Plymouth contractor throws a wide net
Successful entrepreneurs are not typically people with money to invest. They are not always people who are highly educated in finance or management.
More often, they are just people who are willing to work harder than most, and who are willing to take risks.
That’s how Jim Pankow, president of design/build contractor Jim Pankow, Inc., in Plymouth, would describe himself. And that’s how he built his business to become one of the dominant general and design/build contractors in Sheboygan County, venturing as far south as Franklin and as far north as Green Bay.
"My grandfather told me that an education will cost you money whether you go to a college or learn it on your own," Pankow said.
Pankow received his bachelor’s degree in construction by working as a laborer in the industry. His advanced degree came in the school of hard knocks.
"I was lucky to get a high school diploma," Pankow said of his decision to begin working in construction. Eventually, he hoped to become a farmer like his parents, and certainly wasn’t planning to start a business when he built his own home in 1969.
"When I was done, I had an extra two acres next door, and built a house on it to sell," Pankow said.
Then he built more houses – and wound up incorporating in 1977 as Jim Pankow Realty and Construction. Multifamily came next as Pankow developed a fleet of apartment buildings. By 1980, he was constructing his first commercial building – a Piggly Wiggly in Cedar Grove. Even that building – a simple masonry building with a seam metal roof – had its interesting elements. It was the first Piggly Wiggly to incorporate a concrete tile roof over the entrance canopy.
Since then, Pankow and his team have been building – and more recently designing – everything from car dealerships to churches to schools to industrial facilities to restaurants.
Today, Pankow’s company employs 50, and the Associated Builders and Contractors directory lists his firm as taking in between $10 million and $20 million a year.
Pankow seems almost taken by surprise by the direction his career has taken. But Steve Stone, executive vice president of Associated Builders and Contractors’ Wisconsin Chapter, thinks it is no accident Pankow got to where he is.
"I think most of them get into it on purpose," Stone said of constructioneers like Pankow. "They are doers. They love to build things and look over their shoulder at the end of the day and say ‘I did that.’ A lot of owners are former craft-level people who love what they are doing so much — and they are smart. They surround themselves with people who can manage and start their own businesses. That is very common in construction."
Sitting in his pine-paneled office replete with hickory floors and surrounded by his hunting trophies, Pankow could just as easily be sitting in the den of his own home. There is no PC on his desk – just an adding machine.
The desk itself is a simple particle-board job – nowhere near as stately as the workstations the company built for the rest of the office space. Pankow said the firm’s cabinetmakers were still working on his desk.
"It will be made out of black walnut," Pankow said. "They’ll have to bring it in here in sections. It weighs about 900 pounds."
High-end cabinetry and office furniture is a growing segment for Pankow. Since moving to the firm’s current location on Highway O — just off Highway 23 west of Sheboygan – the cabinetry shop is 10 times its former size at 2,500 square feet. The firm doubled the size of its office space from 2,500 to 5,000 square feet. Leased space accessible from the rear of the building allows for additional expansion. The shop has also doubled in size from 7,500 square feet to 15,000 square feet.
Built on common sense
The new office, like most of Pankow’s projects, is a wood-frame and masonry building. But the business itself is built on common sense.
A primary common-sense principle Pankow relies on is — don’t put all your eggs in one basket. Good advice in a market where, recently, various market sectors are being affected by the slowing economy. Pankow has undertaken his share of industrial projects, and several projects his team had been working on for manufacturers had been put on hold. But his work for schools, churches and other sectors chugged ahead.
In the year ahead, if public sector building projects are put on hold, another segment will be there to keep the firm busy.
While construction marketing gurus push the benefits of vertical market specialization, Pankow is running hard in the opposite direction.
"If you are going to get really good at one thing, you had better be in a market where there is a lot of that type of work going on – or be willing to travel," Pankow said.
"There are some contractors who have specialized and do incredibly well for their customers, their employees and themselves," Stone said. "They get hooked up with some type of owner like a fast-food company – or maybe they specialize in building airports. They go after that type of work. They will become known as the contractor for the type of industry they are in. In our area, Westra is known for schools and agriculture/dairy construction. Stevens Construction – at one time — was very well-known for doing multifamily. Marshall Erdman here in Madison is known for their work in the health-care industry. But what Jim Pankow has currently latched onto is diversity."
"I suspect that as the economy fluctuates, they have the ability and the relationships to do work in industry, do some commercial work and some schools and other types of jobs," Jeff Austin, head engineer for Aldrich Chemical, Sheboygan Falls, said. Pankow’s firm has been working regularly for Austin since 1991. "That gives them the opportunity to stay busy and keep their crews working."
Stone stressed that Pankow’s rural location was not necessarily a hindrance in becoming more specialized – particularly as the firm grows.
"Specialization becomes easier the larger a contractor gets and the more they are able to travel," Stone said. "Look at Kramer Bridge in Plain or Lunda in Black River Falls. They travel all over the country to build bridges. Urban or rural doesn’t rope a contractor into one method or another."
While the idea of vertical specialization is to become more competitive and appealing to clients in a particular industry or a specific type of project, Pankow and others in the industry point out that the reverse can also be true. Stone stressed that aligning with a single vertical market can be hazardous.
"One of the negatives to specializing in an area is that if that market starts to dry up, if the schools stop building, you have to regroup and find something else," Stone said. "But if you go into diverse types of work, you can jump from market to market and be very creative with your response time."
"We haven’t really locked into just one thing, and I think that’s good," Pankow said. "In talking to a prospective client, it means we have a lot of different eggs in our basket. If they need a car dealership, we’ve built those. If they need a church built, we’ve built those, too."
One thing that Pankow had never built before was a Hindu Temple. But fortunately, when the Hindu Temple of Wisconsin solicited bids for a structure at N4063 W243 Pewaukee Rd., Pewaukee, his competition hadn’t, either.
The contractor selection committee found Pankow’s diverse background appealing.
"We wanted to see the contractor’s previous history," Ramesh Kapur – head of the selection committee and president of the engineering firm Kapur & Associates, said. "Since the temple was a unique project, we wanted to work with a contractor that is very flexible and easy to work with. It is not an ordinary church or normal building. We had a lot of religious requirements."
Those religious requirements cut to the heart of the structure. Pankow’s team – guided by Kapur’s architect – constructed the project so pedestals holding Hindu idols would project through the floor and come directly in contact with the soil. The floors of the restrooms were also raised 30 inches above those of the worship area.
Kapur said the committee was primarily concerned with the quality of the contractor’s previous work and the cost – but that cost was not the final word.
"We called his previous clients – and we (Kapur & Associates) had worked with him in the past on other jobs and we knew the quality of the work he does and the people he has. We got very high recommendations from his previous clients."
The $4.5 million, 24,000-square-foot temple project was completed in September of 2000. Pankow also completed an adjacent 4,800-square-foot Jain temple. Jainism is a sect related to Hinduism.
Apart from allowing Pankow to position himself on his flexibility, being an opportunist has come in handy in recent months as smaller jobs with existing clients have been crucial. Pankow’s firm is undergoing a remodeling project for Sartori Foods. The 2,750-square-foot remodeling job required careful coordination so the manufacturer of specialty cheeses could remain completely operational during the four-month project.
"Sometimes, when things slow down, it is nice to have those jobs to keep your people busy," Pankow said.
Success by design
Another way Pankow has added to billings has been to widen his scope of services to include a project delivery system that has been growing in popularity — design-build. This development, too, came almost by accident.
"That’s something that kind of evolved," Pankow said. "We hired an individual who happened to be an architect. We hired him more to get on the bidder’s list with various design firms – trying to get jobs. Gradually, we came across situations where a prior customer had a small job and didn’t want to bring in an outside architect."
One of the attractive things about design-build is that it allows contractors to negotiate a scope of services and a fee with their client rather than submit hard bids on a scope of services that might or might not be very complete. Less scrupulous contractors can win out by low-balling the bid and then adding items to the scope of services after the fact. That can be more of a problem when the market shrinks and competition heats up for a smaller number of jobs.
"Two years ago, I decided to make a concerted effort to increase the volume of design-build projects," Pankow said. "I was frustrated with the number of low-bid scenarios."
While stressing that competition among design-build contractors was fierce as well, Pankow said the firm had enlarged its design department to include two architects and two draftsmen. The firm is currently working to recruit an additional draftsman.
That’s despite the fact that Sheboygan and its outlying areas are conservative, and businesses in the area are not exactly flocking to the design-build concept.
David Johnston, director of public affairs for the Design-Build Institute of America in Washington, D.C., said both economic and cultural trends determine how quickly the design/build delivery system catches on. A primary driver is the speed demanded in the construction process. According to Johnston, a slower economy means manufacturers and others are not as interested in the compressed project timeline design-build can deliver.
"There are a number of factors," Johnston said. "The economy has slowed down considerably since Y2k. With that, the need to have products rushed to market rapidly – it is just not there. Businesses are being more deliberate with how they go after their projects."
State and federal government entities have been slow to enact laws allowing negotiated design-build contracts for their projects. But the private sector has been hamstringing the trend as well, according to Johnston.
"There is a culture out there," Johnston said. "Some people have been trained as constructors and others as designers. They just don’t want to lean towards the collaborative effort necessary to make design-build work. They are thinking ‘I want to protect my profession.’ The project is secondary to the profession."
"The jury is still out on that," Pankow said as to whether design/build would catch on. "We are in a conservative area. Not everyone is sold on that type of delivery. So you still see a fair amount of bid work out there."
But having designers on staff can help with even small projects – like construction of a Culver’s restaurant.
"Culver’s has its prototype building," Pankow said. "Our architectural staff checks it, modifies it for local regulations and design criteria of the different municipalities. And each site is different, so you have the site to develop."
Those simple design elements would require Pankow to seek an outside registered architect were it not for his own in-house design department.
Some contractors who steer clear of getting involved in the design business claim that having an in-house design department is a disincentive for architects to include a contractor in bidding lists on their projects.
Pankow acknowledged that situation was a concern of his.
"It is a risk we considered when we did it," Pankow said. "It is not something that is easy to quantify because design firms will not come out and say they are not including you on a bidding list for this reason."
Johnston and Kapur did not think that eliminating design/builders from bidding lists was very likely a factor for a company like Pankow’s. Kapur stressed that for government projects, it is the law that bidding is open and it is the law that all bids are to be opened.
Even for private work, the owner has more power than the architect, according to Kapur.
"The control is in the hands of the owner," Kapur said, implying that awareness and preference among owners could trump a biased architectural firm. "The architects don’t have that much control. It could happen but it is not too common."
Really wanted to farm
Running a business is about achieving goals through intelligent risk-taking – not giving them up.
Once his business was launched successfully, Pankow took a shot at his dream of farming.
"About 10 years ago, I sold some stock to two individuals in the office and I sort of semi-retired," Pankow said. "I started raising elk and buffalo, and split my time between construction and that business."
Pankow said he enjoyed his livestock business, and that it was profitable. But the transition did not take. Before too long he was back in the office full-time along with his minority stockholders Gary Gartman and Rob Hutter.
"After a while, three years ago or so, I really missed being more involved in construction. Or maybe I just got the other idea out of my system."
Regardless of whether he is farming or building, Pankow seems to enjoy the ability to buy freedom through delayed gratification and hard work.
"When I was first starting out, some of the people I knew gave me a hard time because I couldn’t do things like dart leagues or bowling," Pankow said. "I had to build this business. But in the end I think it was worth it. I’ve been able to hunt in Alaska several times. That’s something I wouldn’t be able to do otherwise."
Sidebar – Life Lessons from Jim Pankow
"My grandfather told me that an education will cost you money whether you go to a college or learn it on your own," Jim Pankow said.
Here are a few things Pankow has learned about what it takes to succeed as a contractor:
1. Stick to your word. "If you agree to do something for a specific price – and something happens to increase your cost – work a little harder to make up for it instead of going back to the client with your hand out."
2. Be a risk taker. "You have to be a person who likes to take risks … who likes to walk out to the edge of a cliff just to see what your reaction would be. If you don’t get satisfaction from that inner feeling, you should think twice about getting into construction. Construction parallels farming in terms of risks presented by things like weather."
3. Good people attract good people. "I was fortunate to be able to attract some good, hard-working people in the beginning. They, in turn, have attracted people with similar values. After all, if you are good and conscientious about your job, that is probably the type of person you hang out with."
4. Let your people work. "Hire top-quality people. Give them what they need to do a top-quality job, and then let them go out and do it. One thing almost every client has told me is ‘Your guys are always working. They’re not just standing around.’ If you can accomplish that, you will be around for a long time."
Sidebar – From soup to nuts
A look at projects completed by Jim Pankow Inc. show the Plymouth contractor truly does play the field. From pristine food processing facilities to rustic horse barns, design-build and hard-bid, Pankow works as a true generalist.
Even in working for a single client, Pankow’s diverse strengths can be helpful, as is the case of his longstanding relationship with Aldrich Chemical of Sheboygan.
"The first job they did for me on the site was back in 1991," Jeff Austin, head engineer for Aldrich Chemical in Sheboygan Falls, said. "But I think he did some work here before that."
Aldrich is an arm of Sigma Aldrich, a $1.2 billion biochemistry manufacturer and distributor with 6,000 employees worldwide, 250 of whom are in Sheboygan Falls. Austin said projects Pankow has been involved in are open-bid situations, but in each case, there are a number of factors that determine which contractor is chosen. A major company in a dynamic market like biochemistry has a regular need for contracting help.
Pankow is currently involved in a 5,500-square-foot expansion on one of Aldrich’s production buildings. The job entails eliminating some loading docks and building in structural steel, concrete, masonry and sheet-metal siding.
"What they have been able to do for us has been a variety of things from structural steel, masonry work and also the coordination of some of the other trades," Aldrich said. "They are able to bring a lot of skills to the table."
Great Lakes Cheese
Plymouth
In 1989, Pankow was the general contractor for an 89,000-square-foot cheese manufacturing facility. Construction details included four inches of insulation sandwiched between double-block walls. As is the case with other food industry projects Pankow is involved with, United States Department of Agriculture regulations must be observed. Pankow’s firm was asked back to complete a 40,000-square-foot expansion in 1994.
Genuine Mechanics
Sheboygan
Pankow is handling this 3,293-square-foot structure as a design-build project, scheduled for completion this month. Construction of this auto service facility requires the contractor work within close quarters as the new building is within 30 feet of an existing one, but is 6 feet below grade.
St. John’s Evangelical Lutheran Church
Newburg
Pankow executed plans prepared by Excel Engineering, Fond du Lac, to build this 12,592-square-foot church. The nine-month project was completed in January. As some sectors like manufacturing slow down, churches have continued to be an excellent market.
Taco Maker Restaurant and Convenience Store
Plymouth
This 5,572-square-foot design-build project took place in a seven-month timeframe, and was completed in December of 2001. Pankow’s cabinet shop crafted the cabinets and countertops.
Kettle Moraine Veterinary Center
Plymouth
In March of 2001, Pankow designed and built a 3,812-square-foot addition to an existing clinic – while the clinic remained in operation.
Howards Grove High School
Howards Grove
Like most jobs in the private sector, this was a publicly bid project and Pankow worked with plans from Stubenrach Architects of Sheboygan to construct this 114,400-square-foot school building between 1993 and 1994.
March 1, 2002 Small Business Times, Milwaukee
