Watts Mechanical Hits Big Growth With New Leadership

“Each time someone lets you do [a project], you can talk about how you built it to other guys, and then you get a chance,” says Andrew. “All of a sudden, maybe your largest project was $250,000, then it’s $500,000, then it’s $1 million, then it’s $5 million and it just goes on from there,” until you’re installing the mechanical systems in downtown Calgary’s Le Germain complex. The project’s hotel component and its office space are both slated for occupancy this month. Le Germain also includes condominiums in its upper levels, set for completion in the spring. A contract worth more than $10 million, it’s Watts’ most valuable and, given the geothermal heating throughout and offset condo units, amongst its most challenging to date.

“It’s as complicated as you can possibly get,” says Andrew. “Now that we’re almost done it, the doors have opened.”

With a growing glut of new office space in Calgary, Watts Mechanical’s main turf, what those doors open onto in the near term is uncertain.

“Commercial construction has stayed relatively busy, but [with] cleaning up backlog,” says George Doty, chair of the Mechanical Contractors Association of Alberta and president of Edmonton’s Wil Mechanical Ltd. “Now infrastructure is providing quite a bit of opportunity but competition is severe.” Compared to three to five bidders on boom-time jobs, projects are currently attracting 12 to 15, says Doty, and drawing bids below cost.

Andrew insists Watts, despite bidding frequently, isn’t taking a hit to keep busy. Other firms have, he adds, and Watts has seen the benefit of finishing jobs started by now-bankrupt competitors. As a result, margins for the last year were a healthy 6.7%, up from roughly 4% during the boom two years earlier. He expects to scoop more work yet. “I know half a dozen of our competitors that won’t be here in a year.”

More than scavenging could see Watts through the office space bubble. Still interested in smaller projects, the company intends to pursue a strengthening market in smaller retail projects, the infrastructure Doty mentioned, school expansions made necessary as displaced workers return en masse to the classroom and office renos as businesses jockey for premium Calgary workspace. “Every time something happens, all I see is opportunity in it,” says Andrew.

But the biggest factor set to sustain Watts’ gains was in place before the boom ended. In 2007, the company spun off Watts Building Maintenance, a separate entity devoted to the upkeep necessary in good times and bad. Association head Doty calls this an already heavily competed sector. But relationships Robert established over the two decades preceding Andrew’s arrival offer key entry points, ones Andrew hopes to exploit further, with plans for a full-service electrical division before levelling off growth in the near future.

“We will very shortly max out for our size in Calgary,” he says. “Once we reach that, it’ll all just be about getting better and better at what we’re doing.”

Doty, who’s been with Wil since 1974, saw the the potential negatives of growth when Wil Mechanical had a spurt in the early 1980s. “Production goes down, quality goes down, resulting in more callbacks, more problems on the job [and] cost overruns,” he cautions, illustrating just a few issues that could fall under the rubric of “quality control” that Andrew has worked to improve recently at Watts. To do it, the CEO’s approach has been to rely on his people.

“His solution is, while we’ve got the downtime, before it gets silly again, let’s train people,” says field supervisor Wayne Richardson, who joined Watts full time about three years ago after a decade of contract work.

Scheduled for an upcoming month-long leadership training course, Richardson would identify Andrew’s emphasis on professional development and the push to empower employees as one of the major differences between Watts Sr. and Jr. The strategy makes sense. As Robert approaches retirement, Andrew knows he’ll need new support as he focuses more on business development and less directly on operations.

Not that’s he’s setting himself up to lose touch. “He’s managed to keep this company growing exponentially but also keep an atmosphere of his door always [being] open,” says Richardson.

And it’s around the matter of communication that, regardless of the glossy corporate veneer Andrew’s applied to Watts Mechanical, the old codes of the industry he ended up following his father into return to the fore. “Something that’s really nice here,” Richardson adds regarding Andrew’s open-door policy, “is the ‘no-bullshit rule.’ If we’re talking bullshit, he calls us, and if he’s talking some bullshit, we call him. Everyone’s straight with everyone here.”

They just don’t yell at each other anymore.

Current Issue