The Turner Corporation
Address:
375 Hudson Street
New York, New York 10014
U.S.A.
Telephone: (212) 229-6000
Fax: (212) 229-6185
http://www.tcco.com
Statistics:
Public Company
Incorporated: 1984
Employees: 2,800
Sales: $3.3 billion (1996)
Stock Exchanges: American
SICs: 1522 Residential Construction, Not Elsewhere Classified; 1541 General Contractors Industrial Buildings; 1542 Nonresidential Construction, Not Elsewhere Classified; 7389 Business Services, Not Elsewhere Classified; 8741 Management Services; 8742 Management Counseling Services
Company Perspectives:
Turner will be the recognized leader in providing building construction services, both nationally and in every location in which Turner operates. We will achieve this by consistently exceeding our commitments to and the expectations of clients, design professionals, subcontractors, and vendors, and the community at large. These services will be delivered by team-oriented, responsive, innovative, reliable, ethical, and skilled staff who participate in a world-class training and development program and benefit from a career employment opportunity.
Company History:
Founded in 1902 by Henry C. Turner, a devout Quaker from the eastern shore of Maryland, The Turner Corporation has grown into one of America's top general contractors. In 1996 it completed $3.3 billion worth of construction projects. Organized as a holding company, the business's key subsidiary is Turner Construction Company. A downturn in the commercial construction segment during the late 1980s and early 1990s compelled Turner to diversify from that segment--its traditional stronghold--into several specialized niches, including biotech/pharmaceutical, healthcare, retail, recreational, and government buildings, as well as multi-unit housing and interiors. This award-winning company has built some of the most famous and recognizable buildings in major cities around the nation, including the John F. Kennedy Memorial Library in Dorchester near Boston, the United Nations Secretariat and Madison Square Garden in New York, the Xerox Center in Chicago, and Two Union Square in Seattle. In 1997 Turner built more healthcare projects than any other contractor in America, extending its leadership of that category to twelve straight years. The Turner Corporation has built 20 of the 100 tallest buildings in the world. Its clients are among the world's leading corporations, including General Motors, Ford, Chrysler, United Airlines, American Airlines, General Electric, and IBM.
After chalking up four decades of profitability, Turner suffered its first-ever annual loss in 1990 and struggled to stay in the black throughout the early and mid-1990s, losing $1.7 million on revenues of $2.8 billion in 1996. That year's management shakeup brought in 71-year-old Ellis T. Gravette, Jr., to serve as chairman and CEO. Harold J. Parmelee retained the presidency, a post he had held since May 1990. Having divested many of its most disastrous real estate holdings, in 1997 the company appeared poised to reap its biggest profit since 1992.
Key Strengths Distinguish Turner from Competitors
The company operates through 44 offices in America and abroad. It has divisions and subsidiaries located throughout the United States as well as in Europe, the Middle East, South America, and Asia. This network of offices enables Turner to function as a local facility as soon as a contract for construction is awarded. In fact, Turner is referred to as "the largest small contractor in America" because of its system of serving as a local contractor in each community. In 1992 President Parmelee noted that, "Our roots go very, very deep. We've been in New York City for 90 years, in Philadelphia for 85 years, and in Boston for 76 years. This allows our people to become active citizens of these communities and to work closely with local owners, architects, subcontractors and municipal agencies." Staff members in these offices have an intimate knowledge of local regulatory and review processes, local labor conditions, and strengths and weaknesses of subcontractors, thereby facilitating the construction process.
Another benefit of having ties in a community is that quality is enhanced. According to former Chair and CEO Alfred T. McNeill, "People who are building their own community take greater pride in it. Our commitment to quality can be seen in the 75-story First Interstate building in Los Angeles that didn't crack in the earthquake and the Turner-built housing in Florida that remained standing after Hurricane Andrew."
Turner's tenacity in the rough-and-tumble construction business has frequently been attributed to its ability to adapt to changing market conditions and construction demands. As the demand for commercial building has declined with world's economic cycles, Turner has been quick to diversify into new markets in the social and public sectors, giving the company a broad portfolio of experience. In addition to the construction of new buildings for niche markets, the company has been involved in expansions and renovations of existing facilities, and in providing services related to construction activities. When poor economic conditions have forced other companies to reduce staff, Turner expanded its services, using its full network of staff and resources to function as a sort of one-stop construction business, providing a full range of services from designing to building to helping with financial matters.
Early 20th-Century Roots
Turner began modestly. After Henry C. Turner graduated as an engineer from Swarthmore College, he worked with the little-known Ransome system of steel-reinforced concrete. Believing that this new method would revolutionize construction, Turner and a partner, DeForrest H. Dixon, purchased the rights to the system for $25,000 and founded Turner Construction Company. In the early 1900s, the company completed the stairways for New York's first subway stations. Industrial contracts soon followed as Turner's reputation for speed and skill grew, and the Ransome system received recognition. Turner's faith in using concrete led the company to adopt the slogan "Turner for Concrete."
During World War I the company received several defense contracts. Volume increased from $6.5 million in 1916 to $35 million in 1918. In 1919 the company received its first international contract. From 1919 to 1922, Turner expanded into new areas and built its first high-rise office building, its first hotel, and its first full-scale stadium.
During the Great Depression of the late 1920s and early 1930s, construction activity declined. Turner's volume fell drastically but the company remained in business while thousands of other contractors were forced to close their doors. Turner was able to continue operations because it shifted its focus from industrial and commercial building to other types of facilities, such as retail stores, churches, and other academic and public buildings.
During World War II, the company once again received defense contracts from the government and was involved in such building projects as a submarine base in Connecticut, Pacific Naval air bases, the Brooklyn Navy Yard Storehouse, and 93 oil tankers for the Alabama Drydock & Shipbuilding Company. During wartime, Turner also managed base facilities for the top-secret village at Oak Ridge, Tennessee, where, without the company's knowledge, the components of the first atomic bombs were being prepared. By 1941, when Henry C. Turner retired, defense work represented 81 percent of the company's business.
Diversification after World War II
After the war, the country started rebuilding programs and Turner received contracts for building academic, commercial, and industrial buildings. Turner built a structure for the Coca-Cola Bottling Co. in New York and was the contractor for the Firestone Library at Princeton University. By 1951, with all this activity, company sales had reached $100 million.
In the 1960s, Turner built high-rise buildings, futuristic airline terminals, and pavilions for the World's Fair, as well as some of the nation's best-known buildings, such as Lincoln Center, Madison Square Garden, and the United States Steel headquarters in Pittsburgh. By the late 1960s there were Turner buildings as far away as Hong Kong. The company went public in 1969 and by 1972 was selling shares on the American Stock Exchange.
By the 1970s, Turner had expanded its foreign offices into such countries as Iran, Pakistan, and Dubai. In the late 1970s and early 1980s, the company continued to build highly visible facilities associated with prestigious names, such as the John F. Kennedy Library in Dorchester in 1979 and the Moscone Convention Center in San Francisco in 1981. Turner enjoyed average annual revenue increases of 11 percent through the first half of the 1980s, capping four decades of consecutive annual profits.
New Niches in Late 1980s and Early 1990s
The search for new and different types of markets was especially important during the recessionary years of the late 1980s and early 1990s when the construction market--and in particular the commercial segment--slumped. Turner continued to expand into niche markets that reflected the scope and range of its experience. For example, in 1989 the company contracted to build a convention center in Columbus, Ohio. In 1990 the company completed the 54-story Mellon Bank Center in Philadelphia, the third tallest building in the city. In 1991 Turner completed construction of the 63-story Society Tower in Cleveland.
In 1992 alone, Turner built 125 projects, including office, retail, airport, industrial, advanced technology, healthcare, justice, residential, educational, science, and recreational facilities. Through diversification into new markets, sales in the commercial sector dwindled from about 50 percent of Turner's business in 1986 to less than 20 percent of total revenues in 1992. Moreover, this volume was mostly for renovation and interiors rather than new construction.
In addition to diversifying, Turner took steps to reduce its exposure to risk by forging alliances and joint ventures. In 1992 the New York contractor joined forces with Switzerland's Karl Steiner Holding A.G. Dubbed Turner Steiner International SA (TSI), the new entity assumed responsibility for contracts formerly administered by Turner International, including projects in Japan, North America, Central America, and the Caribbean. TSI took on several rebuilding projects in Kuwait after the Persian Gulf War, providing in particular reconstruction services for the Kuwait Sheraton Hotel. Other projects with TSI were the Abjar Hotel in Dubai, the Almulla Hospital, New Doha International Airport in Qatar, preconstruction and construction services for office towers in Sri Lanka, and a project in Brussels for Citibank Europe.
Turner applied the same strategy to its Latin and South American interests, forming Turner South America in partnership with Brazil's Birmann S.A. On the domestic front, Turner created a joint venture with EMCON, a hazardous waste management firm. Known as ET Environmental Corp., the affiliate offered site remediation as well as design and construction of waste management facilities.
Turner's decision to move into the social sector was rewarded in 1992, when the company served as the lead contractor of healthcare construction projects totaling $1 billion. Turner was awarded contracts to build University of Chicago Hospitals for their new Center for Advanced Medicine and two new buildings at the New England Medical Center. The company also negotiated construction management contracts at two San Jose area hospitals. Turner entered into a contract with the biotech/pharmaceutical company Genzyme Corp. for building a quality control/quality assurance laboratory and pharmaceutical manufacturing facilities. The company was also engaged to build a new petroleum additives research facility for Ethyl Corporation. Other work progressed on pharmaceutical projects for Rhone-Poulenc Rorer, Ethicon, Ortho, and Allergan.
Educational projects were also showing steady growth and were 33 percent higher in 1992 than in 1991. The company was involved in new and renovated educational facilities with local school systems and large public and private colleges and universities. Also, Turner was chosen to manage the seismic upgrade addition and renovations of the Doe and Moffit libraries in San Francisco the same year.
Some construction and management contracts for public-funded projects were also awarded in 1992. Contracts were awarded for modernizing and expanding Albany Airport, building a new wing of the Cleveland Public Library, and providing management services for renovations to the New Jersey State House Annex in Trenton. Long-term construction programs included the Los Angeles County-USC Medical Center replacement facility and a ten-year expansion project at Lambert-St. Louis International Airport.
Sports and entertainment complexes proved another important niche for Turner in the early 1990s. The company built Cleveland's Gund Arena, Portland, Oregon's Rose Garden Arena, and the Nashville Arena in the first half of the decade. The corporation formed a joint venture known as Turner-Thompson Sports in 1995. Its first project was the Carolinas Stadium in Charlotte.
In keeping with its pursuit of diverse roles in the construction field, Turner greatly expanded its roster of project management services at this time as well. Turner president Parmelee realized that the continuous development of new services was a reality of the contracting business in the 1990s. He noted that, "Clients will seek more program management from concept to completion and more overall responsibility." The contractor increasingly took on the responsibility for both design and construction of a project, as clients sought to save time, money, and staff hours. The design/build projects that were developed from this strategy in 1992 included the Federal Justice Building, Atlanta City Detention Center, and a six-story parking garage at Vanderbilt University in Nashville.
As the recession of the early 1990s persisted with its resulting tight credit market that hampered new building, Turner added another service to its arsenal. The company took the design/build process one step further and developed the design/build/finance service. Turner assembled teams of facility users, developers, designers, and lenders in agreements that met all the needs of the people involved in the projects. The finance and development was assumed by a third party, a special purpose corporation. Noteworthy design/build/finance contracts of the early 1990s included agreements with the University of Cincinnati and the Middletown Courthouse in Connecticut.
Recession Batters Bottom Line in Early 1990s
In spite of Turner's many efforts to meet the economic imperatives of the troubled contracting industry, the company struggled mightily in the early 1990s. Revenue declined from over $3.5 billion in 1990 to around $2.7 billion from 1990 through 1994. During that period, the company's aggregate net income totaled less than $2 million, as Turner suffered losses in 1990 and 1993. Though it continued to claim "a broader geographic presence in the U.S. than any other construction company," Turner slid out of the industry's top revenue spot in 1995. The publicly traded company's stock dove from $21 in the mid-1980s to a low of $6 in 1991 before settling around $10 from 1993 through 1996.
Under the direction of chairman and chief executive officer Alfred T. McNeill, the company undertook a restructuring in 1994 that encompassed a moderate consolidation of Turner's traditionally decentralized corporate structure and a corresponding staff reduction. The number of U.S. offices declined from 42 in the late 1980s to about 35 in the early 1990s, and employment levels were cut by more than 16 percent from about 3,000 to 2,500 over the same period. Turner also abandoned its foray into real estate ownership, divesting millions of dollars worth of properties throughout the first half of the 1990s.
In spite of McNeill's efforts and an overall improvement in the economic climate, Turner achieved only anemic profits in 1994 and 1995, then suffered a $1.7 million loss on revenues of $3.3 billion in 1996. In August 1996, Turner's board appointed 71-year-old E. T. Gravette, Jr., to succeed McNeill as chair and CEO, while 59-year-old Harold Parmelee retained the position of president he had held since mid-1990.
The housecleaning appeared to be taking rapid effect in 1997. In the first three quarters of that year, Turner's revenues increased nine percent over the same period in 1996, to $2.7 billion. Perhaps more importantly, net totaled $5.1 million, a pace that if carried through the remainder of the year would give Turner its best annual results since 1992.
Principal Subsidiaries: Ameristone; Burwharf Corp.; Mideast Construction Services, Inc.; Turner Investment Corp.; Universal Construction Company, Inc.; Trans-Con of Delaware Inc.; TDC of Texas, Inc.; Turner Construction Co.; Turner Development Corporation; TDC Corp. of Florida; Turner International Industries, Inc.; Turner (East Asia) Pte. Ltd. (Singapore); Rickenbacker Holdings, Inc.; Rickenbacker Development Corp.
Further Reading:
"Back from the Brink," Forbes, October 25, 1993, pp. 14-15.
"Concrete and Steel Unite," ENR, July 19, 1990, pp. 30-32.
"Constructor," New York: Turner Construction Company, 1992.
Grogan, Tim, "Builders Flourish in an Upbeat Market," ENR, May 20, 1996, pp. 77-78.
Korman, Richard, "Turner Works Hard to Show Profit," ENR, September 14, 1989, pp. 17-18.
Lilly, Stephen, "City Review, Columbus, Ohio," National Real Estate Investor, December, 1989, pp. 140-42, 156-57.
"Turner Bites Bullet Now to Improve Profitability and Productivity Ahead," ENR, April 4, 1994, pp. 28-29.
Willoughby, Jack, "Hunker Down and Hope for the Best," Forbes, October 20, 1986, pp. 63-64.
Source: International Directory of Company Histories, Vol. 23. St. James Press, 1998.
