Press Release
Second generation businesses often fail when family members take over from the originator of the business and the entrepreneurial spirit dies. In the case of NELCO Contracting, that however is not happening as a new generation of Frandsen’s continue to take the firm to new heights.
At the Business Expansion and Retention general meeting (BEAR) on April 28 the Frandsen family made it plain that they were here to stay and to give the community a business that will reach far into the future.
“We have been doing a restructuring on the business since April of 2015 when we brought in consultants to tear every aspect of the business apart and review it,” said James Frandsen, the Vice president of Finance and Compliance during a presentation. “It’s a slower economy now than it has been and we are managing the decline by doing the restructure.”
James, along with brothers Jason (President and CEO) and Garth (Vice President of Trucking) have been working hard to keep the company viable. Each made their own presentation to the group. Also present at the meeting was founder of the company, Neil Frandsen, their father and the Chairman of the Board of the company.
In 1973 Neil along with brother Duane founded NELCO. They built their shop on family ground on Fairgrounds Road above the bluff just south of Price.
“It was a tight fit there,” said Garth. “To get all the trucks in the yard you had to pull them in a certain way or they wouldn’t fit.”
The company grew while Neil continued to work long days. Garth said that he would get up at 4:30 in the morning and go do paper work and work on machines early then would go out and work with the crews all day. Then at night administrative work and other things would keep him busy until 9 p.m.
Such is life for a new entrepreneur.
They did a lot of oil and gas development work out of that facility. In the 1980s the business climate became tough with 24 percent interest for financing being common. When the Thistle slide happened that led to some growth in work for the company. The other major contractor in the area at the time, Loudermilk, went to work on the slide area and NELCO was able to pick up a lot of local work. The company continued to grow and in the 1990s a call came that changed the direction a great deal.
“We got a call from River Gas to do some work and to be there that afternoon,” said Garth. “The contractor they had to do work for them had pulled out so we showed up. It was a huge risk because we didn’t know them, but it gave us huge rewards.”
It was about this time that the company helped to pioneer the use of large seamless poly pipe which was a boon to the industry.
As the company grew the confines of the old shop and grounds began to show more and more. Parking became a premium with employees having to park along Fairgrounds Road. Then Duane decided he wanted out of the business so Neil bought him out. In 2000 Carbon County helped the company work with the State School Institutional Land Trust to acquire some property on Highway 10 at the junction of Highway 10 and Ridge Road to build a new facility. During the early 2000s the employment at the company went up to 110 employees. Then in 2008 the Great Recession slowed work down a lot when gas development and other began to slow. To a certain extent that has continued to this day.
“We are having to change with the times,” said James. “Our goal is to be at about $15 million per year in sales. That is the point at which we will be the healthiest. Today we are ranging $7-10 million.”
The restructure has been an enlightening experience. They have drilled down to the core of the functions of the business and under the new management structure they have been defining roles of each employee better. The company has been measuring productivity and have put together detailed job descriptions so employees know what is expected of them.
“It is based on accountability, responsibility and reporting,” said James. “We were concerned how employees would feel about it, but we found they were grateful for knowing what they had to do.”
While there has been a lot of good outcomes from the restructure they are still working on, James said that the bonus pool they have established for employees is one of the best things they have ever done.
“With bonus pool everyone has skin in the game,” said James. “Employees watch each others back because with targets for profit determined a percent of that profit goes into the pool which belongs to all the employees,” he said.
This helps everyone watch costs and to also keep avoidable accidents from costing the company money. The culture of the company has changed for the better and because of that the financial institutions that the company works with have noticed and so have customers.
The company has also created a sales position which they didn’t have before.
“It was the best public relations move we ever made,” said James. “It helps us to pick the fruit on the tree that is still there too.”
Jason discussed how the new structure has helped to meet challenges of the business climate today. He said that they are establishing management maturity and are able to keep the pipeline full of projects for the future.
“One of the problems we have is that there is a shortage of skilled workers,” he stated. “We want to create a career path through growth with us.”
He said that the company is doing a lot of on-the-job training, but also appreciates what the vocational sectors of the USU Eastern and public education in the area are doing to help. He said such positions as heavy equipment operation and mechanical technicians are in short supply.
“We are embracing new technology that comes with equipment and operations,” he said, stating that millennials are into the “video game” approach that is being used to operate a lot of machinery these days.
Adding to those comments James also said that agencies that help businesses are becoming key to what they are doing at NELCO.
“We have been working with the BEAR program as well as with Small Business Development on a lot of things,” he said. “That helps us to see what is available out there for help. The Custom Fit program has bee awesome for us.”
All three said the future for the company looks bright as they expand their reach. By offering a myriad of services from mining support to gas/oil field work along with trucking and site work for buildings and stream rehabilitation they are staying viable in the local market and beyond.
“We are continuing to enlarge our service area (geographically and service wise), to implement our restructure program, to target areas we excel at and to look outside the box for areas for other revenue streams,” said Jason in conclusion.
