March 28, 2008

L82 CONSTRUCTION

L82 Construction has come a long way since founder Manny De Melo started up the business with some family members in his home’s basement. The company is marking its 25th anniversary with the building of a new headquarters near the London airport.

Business Success

L82 Construction marks 25th anniversary by building new headquarters

MARY BAXTER

correspondent

More than 25 years ago, in the depths of the 1980s recession, Emanuel “Manny” De Melo found himself out of work after his employer folded. He wasn’t alone; soaring interest rates had left many Canadians within the construction industry in the same position.

Unlike his counterparts, however, this former site foreman and supervisor saw the layoff as an opportunity.

“It wasn’t too hard to start (a business),” Manny quips today. Finding people to work was the easiest part. “No one was employing people; they were laying off,” he says.

There was also a project available – a job his former employer hadn’t finished for Decade Developments.

Today, L82 Construction, the company founded in 1987 and owned by De Melo and his cousin, Fernando De Melo, is a far cry from where it began all those years ago operating from Manny’s basement with the aid of his wife Kathleen.

Indeed, the growing business is on the brink of its third move, to be completed by the fall, to an 11-acre property near London’s airport.

L82 Construction is well known in the London region for its work in site servicing, sanitary sewer, watermain, sewage force main, storm retention ponds and road reconstruction.

Jeremi De Melo — one of Manny’s two sons and three daughters who work in the business — and Scott Hutcheson, one of several long-term employees, describe L82 as a medium-sized business that primarily serves communities in southwestern Ontario.

The company averages $25 million annually in sales, says Manny, with most of those generated from contracts that are rarely above the $10-million mark.

Jobs in recent years include site servicing for a new Home Depot store in London and the city airport’s industrial park, the reconstruction of Grey Street in London and servicing several new subdivisions in the city.

This year, L82 is one of two businesses contracted for work on a major sanitary sewer project in the city’s southeast end.

From the beginning, diversification has been a key strategy, affecting all aspects of the business’ development.

There’s a preference to complete 10 to 15 mid-to-large jobs in a season rather than focusing – and becoming reliant – exclusively on larger contracts, which can be rarer in the province’s southwest.

“We don’t get into MTO contracts where they’re $100 million,” notes Jeremi. Becoming tied up in larger jobs can also make it difficult to provide service for smaller long-term customers, Hutcheson adds.

The company has also diversified its activities by adding to its portfolio equipment rental, demolition, grading and snow removal.

Along the way, it spun off another company in the form of Demar Aggregates Inc. Demar, in its tenth year, operates six gravel pits and is the second largest supplier of aggregates in London.

Diversification also appears to be a key strategy for the future.

“I’d like to see more diversification in the commercial end – get more into constructing commercial developments,” says Jeremi, adding he’d also like to see more focus on work outside of the London region in terms of civic projects.

Manny says diversification will be key to weathering a predicted decline in activity. He doesn’t believe the region will be affected by a full-blown recession as it is too strategically placed, adding that nevertheless, it doesn’t hurt to be prepared.

He credits steady growth not only to a willingness to diversify but to several other factors, such as reinvesting profits into the company over the year and sticking to a motto of service, quality and, above all else, on-time delivery.

An employee retention rate well above the industry’s average of five years or less has also been an important factor in success and the one of which he’s most proud, he says.

Between L82 and Demar, staff levels can reach 85 in summer months. Hutcheson, who has spent 20 years in roles ranging from site surveyor to his current occupation of estimator and project manager, is a prime example.

Nevertheless, like several other companies in the region, L82 is experiencing the impact of Alberta’s economic boom on its ability to retain employees. Those who are leaving tend to be either starting out in their career or nearing retirement, Manny notes.

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