Finance & Business World

As a local construction company, Alberici Corp. has benefitted greatly from the growth of St. Louis.

The company, started by an Italian immigrant, got its break renovating a Boatmen’s Bank branch office in 1918. The family’s name has been seen on cranes at countless local commercial projects, including the Edward Jones Dome and Scottrade Center.

In its 90th year of business, Alberici is riding a wave of strength. Last month, Alberici’s experience building and upgrading auto plants around St. Louis helped it win a $500 million deal to build Volkswagen Group of America’s auto plant in Tennessee.

The Overland-based company, which employs 450 people, has seen revenue growth in each of the last four years and is expecting record revenue of $1.3 billion this year.

But there are challenges on the horizon. The prospects for future construction activity are dimming with the slowing economy, and a legal dispute with St. Louis University has put into question the ownership of the company.

At any given time, Alberici is contracted or working on 125 to 150 projects in the United States, Canada and Mexico. But this year may represent the peak in the current cycle of commercial development.

"We’re seeing that projects haven’t gone away, but businesses aren’t rushing to invest in (buildings that create) productivity gains," said Greg Kozicz, the company’s chief executive and president.

Across the construction industry, demand for commercial projects is softening due to weak economic conditions. Beginning next year, the company expects its annual revenue to decline through 2011.

Alberici also has been dealing with the recent handover of the majority of its

ownership to a longtime friend of the company — St. Louis University — and a legal dispute resulting from this new relationship.

The school received a 70 percent ownership stake in the company when the company’s chairman, Gabe Alberici, died in December 2002.

After a lengthy IRS review of the gift was completed, the university declared it wanted to sell the shares. But the two sides have been unable to agree on the value of the shares and how much financial information SLU should be allowed to see.

As a result, SLU filed a lawsuit against Alberici in late April, claiming the company’s refusal to release certain financial data will keep the school from selling the shares. SLU would not comment on the suit or its relationship with Alberici.

Ideally, Alberici would prefer to buy the shares, Kozicz said. He said the company also would be comfortable if SLU were to retain ownership, which would only strengthen the long relationship between the entities.

In addition to building several projects on SLU’s campus, Gabe Alberici sat on the university’s board of trustees for 24 years and was a loyal Catholic, proudly displaying a picture of himself and the Pope in his office, according to a former colleague.

Gabe Alberici’s will did not stipulate what SLU could do with the shares or limit when they could be sold. To add to the complexity of the situation, while the 5 million shares represent 70 percent of the value of the company, they are nonvoting shares, so control of the company remains in the hands of the Alberici family and the school cannot force the company to buy back the shares.

Still, the potential for conflict with a new owner is a genuine concern for Kozicz.

"Our discomfort would be not knowing if the cultures are as good of a match as the Alberici and SLU cultures are," he said.

This is the kind of uncertainty no construction firm wants to deal with while competing for contracts in an already difficult economy, Kozicz said guaranteed payday loans.

"Our success is driven by our culture and ability to focus on what is a very challenging marketplace," Kozicz said. "To the degree there are non-core distractions that cause us not to focus on our day-to-day business, this (lawsuit) represents an additional challenge that’s not about moving the business forward."

In the spirit of moving forward, the company will not appeal the decision in the court case, Kozicz said. The lawsuit is pending in St. Louis County Circuit Court.

If the situation has been a distraction, at least one client said it has not been apparent in business dealings. For the last 18 months, Sherry Hausmann, president of SSM St. Clare Health Center, has attended weekly meetings with Alberici officials regarding the construction on the $146 million hospital the company is building near Fenton.

"I was unaware of it," Hausmann said of the suit. "They are very focused on St. Clare and providing a hospital to the community."

She added that if SSM were still hearing proposals for the hospital, the stability of the company’s ownership would be considered. Still, she said Alberici’s work on the project has been phenomenal.

The local construction community long has held Alberici in high regard. The company is a trendsetter, said Len Toenjes, president of Associated of General Contractors of St. Louis.

Specifically, Toenjes noted many of Alberici’s local jobs lead to projects in other regions and countries. Its work on local auto plants, for example, led it to set up offices in Detroit to work more closely with the Detroit Three.

That’s a model most major construction companies aim for.

"I think a lot of people here don’t realize they do way more work outside of St. Louis than in St. Louis," Toenjes said of Alberici.

Geographic diversity is the company’s safety net, Kozicz said. Alberici has developed relationships across North America to protect itself against economic slowdowns. For example, when U.S. manufacturers slowed their construction of factories and warehouses, the company found new work in Mexico, Kozicz said. Also, Canada’s booming mineral and commodity export business has created projects for Alberici in that nation.

Alberici’s current or planned projects range from a $65 million deal to build a chocolate factory for Hershey Co. in Mexico to the $1.2 billion Holcim Inc. cement plant in Ste. Genevieve County.

The company also was smart to switch from heavy dependence in construction of auto plants to develop expertise in the green building movement, Toenjes noted.

In 2005, the company established Vertegy, a subsidiary concentrated solely on designing, consulting and procuring environmentally friendly construction projects. Alberici’s goal is to employ the largest number of people certified to build projects to the highest environmental standard.

Only about six of Alberici projects in 2008 will utilize its green expertise, Kozicz said, but he noted that just five years ago, it had no such projects.

While Kozicz said the short-term prognosis for Alberici isn’t positive, he expressed confidence in the company’s historic ability to deal with adversity.

"I don’t think anybody can crystal ball the durations (of economic conditions), but all well-run companies know the boom cycles and the down cycles come and go, and you learn how to manage through them."

cboyce@post-dispatch.com | 314-340-8345

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