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Nailing it | A reputation for innovation and ethics lands Ken Porter's drywall company a milestone project
Photo/Tim Greenway
Ken Porter of Porter Drywall
Photo/Courtesy Porter Drywall
A prefabricated roof module made by Porter Panel & Truss is lowered into position on Sokokis Hall, a new dorm at the University of New England in Biddeford
Photos/Courtesy Porter Drywall
Porter Panel & Truss installs prefabricated modules, top and center, at the Margaret Chase Smith Federal Building in Bangor. At bottom, panels used in the modules are stored in the company's ergonomic facility in Portland. A subsidiary of Porter Drywall, Porter Panel & Truss now accounts for 20% of the parent company's $10 million revenues.
In the middle of a recession, it’s all too easy for a business owner to buckle down, shrink from thoughts of expansion, investment or innovation, and hope that a single-minded focus on core products and services will allow the business to survive until the economy turns around.
Ken Porter took the opposite approach. His company, Porter Drywall, had grown since its founding in 1989 to become the largest drywall contractor in the state. By 2007, the Portland company had more than $15 million in sales and employed 180 people, according to Porter.
Then the economy collapsed under the weight of the financial meltdown. Within a few months, once the company’s backlog of work was complete, Porter was forced to lay off more than half his employees. At its lowest point, the company employed just 60 people. It was a tough time to be in the construction industry, and arguably an even tougher time to be in the drywall sector, because the barrier to entry is relatively low. As the jobs got fewer and farther between, the competition grew fierce.
Yet rather than pull back, Porter expanded his business, differentiating it from competitors with new techniques no one else in the state was using and finding the time to lead an industry effort to pass a law representing one of the biggest regulatory changes Maine’s construction industry has seen in recent memory. As a measure of Porter’s success, his company led a joint venture that recently landed the largest drywall job ever in Maine.
Leveling the field
Back in 2007 and 2008, competition increased for the fewer drywall jobs coming up for bid, and Porter began to notice he was getting underbid on more and more projects. He realized that his company, with the employees and the payroll taxes and workers’ compensation insurance premiums that go along with them, was being outbid by companies using a crew of independent contractors, many of whom weren’t covered by workers’ comp insurance, thereby avoiding all those associated labor costs.
Uninsured independent contractors were “rampant” in the construction industry, Porter says. Everyone knew that. But it hadn’t been a problem when there was plenty of work to go around. “We’re talking hundreds of thousands of dollars in [workers’ compensation] premiums for a company our size,” he says. “All of a sudden it becomes a big nut to crack to pay that workers’ comp and compete against guys who aren’t paying it. It’s huge. It’s an unlevel playing field.”
Porter wanted to address the issue of worker misclassification — when an employer classifies an employee as an independent contractor, thereby avoiding payroll taxes and workers’ comp costs — within the construction industry. “We were trying to do it right. We were doing it legal. And we were being punished,” he says. So he brought the issue to the board of the Associated General Contractors of Maine, which he serves on, and convinced them to take a strong policy position. “Most people simply wouldn’t have bothered,” says John O’Dea, CEO of the AGC of Maine. “But he hooked onto it and he never let go.” Porter pulled together a coalition of industry groups, many of which don’t always see eye-to-eye on industry issues, and helped draft a bill that tightened the definition of what constitutes an independent contractor, found a sponsor and worked hard for the bill’s passage.
LD 1456 went into effect on Jan. 1, 2010, and presumes that any worker on a construction job site is an employee unless he or she can show proof of workers’ compensation insurance or can meet the standards of a new 12-question form for the Workers’ Compensation Board. “If you sit down and look at the law that relates to independent contractors, you can find the 12-part test right there and it’s got Ken’s fingerprints all over it,” says O’Dea.
Gary Vogel, an attorney at Drummond Woodsum and chair of the Maine Real Estate and Development Association’s legislative affairs committee, says Porter’s tenacity is one of his strongest traits. “When he gets his mind set on something, he doesn’t let go, and when he gets to a roadblock, he figures a way to deal with it. He becomes … I don’t want to say single-minded, but he really focuses intensely on getting the task done,” says Vogel, who also happens to be Porter’s lawyer and friend.
The law has had a significant impact on the industry, O’Dea says. Construction sites these days are more often populated with employees covered by workers’ compensation rather than companies with crews of independent contractors. Porter estimates that before the law change there was 20% to 25% compliance, compared to 70% to 80% compliance now. He’s self-effacing about his role in the effort. “We’re not totally altruistic here. We used to be just as guilty as the next guy,” he says, walking behind his manufacturing facility toward a stack of metal roof trusses destined for an Army National Guard building in Bangor. “But over time you start to realize your greatest asset is your employees and we have to take care of them. You wake up in the middle of the night sometimes when you think about what if someone breaks his neck and is paralyzed and has a wife and three kids to take care of and they’re an uninsured independent contractor…”
Fifteen years ago, Porter Drywall became the first drywall company in the state to offer its employees a benefits package that included health insurance and a 401(k) plan. “As soon as we did it, we realized it was helping us,” he says. “More than just helping the employees, it helped us recruit and retain people, as well.” Porter also set up an employee stock ownership plan in 2007. “It’s just a philosophy we have — if you work hard for us and are loyal, we want you well taken care of,” he says.
The company hasn’t used an uninsured independent contractor since 2006. “I [see] nothing wrong with independent contractors, but our policy is if you’re going to work for us, you’re going to be protected by workers’ compensation insurance,” Porter says. “We believe that if there are three guys here on this staging and three guys on the staging next to it, and three are insured and three are [uninsured] independent contractors, and something comes and takes out both sets of staging, why is it fair that those three are covered sufficiently for their injuries and those three are on their own? We just don’t think that’s right ethically.”
A new technique
While work was tough to come by during the recession, one large project undertaken at that time was the construction of the Hollywood Slots racino and hotel in Bangor. Cianbro, the Pittsfield-based general contractor on the project, needed a drywall company that could handle a new building technique. Rather than have a subcontractor arrive on site with tons of materials, raise scaffolding, and frame the walls and hang the drywall piece by piece, Cianbro wanted a company that could install prefabricated wall panels, the exterior ones complete with window and door frames.
The New Hampshire-based company manufacturing the panels recommended Cianbro give Porter a call. The seven-story hotel went up during the winter without any staging or scaffolding and opened in July 2008. Prefabricated panels had been used around the country for larger projects before, but this was the first project in Maine. The work ended up being a “lifeline,” says Porter.
Porter then saw an opportunity to apply the panelization technique to smaller projects more common in Maine. “We needed to come up with an innovative way to compete,” he says. He invested hundreds of thousands of dollars in a new subsidiary, Porter Panel & Truss, which was born in January 2010.
“Prefabrication is a hot word these days,” Porter says on a recent morning at the Porter Panel & Truss manufacturing space on Presumpscot Street in Portland. “It’s a smarter way to build, you’re getting better quality, it’s being built in a controlled environment, it’s more precise, it’s more predictable, there’s less waste.” Another side benefit is that fabricating panels in a controlled environment with ergonomic workstations is safer than having workers frame and hang drywall by hand. As a result, Porter’s workers’ compensation premiums for the employees in the manufacturing facility are half what they would be if those workers were on a job site.
O’Dea of the AGC says he was blown away when he visited a work site where Porter Panel & Truss was putting up a house. “The job site was perfectly clean. There were a couple trash barrels, but none of the waste associated with a regular construction site because everything had been designed and fabricated in the shop,” he says. “It was very obvious I was looking at a better idea.”
In just over a year, Porter Panel & Truss has grown to represent roughly 20% of the company’s revenue, which Porter says totals more than $10 million, and increased its employees to 100. It also allowed the company for the first time to expand outside of Maine. Porter Panel & Truss now ships its panels throughout New England.
Landmark project
When MaineGeneral began looking for contractors to build its new $312 million hospital in Augusta, Porter Drywall was the only Maine drywall company invited to bid. Its competitors were four out-of-state companies. The new hospital will be the largest drywall project the state has ever seen, Porter says. It’s anticipated the project will include more than 600 prefabricated wall panels. “They want us to panelize as much as possible,” Porter says.
Local participation was a condition of the bid and Porter found his company being courted by a few of the out-of-state companies to join their teams. But rather than play second fiddle to larger firms that would bring in outside labor and funnel the revenue out of state, Porter pulled together a joint venture with a few local competitors — Dirigo Drywall and Zimba Co. — as well as an acoustic ceiling company. They won the project. “It was easy to find solidarity in joining ranks with each other knowing this is the biggest thing coming in a down economy after having lost so much work to out-of-state and out-of-country union contractors over the last few years on all the other hospital projects,” Porter says.
Larry Dahms, owner of Dirigo Drywall, says the project will guarantee work for as many as 17 of his employees for 22 months. “I didn’t have anything on the books for a year from now, but now I do,” Dahms says. “It’s going to be a great project.”
The project is expected to break ground this summer and Porter will deliver the first wall panels by the end of the year. The drywall contract is worth more than $10 million, Porter says, and will keep 125 people from the four companies employed throughout its two-year timeframe.
His willingness to collaborate has only added to Porter’s reputation as an innovator in the industry, O’Dea says. “What distinguishes a successful company from another company is the ability to put systems in place and grow the business and [Ken Porter] has done that,” O’Dea says. “This is not Joe Bob Drywall. This is a very sophisticated company that knows how to get it done.”
Porter Drywall
655 Riverside St., Portland
Founded: 1989
President: Ken Porter
Services: Framing, drywall and exterior finish systems; prefabricated panels and trusses through subsidiary Porter Panel & Truss
Revenue, 2010: More than $10 million
Employees: 100
Contact: 878-2024
www.porterdrywall.com
Whit Richardson, a writer based in Yarmouth, can be reached at editorial@mainebiz.biz.
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