Q+A: Las Vegas contractor talks city’s colorful past, surviving recession, stepping aside

Frank Martin, founder of Martin-Harris Construction, one of Las Vegas’ biggest contractors, recently sold the company and is poised for retirement within 2 years on Thursday, December 10, 2014.

In the late 1970s, while the mob ran the show at Las Vegas casinos, general contractor Frank Martin was renovating a condo at the Las Vegas Country Club. He gave his client, a pit boss, an invoice every Friday at 4 p.m. And each time, the client strolled into a back room, calmly walked out with a shoebox stuffed with cash, and paid, no questions asked.

“A shoebox full of $100 bills. And it didn’t make any difference if he owed me $500 or he owed me $5,000. He’d count it out in $100 bills,” Martin said.

Martin, the 67-year-old co-founder of Martin-Harris Construction, helped build Las Vegas, turning dirt lots into schools, office and industrial buildings, and retail centers. He rode the wave as investors took Las Vegas from a fast-growing gambling town to one with out-of-control — but doomed — expansion.

With his cowboy boots, blunt talk, and thick, diamond-encrusted gold rings, Martin is one of the many characters who shaped the valley. The former carpenter built a two-man contracting business into a behemoth with, at its peak, almost 1,000 employees and nearly a half-billion dollars in annual revenue.

But during the recession, his company, along with practically every other contractor, was in a downward spiral. As work dried up, his revenue shrank and he shed hundreds of workers. Among other problems, a time-share tower near the Rio that Martin was building got mothballed by its owners.

“It was like somebody had reached up and turned a faucet off and there wasn’t a single drop of water coming out of that faucet any longer,” he said. “We had hundreds of millions of dollars worth of projects just evaporate — evaporate into thin air.”

But now, with business improving — the time-share tower is finished and poised to open soon — Martin is ready to call it a career.

He recently sold his company to Big-D Construction Corp., a builder with offices throughout the West and $600 million in annual revenue. The sale was announced Nov. 14. Terms were not disclosed.

“Not even my accounting staff truly knows what the number is,” he said of the price.

He likely got a big chunk of change. Martin’s company, founded in 1976, is a fraction of its size last decade but still robust. It has about 200 employees and $200 million in revenue, making it one of the largest construction firms in the valley.

Martin will remain at the helm through fall 2016 and stay as an adviser under a five-year consulting agreement. The sale is not expected to result in any layoffs or affect current contracts, according to Martin. His company also will keep its name.

Martin, who moved to the valley as a high school freshman in 1961, has known or worked for many big-name Las Vegans. He talks fondly of developer Irwin Molasky, bash-and-crash former Clark County Sheriff Ralph Lamb and his late brother Floyd Lamb, a powerful politician who got jailed for attempted extortion.

“Irwin is a man of integrity, a man of his word,” Martin said. “Ralph Lamb — a man of integrity, a man of his word. Floyd Lamb — a man of integrity, a man of his word. He might have gone to jail, but he was a man of his word.”

VEGAS INC recently sat down with Martin in his office to talk about the sale, the recession and the construction business. Edited excerpts:

So, why sell the company?

I think the major reason was the timing seemed right. We’re having the best year in five or six years, as measured by revenue, profit and the pipeline of work we’re pursuing. Our pipeline is at one of the highest points it’s been in a long time. It’s easily $300 million to $500 million deep. Our backlog — projects we have under contract and are working on — has been very strong this year. It’s remained at around $120 million to $150 million. The people at Big-D cold-called me in October 2013. The CEO, Jack Livingood, obviously knew that I had gotten a little age on me and wanted to know what I was going to do with my company. It took us 13 months to put everything together. I had to make up my mind that I wanted to sell, then I had to make sure if that was the right company. It was a good time to sell. The market is good, and the company I sold to is an outstanding company.

Business is good but it was still bigger before the recession.

Absolutely. In 2006 and 2007, our pipeline was anywhere from $500 million to $1 billion deep. We had revenue from $350 million to $470 million a year. That dropped hard.

Was that in large part because of the time-share tower?

To a degree, though smaller projects also fell off. The time-share tower was a huge hit for us — that got terminated Nov. 8, 2008. I’ll never forget that day as long as I live. That project was going to be 40 percent of our revenue in 2009. That went away in one day.

During the recession, contractors nationally started piling into government projects, but that probably didn't last long because governments had their own financial problems. Are contractors still relying on public-sector construction?

For us, we don’t have a single public-sector project going now. Not one. We’ve got several we’re watching and monitoring, possibly with community colleges. I don’t see anything happening in K-8 education because we can’t get a bond issue passed by voters to fund these schools.

Your son Frank “Guy” Martin is a top executive at Martin-Harris. This could be a touchy subject, but I know it comes up with family businesses: Had you talked about or thought about transferring ownership to your son?

Absolutely. I’ll be as straight up with you as I can here. What people don’t understand in a construction company, if I issue a $100 million bond to the Army Corps of Engineers for a project, I am personally — personally — guaranteeing that money to the bonding company. For that kind of risk, you can’t insure around it. Right now we can bond a $200 million project. If I were to transfer ownership (to family), the company would have to be downsized because we wouldn’t have the bonding capability and couldn’t bid the size of projects we do now. It takes generations to build that wealth. I started with five grand in my pocket.

What surprised you the most about the recession? You’ve been through downturns before, but what made this one different?

Two things. The first was how fast it came on. On Nov. 7, 2008, I was fat, dumb and happy. We had jobs lined up going out the door. We had seen downturns before. In 1989, things were going crazy, and then everyone put on the brakes. But in 2008, it was gone. I use the word evaporated because that’s exactly what it did. It evaporated. Most of our jobs we had in progress got finished; only three got mothballed or stopped. The time share was the biggest one. What mainly stopped was that pipeline of future jobs; all you heard was a big sucking sound.

The next thing about the recession that surprised me was how long it lasted. Never in Las Vegas has a recession lasted five years, but it did. Every year, you'd listen to the economists — "Yeah, it's gonna be this by this, yada yada." All it did was just get worse. From 2008 through about 2012, it got worse every year.

When things were really cooking out here, what was your top head-count and revenue?

At our family’s three companies, our top was about $480 million in revenue, and we had 970 or 980 people. That was in 2007 and 2008. Then we went down where, at one point, for all three companies, I don’t think we had 200 people. That all happened in 120 days. That’s why I said it evaporated — it just stopped. It was astonishing.

What about the broader economy now? Things are slowly getting better but they’re not great.

Across the board, it is slow. But I think that’s good. Americans have really, really short-term memories. Our attention span is nanoseconds. With the recovery slowly working up, that keeps it at the forefront of people’s minds a little bit longer. We need to be reminded, consistently and constantly, of the things that put us in that tailspin. There are certain pieces of the market that are recovering. The disturbing part is a lot of the people who got laid off during the recession left the industry. Some of them, it took two or three years to find a job in another industry, and they don’t want to leave.

What does it take for a contracting company to survive and thrive in Las Vegas?

The biggest thing is to be in the community. In our industry, we work ourselves out of a job every day, so we have to keep the pipeline flowing. Business is a three-legged stool: You’ve got to get the customers in the door; you’ve got to do the work; and you’ve got to make sure you can earn a profit. The only time people need a contractor is when they really need one, and the first one who’s knocking on their door at that point generally gets the opportunity. And once you get the job, do a really good job.

You’ve been in Las Vegas a long time. Did you have any dealings with the mob, or work on projects financed with mob money?

We were pretty much never allowed to know. But you had feelings. Some of those guys are still alive here in town.

Business

Share