Chamber of Commerce and I’ve been the president of the Chamber of Commerce. It’s kind of nice to think about that kind of a family involvement and commitment over generations and now we’re looking to encourage the next generation to look to come into the business as well.
We often hear about how difficult it is to do business in Rhode Island, and some efforts in the General Assembly. Are you comfortable that things are getting better in this state?
I think that there’s a great realization that there’s the stake that we all have, not just the quantity of jobs, but the quality of jobs that we can attract to Rhode Island. Look at the great success stories we’re reading about in the last few weeks – CVS and Fidelity, Fleet. Those were General Assembly initiatives to encourage financial services companies and other employers to create the jobs in Rhode Island. And it’s worked. There’s the hard evidence that if you put those incentives out there, companies, particularly those that already have some relationship – well Fidelity didn’t have a relationship in Rhode Island- but certainly CVS and Fleet had strong Rhode Island connections. It worked. Workers’ compensation revision worked. There’s a few other things they need to do to change things ultimately.
What do you see as the key issues that the government has to deal with?
I think they do have to deal with the issue of tax parity between Rhode Island and Massachusetts, the income tax. I’m disappointed they didn’t make the change on capital gains in this current session. I can see the income tax being a more difficult solution for the General Assembly. I think most people feel, create the absolute most favorable environment for businesses to grow and prosper and this state itself – the surpluses will grow and other revenue and resources will grow. There’s a reluctance to make that bet right now. We do have a substantial percentage of our population that is still struggling, even in these good times. So I have great political sympathy for the dilemma the General Assembly faces on the issue. But what’s going to happen is Massachusetts is talking about reducing their rate even further. When that happens the gap is going to be even more substantial. Then they’ll have no choice but to take action.
In your experience when a company makes a decision to move somewhere, who is making that decision? Are you talking the top three or four people in the company who decide based upon where their quality of life will be better?
I think so. Historically, when companies have moved out of New York City to New Jersey or Connecticut, it has always been to where the CEO lives. It’s been repeated time and time again, where those top people are. It really drives those types of decisions. You can make numbers justify almost anything you want to do. In the end it is a gut feeling on the part of the senior people. I’ll never forget Digital was going to come here. I was very involved in the Port Authority for Governor Garrahy. That was going to be our big home run. Not enough senior people at Digital had the commitment to Rhode Island.
