Wal-Mart a boon for Triangle Associates

October 3, 2009
| By Pete Daly |
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Triangle Associates, one of the larger construction contractors in West Michigan, is "blessed," according to Vice President Mitch Watt, because despite the lousy Michigan economy, it is busy and has a good backlog of projects over the next two years.

Much of that blessing can be attributed to education and health care projects, and to Wal-Mart, one of Triangle's "bread and butter" clients, in Watt's words.

Triangle, a 91-year-old family-owned company headquartered on Three Mile Road in Walker, began business in 1918 as George Datema & Sons. The firm is now headed by the founder's great-grandson, Craig S. Datema, AIA, and is active throughout much of the Lower Peninsula and into Indiana and Ohio.

According to Watt, Triangle took in about $140 million in revenue last year and has about 140 full-time employees. He said he believes the company will miss its 2009 revenue goal by around 3 percent — but that will still leave it with a revenue increase of 6 percent over last year.

Triangle has always been strong in the commercial/industrial construction market, but the activity level in that market now is "terrible," according to Watt. He said a lot of the projects Triangle was hired to do over the last year or so have failed to start because of lack of financing.

Industrial companies have little need for new or expanded plant construction, noted Watt, and the market for office building construction or renovation is "dead right now."

"The retail market is down to the point where it's just shutting those projects down," he said — "with the exception of Wal-Mart, which has been extremely strong for us and continues to be strong. Wal-Mart has just been an amazing client for us."

Triangle got its first contract from Wal-Mart in 2005 to build a new Supercenter store in Muskegon, which was completed in 2006. Since then, Triangle has done about 17 Wal-Mart projects in Michigan, Indiana and Ohio. Six were "special projects" of less than a million dollars; three were expansions/renovations of existing Wal-Mart stores into Supercenters that ranged in cost from $6 million to $8 million.

Wal-Mart also does smaller, fast renovation projects that take about 10 weeks; much of the work is done at night while the store remains open during the day. Triangle has done about four of the fast projects, and has just completed a remodel of the Grandville Wal-Mart.

Triangle has built more than one Wal-Mart Supercenter — stores that are generally about 200,000 square feet and cost in the $13 million to $14 million range. Besides the Supercenter in Muskegon, Triangle has built three others: a recently completed Comstock Park store, one in Monroe, and one just started in Logansport, Ind.

Watt said Wal-Mart is probably one of the most sophisticated retail property owners in the world. Its huge network of retail centers is second to none, he said — "and they've done it by being very organized and very straightforward in their expectations."

Wal-Mart has "very strict guidelines on processes, procedures, quality levels, safety" and deadline expectations, said Watt.

"If you stumble at any given moment, you're done. They move on to the next (contractor), and they have a very short list of contractors they use around the country. They want to work only with those they know will deliver," said Watt.

According to Wal-Mart's annual report filed with the SEC when its fiscal year ended Jan. 31, the corporation had net sales of $401.2 billion in 2008 (FY09). In addition to its U.S. stores, Wal-Mart has stores in 14 countries and Puerto Rico, which contributed about one-fourth of FY09 sales. Wal-Mart ended last year with 3,656 stores in the U.S., with total square footage of almost 590 million.

Last year Wal-Mart opened 112 new stores in the U.S. and closed 6.

In Michigan, Wal-Mart will have either expanded or built from scratch 10 stores during 2009, according to Nick Infante, director of government affairs for Wal-Mart's Midwest region. Three stores were expanded or built in 2008.

Almost all of the 2009 Michigan construction by Wal-Mart was in the southeast part of the state, with the exceptions being the relocation of an existing store in Sault Ste. Marie and the current expansion of a Traverse City store.

Watt said Wal-Mart is intensely focused on sustainability, not just in construction practices but also in its everyday business. The company does not typically seek LEED certification, he said, adding that it pursues sustainability "because they think it's the right thing to do. They don't necessarily (expect) a lot of praise for it."

Wal-Mart, he said, is big on use of recycled materials, closely controlled lighting and skylights. He noted that much of what is considered sustainable entails extra up-front cost, but "Wal-Mart is one of those companies that doesn't do things unless it's proven to be beneficial to the bottom line."

Watt said Triangle got on Wal-Mart's list of construction contractors after a lot of discussions and by "showing our success rate with other projects."

Wal-Mart and Meijer are well-known competitors, of course. Watt said Meijer, whose headquarters is located on Three Mile Road just a short drive from Triangle, has indicated it won't use Triangle as long as it builds for Wal-Mart.

"That's not an uncommon thing," said Watt, noting that store design and construction can be part of a highly developed, competitive retail strategy. While it is unfortunate, he said, "we respect that decision."

Triangle has current projects throughout Michigan plus Indiana and Ohio, and provides a broad array of construction services to a broad market comprised of many different sectors. He said the economic downturn has led to publicly funded projects being the majority of Triangle's work. Those include K-12 schools, as well as colleges and universities. Right now, Triangle is doing $130 million in work for Kentwood schools, and is also working on schools in Montague and Vestaburg.

Recently, Triangle completed the cancer center at the new Metro Health campus south of Grand Rapids. It also has done a significant amount of work in not-for-profit housing for seniors and low-income families.

"We have been blessed in that we are diversified and have been able to shift from those markets that are down to areas that are strong," said Watt.

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