For over thirty years, Allstar Construction has been evolving into a specialized contractor, whose niche market includes the building of high-end homes, building maintenance and insurance restoration.
The company prides itself on being able to tackle some very challenging and detailed projects. However, the drawbacks to this industry are that the necessary skilled labor is very difficult to come by. We spoke with President Grady Stephens about the nature of this business and what effect the economy has on it.
Allstar is known as an extremely high-end new construction exterior contractor. In Minnesota, these premium custom homes hit the market with an average value of anywhere from $5 million to $20 million. Allstar’s specialty is the exterior work. For example, on one of these homes, it would work on a $650,000 slate and copper roof system, or a $1.5 million exterior masonry package.
Allstar was launched in 1979 by Rob Vassallo who had quite a knack for recognizing and retaining the talented people. Many of his hires are still with the company to this day and are in fact now running it. People like Pete Carlson, Adam Rametta and Stephens were all hired by Rob right out of college. Stephens started with roofing and then ran two different divisions of the business before owning it.
“In the beginning, it was a roofing company,” Stephens shares. “The guys that own it now expanded to other facets of construction as time progressed. We started to buy new companies and expanded from there, which has enabled us to become a major player in the industry.”
There are several construction companies that operate within this niche market. “I count about seven really high-end builders, but, essentially, we work for all of them,” explains Stephens. “If there are three different companies bidding a project for the homeowner, then they see our roof bid three times. For each company that they have bidding on that house, we are the preferred roofer for that vendor. So, we almost get these jobs by default.” Allstar’s price remains the same regardless of which company wins the contract.
And the company stays busy. It is working on multiple jobs at any given time; as of mid-July, it had eighteen different projects in production.
Currently, it is working on a project in which the specifications called for an elite slate product from Vermont that had to be mined and manufactured to a particular thickness. “So they went and mined it and ended up producing a great product. Black Diamond Slate is a company out of Georgia that built the project for us before shipping it up here.”
The truly difficult aspect of jobs like this, Stephens explains, has to do with the products. One project uses a product known as Rheinzinc. All of the metal on the house, including the roofing, is of Rheinzinc material, a very unusual product to use in residential applications. All of the material was shipped to Allstar’s in-house metal shop to be fabricated.
“We sent our guys to Rheinzinc school to learn all about the product. They had a week long training session and then, a month later, another two-day session, followed by another two-day session,” Stephens explains. “They went to Chicago to learn about this product and how to weld it, fabricate it and what products to put underneath it in order to make it last in Minnesota.”
This house will have a value of approximately $10 million once completed. The highest valued residential project the company has undertaken was worth roughly $50 million.
Allstar has one of the most skilled masonry teams there is. The team works on commercial and residential projects on full-veneer masonry (the stone is typically four inches thick and
installation requires a supporting foundation or footing) or block and brick (concrete blocks as a structure for a brick veneer).
Regina Hiller runs the masonry division that runs two separate masonry crews. For about fifteen years prior to working for Allstar, she worked for one of its distributors and suppliers. “We identified that she was the right person to run the division. She has been with us for three and a half years.”
The metal shop, with state-of-the-art fabrication equipment, has been doing sheet metal work and manufacturing custom roofing products for the company for many years. Prior to the creation of the metal shop, the bulk of that work was farmed out to other metal shops in town.
“We finally came to the conclusion that it made sense for us to just purchase the equipment and do it all in-house. That way we have control over the quality of our product, along with control of the timing of receiving the product that we needed. Once we bit the bullet on the equipment, we found the right guys, hired the manufacturer of the equipment company – which was Tennsmith out of Tennessee.”
Allstar had representatives of Tennsmith install the equipment in the new warehouse and then train the employees. Every year, representatives return to help to train new staff how to use the advanced computer technology that controls all of the sheet metal bending and braking equipment. The plan is to purchase more of this type of equipment and to include new machines to produce copper rain gutters in-house.
Currently, Allstar is licensed to work in seventeen states. “We will be doing more and more work out of state,” says Stephens. “We also do a lot of work in Wisconsin, North and South Dakota. As well, a lot of Minnesotans own homes in Arizona, which has become another market for us.”
Stephens says that the company is looking to hire the next generation of workers. He sees finding new, young talent as a very difficult task. It is a different skill set needed now than that was traditionally required. More and more, even in the construction industry, advancements in technology mean that much of the equipment is being run by computers.
“It’s a good integration for those young guys coming out of college, to step right into place in a company like ours, because we have the technology and equipment that can be run by that age group. In twenty years, we want to be double the size and double the workforce – which now sits at 190 people. We will also be expanding on our present space with more offices and warehouses.”
The biggest challenge that Allstar has is finding qualified labor. Even to find qualified outsourced labor is difficult as it can be more trying to contract it out, than it is to hire and train. There is a huge demand in this industry for skilled labor but it is just not being filled, especially, as Stephens points out, in the Midwest. The company has tried using recruiting agencies but these have not produced the desired results. Career fairs are one way to recruit, as are internet advertisements in places like Craigslist.
“When it comes to these skill sets, we look for qualified groups coming out of college programs with construction management degrees and CAD degrees. We are also looking for skilled laborers in the field: from carpenters, to sheet metal guys, to masons.” Allstar then has to weed through a lot of applicants to find those few with a good work ethic.
Stephens foresees the overall real estate market leveling although commercial construction is currently booming while residential continues to grow. “It’s a difficult market for anybody to track because they don’t understand the high-end niche market,” he says. Allstar actually expanded by twenty percent each year throughout the Global Financial Crisis. “One thing that you can always count on is that the rich get richer, and the guys that sell their companies continue to retire and build big homes. We feel that is why our business is recession proof.”
“The key to our success, and to what our success has been, is the employees of the company. We have an unbelievable group of people here, and, with that, I see the sky as the limit!”