Investing in growth has guided Bill Newland’s family business to regional prominence
Hercules manufacturers and distributes heating and air conditioning products in a five-state region and counts 2,500 active contracts, mainly with mechanical and residential building HVAC construction firms.
"My dad started the business with three employees, at a very small location in the Denver area," said William M. Newland, chairman, president and CEO of Hercules Industries. "Right away it was focused on reinvesting earnings and profits into the business for future growth. That's been one of the foundations of the business. And he also taught us as family members in the business, as well as other key employees, the importance of developing a very positive and contributive culture in everything that we do."
Newland stressed that Hercules' focus on people--from the family owners to the employees that are treated like family--is the company's greatest strength. He said this has kept Hercules successful squarely in the market it has served since launching in 1962: providing heating and air conditioning systems to contractors throughout the Western United States.
"The business has been owned and operated by me and my two brothers," Newland said, pointing out that it is unusual for family to stay together in a family business for more than 40 years. "I think it's a testament to what a true family business is and should be."
Of course, Hercules has faced its share of challenges. As Newland explained, the recent economic recession hit Hercules hard, forcing the company to lay off fully 100 of its workforce of 350 in 2009. But that obstacle created opportunities to position the company for growth, Newland said.
"We set out on a strategy immediately after that with optimism and confidence that our company was going to rebuild and that our geographical locations where we did business were going to rebound," he said. "We seized opportunities in terms of buildings locations for future growth, buying machines, investing in inventory at distressed prices, invested in training for our people--basically positioned ourselves for the ultimate recovery of the economy and the business."
Newland said since 2009 Hercules has opened four different distribution centers and added one additional manufacturing location, along with two new manufacturing processes that allowed the company to expand its product range. "We held a different view than a lot of people in the business," Newland said: Instead of shrinking during the recession, "we aggressively pursued an expansion strategy."
"We have fully recovered in terms of revenue, and actually we have the capacity for much greater market penetration and expansion into other markets than we've ever had in the history of the company," Newland said. He explained that Denver-headquartered Hercules counts slightly more employees today than when it was forced to lay off workers in 2009, and that the company's revenues in 2013 were just shy of $100 million. "We're about back to where we were prior to recession."
Newland attributed Hercules achievements during the recession to two driving factors: "confidence in the people we had left" and also a focus on taking advantage of asset sales at distressed prices. But mainly Newland said the company had a firm vision of what it should become after the recession.
And that vision comes straight from Hercules' family ownership structure, a structure that has weathered decades of market and societal changes. What's Newland's secret? "It's open and honest communication between family members. It sounds pretty basic, but we meet at least weekly to review company strategies and events. That would be one element of that. And secondly is respect for each other and what they do in their areas of business."
Indeed, Newland said he's currently transitioning ownership of Hercules to his son, Andrew. "My son is now the president of the company. And his brothers are serving in upper level management of the company now."
Challenges: Newland said the residential and commercial construction sector is "quite dynamic" because it has lots of ups and downs. "We must stay on top of the right products available at the right time as we efficiently use our assets to serve all of our customers." He said the company needs to keep ear to the ground in terms of what the customers need: "We must react to the changing market needs."
Hercules' second, and equal, challenge? "As we grow from a small family business to a larger, multistate business, keeping the family culture and the feel of a family-owned business is important to us."
Opportunities: "Now we have the opportunity to take that re-engineered business to new heights given the growth of our space and our local economy," Newland said.
Needs: "Probably our greatest need right now is to continue to attract, train and retain quality people in our business," Newland said, adding that this has become more difficult as the recession eases.