VESTAL — “From 2008 until 2011, [our] sales averaged in the $50 million [a year] range,” says Kenneth (Ken) Elliott, the CEO of Matco Electric Corporation, Inc. “In 2012, we experienced a 50 percent jump.” The company, formerly located in a 17,000-square-foot building on N. Jensen Road, moved its headquarters in April to a […]
VESTAL — “From 2008 until 2011, [our] sales averaged in the $50 million [a year] range,” says Kenneth (Ken) Elliott, the CEO of Matco Electric Corporation, Inc. “In 2012, we experienced a 50 percent jump.”
The company, formerly located in a 17,000-square-foot building on N. Jensen Road, moved its headquarters in April to a 26,000-square-foot facility at 3913 Gates Road in Vestal to help facilitate its growth.
NBT Bank provided the financing to acquire and upgrade the building. Matco also has offices in Ithaca, Elmira, and Albany, and does a lot of work in the Syracuse area. Matco, which currently employs 320, is a full-service electrical contracting company providing electrical and technology services, including high-voltage, fire-alarm, power, lighting, specialty low-voltage, and construction-management. The firm maintains a fleet of 90 vehicles to service its customers.
“Jim (James F.) Matthews started the company 48 years ago,” says Mark Freije, Matco’s president and a 50/50 stockholder with Elliott. (Elliott and Freije are currently buying all outstanding shares held by former Matco president Ronald Barber.) “[Matthews] was a real entrepreneur, who also ventured into auto dealerships, electronics manufacturing, entertainment, insurance, and real estate. Jim was an enthusiastic hockey fan (and former player), who brought the first professional hockey team — The Broome Dusters — to Binghamton.” (Matthews died in 2011 at age 77.)
Matthews sold Matco Electric in 1999 to Celebrity Partners, of which American Capital Strategies, Ltd. (ACS), a publicly traded, private-equity firm, and global asset manager based in Bethesda, Md., was a minority owner.
“At that time, much of the U.S. construction industry experienced ‘roll-ups’ [in which] large manufacturing firms acquired smaller firms, such as Matco, and rolled them into one [entity],” says Elliott. “We were rolled up with Port City Electric (another firm Matthews had owned in Mooresville, N.C.) and Consolidated Electric (Norwood, Mass.) into an entity called StarCom Holdings. ACS bought out the other partners in 2003 and renamed the group Constar International. By 2007, the other two companies in the group were [underperforming], and American Capital closed them.
“In November 2007, ACS notified us that they may either shut down Matco or seek bankruptcy protection. Mark, I, and Ron (former president Ronald Barber) then asked Constar International (owned by ACS) to sell the company’s assets to local management. M&T Bank provided the financing, and we closed the deal on Dec. 26, 2007.” Matco is currently a sub-chapter S corporation, and the two principals also own a real-estate company — Gates Road Holdings, LLC — in which they share ownership equally.
Elliott and Freije invested in Matco just before the “Great Recession” paralyzed the economy. “Despite the scary economic times, we have a solid list of long-time customers,” says Elliott. “In health care, we do work for United Health Services, Lourdes Hospital, Bassett Healthcare, [SUNY] Upstate Medical [University], and Guthrie. In [higher] education, our customers include Cornell University, Ithaca College, Syracuse University, and the SUNY universities, plus a number of [primary and secondary] schools in the region. We also serve manufacturers such as Lockheed Martin, IBM, Universal Instruments, Raymond Corp., and BAE Systems. Matco did much of the electrical work on the Destiny project, and we service a number of retailers such as Dick’s [Clothing and Sporting Goods]; Best Buy; Sam’s Club; and Bed, Bath & Beyond.
“We focus most of our attention on the Southern Tier, northern Pennsylvania, Central New York, and the North Country,” says Freije. “Still, Matco follows its customers across the U.S., doing electrical work in [states such as] California, Georgia, Florida, New Jersey, and New England. Our work is 95 percent commercial with a small portion assigned to residential. About 60 percent of our work is government [based] and the [remainder] comes from the private sector.”
While enjoying the rapid sales growth of the company, Elliott and Freije are cautious in their projections for 2013. “Last year [generated] an unusual amount of growth,” says Elliott. “It was a strong year in part because of the late flooding in 2011. Mark and I thought [our growth] was an anomaly, so we lowered our projections. Sales [however] for the first six months of this year are well ahead of our projections.”
Part of Matco’s growth is coming from new services offered by the company. “The company offers TEGG Services, which we introduced seven or eight years ago,” says Freije, “and we have had good success with it. (TEGG is not an acronym; it’s a brand name.) TEGG is a preventive-maintenance program designed to protect commercial and industrial facilities from electrical failures, [electrical] fires, business interruption, and property damage. The results are guaranteed if a TEGG contractor certifies that an electrical component is in good working order: The component will be replaced free of charge.” Matco is part of an international network of independently owned, local contractors selected by TEGG to implement the program.
“TEGG utilizes high-tech [procedures] to keep equipment from blowing up,” continues Freije, “which includes infrared thermography, ultrasonic testing, voltage and ampere diagnostics, power-factor testing, power-quality analysis, and surge-protection analysis. These programs pay for themselves by preventing unplanned power outages and electrical fires. OSHA is pushing the program to mitigate accidents and deaths. We charge the customers an annual fee for the service, monitor their systems, and share our reports with the customers. The company is projecting continuing growth in this area.”
“Matco is also growing because of the expanding use of 3-D modeling, which we call BIM (building-integration modeling),” adds Elliott. “Traditional building design used to rely on two-dimensional drawings. BIM software lets us create a virtual-information model that starts with the design team, involves the contractor and sub-contractors, and then the owner/operator. Vital information isn’t lost; it’s retained through the operational life of the building and even its demolition … Today, our customers are demanding BIM. For example, we used BIM on Destiny, which was a paperless project.”
Elliott says that Matco’s sales are also rising because of the demand for LED lighting, the interest in solar services, and the meteoric growth of the gas-distribution industry demanding new compression stations and office facilities.
The company’s growth is steered by an executive team with Elliott as CEO and Freije as president. Other members include Kathy Towery, treasurer; Greg Smyder, senior project manager; Becky Johnson, human-resources manager; Devin Ashman, senior project manager; and Marty Lewis, senior project manager.
Elliott is originally a native of Massena, who attended Clarkson College of Technology (now Clarkson University). He graduated in 1983 with a degree in engineering management. Elliott joined Matco after college “even though the company offered me 40 percent less than my other offers,” he says. “Jim [Matthews] was a heck of a salesman. He convinced me there would be opportunities at Matco not offered at the competing companies. I worked in sales, estimating, project management, and even drove a truck, before becoming the general manager in 1993 and CEO in 2010.”
Elliott’s 30-year tenure with Matco is matched by Freije with 31 years. “After a year at Delhi [University], I started working at the company as an electrician’s apprentice,” says Freije … “My dad was an electrician … I joined IBEW 325 (International Brotherhood of Electrical Workers) and worked my way up to journeyman, foreman, supervisor, project manager, and became president [of Matco] in 2010.”
Matco’s success has also been helped by a number of regional firms. “We have worked closely with Kevin O’Hara at M&T Bank (Binghamton office) for our financing,” says Elliott. “Matco has also relied on Piaker & Lyons for its accounting. Our legal work is handled by John Dowd (John G. Dowd, Attorney), who acts as our general counsel and by Hinman Howard & Kattell, LLP, both located in Binghamton. Mang handles our insurance needs, and we depend on The Partners [Insurance & Financial Services Agency] to manage our employee benefits and consult on human resources.”
Elliott and Freije are optimistic about Matco’s future. “We have a well-trained staff with little turnover,” says Elliott. “Despite the fact that we have a number of competitors, our record of customer retention is excellent. We’re in a problem-solving business, and we need to listen to our customers and stay up with the technology. Today, every foreman has a laptop on the job, because everything is done electronically. Our focus is always on material- and labor-saving devices and procedures that improve our productivity; we make small improvements regularly.”
Contact Poltenson at npoltenson@cnybj.com