PCL's Paul Douglas on sustainability, the year ahead, and his new role
When Paul Douglas was formally introduced last November as the new president and CEO of the PCL family of companies, Ross Grieve, the man he was succeeding, described Douglas as having "all the tools and experience to lead this company."
He had large shoes to fill. Grieve helped grow PCL into one of North America's largest construction firms with 3,300 full-time employees and annual construction volume in the neighbourhood of $6 billion.
In an interview with Alberta Construction Magazine editor Chaz Osburn, Douglas discusses a range of topics, from the Edmonton-based company's commitment to green building to the year ahead and growth areas.
TRENDS COME AND GO. THE GREEN BUILDING TREND SEEMS TO BE HERE TO STAY. WHAT IS PCL DOING ON THE ENVIRONMENTAL FRONT?
This one continues to gain momentum-and rightfully so. Everybody sees that it's just the right thing to do. So it's certainly not hard to get your employees engaged in doing what's right. And once you get certain owners' heads around the fact that it's not only the right thing to do but that there are some long-term economic advantages doing it, wellâ€¦. When financial rationalization and social rationalization come together, there's tremendous momentum. That's what we're seeing.
PCL recognizes that. Our people recognize it. Like many things we do, we brought people from all over our organization throughout North America together-particularly those with a strong passion in [the environment]. We have sustainability champions in each branch. They were very motivated to research, understand, recommend, and promote sustainability within their branches. That task force came up with a number of recommendations that we've had for a number of years, including a logo to promote sustainability from within and externally.
We have some 324 [Leadership in Energy and Environmental Design, or LEED] accredited professionals in the organization. On all our projects we like to have at least one LEED accredited professional to work with owners, designers, and our own team.
HOW DOES THE PROCESS WORK?
It's never one way. There will be certain clients-particularly private clients-who say, "Gee, what it is going to cost me to have a sustainable building?" That opens discussions over things like: will this be a 30-year facility for you? For those owners that intend to be around a long time you can explain the various benefits of sustainable construction and can tell them certain upfront capital costs and potential life [of the building] savings. There's such a menu of different options you can explore.
PCL was the first private entity to build a LEED-Gold facility in Alberta-our Centennial Learning Centre in 2006. We are since building all of our facilities throughout North America to LEED Gold standards. We are just going to be opening one in Bakersfield, Calif., and we're looking at another expansion here on the [Edmonton] campus that we'll make a decision on in April.
HOW IS THE YEAR SHAPING UP FOR THE COMPANY?
This fiscal year is mostly influenced by what happened last year. With 2009 being one of the toughest in our industry's history, in 2010 we're building the work we picked up in 2009. It will be one of the tougher years that PCL has had in the last decade plus, but it's still going to be very healthy. Our teams did an amazing job of acquiring a substantial amount of new work-$5.2 billion worth of new work in 2009. That was down from $5.9 [billion] in the year previous. It still leaves us with a substantial backlog of $6 billion and when we're billing $6 billion you know you're going to keep busy.
THAT'S REAL MONEY.
Yes, it sure is. But what we all recognize is that it was acquired in tougher times. The work mix was different. Competition [was] intense. Therefore there's some pressure on the margins and the return to shareholders won't be quite as good in 2010 as in 2009 or those earlier years. That's a realization of the cycle of the business. The important thing is to stay in the box. Stay positive. Continue to look for opportunities to set the stage for the next turnaround.
WHAT HAVE YOU IDENTIFIED AS GROWTH AREAS?
Being sectorial diverse is something the great leaders of our past started, having lived through some ups and downs. Passing on that knowledge, they set up the company to be sectorial and geographically diversified. The commercial and institutional buildings world as we call it has really dominated the company for many, many years-malls, shopping centres. Institutional would be universities, hospitals, courthouses, and social infrastructure. That has really dominated and still makes up a substantial part of our overall portfolio.
To diversify more fully we want to be able to grow both the heavy civil side and the heavy industrial side of the business so that during different cycles not all markets will go down at the same time and not all sectors will.
If you're geographically and sectorially diversified with a good, balanced portfolio you'll be able to withstand the hits.
Believing in cycles, we made the plan at our March 2008 strategic planning session to continue to expand our heavy civil and heavy industrial to build a more balanced portfolio-our mutual fund of work.
We were already strong in Alberta but we know we can expand in Canada so we're focused on western Canada. We're expanding into industrial opportunities in Saskatchewan and B.C. In the U.S., one particular target area [where] we want to grow our industrial group is Texas.
YOU'VE BEEN CEO FOR JUST A FEW MONTHS NOW. ARE YOU COMFORTABLE IN THE NEW POSITION?
Yes. There haven't been many surprises. We've had a long transition. I've been working alongside Ross [Grieve, now PCL's executive chairman] for 20 years, 12 years in his role as CEO, then an 18-month succession. There was a flurry of activity as our year ended [last] October, but things settled down in December and I started to see what normal in this role might be. So far it's what I anticipated.
HAS THE PROBLEM OF NOT HAVING ENOUGH QUALIFIED WORKERS TAKEN A BACK SEAT TO THE RECESSION?
You would think that there would be more qualified trades people available due to the recession. The reality is that we are still struggling to find enough workers for certain skilled trades. Most of the unemployment that has happened is in the manufacturing business and a lot of those trades can't just move into jobs as electricians, welders, pipefittersâ€¦without extensive retraining. Therefore, for some trades, we're still fighting for temporary foreign workers, which sounds crazy when unemployment has climbed as high in this country and down in the U.S.
YOU'RE A CEO WHO CAME UP THROUGH THE RANKS. HOW HAS YOUR BACKGROUND PREPARED YOU FOR YOUR CURRENT ROLE?
The core of our business is definitely [centred on what happens in] the field-the guys who build the jobs that the office bids and estimates. Understanding that core is key. If you don't know what your core business is, it's pretty easy to get distracted. I think being a labourer and a field engineer and a superintendent and understanding what it takes to build a job and what I need to build that job allows me to make sure that we are not only a service organization to our clients, but also a service organization to [those in the] field. I can help make it a better place to work and hopefully attract the best people to come and work for us.
One thing I learned in the field was you do not put off today what you could do tomorrow. You get it done. It was ingrained in me. That's not a bad [philosophy] to bring in to the office and into the chair of the CEO. In the field you see that it enhances your productivity, it reduces cost, it accelerates schedule. All those things can apply to everything we do as a business. And it's amazing what happens tomorrow that could've really messed you up had you decided to put it off.