Great Lakes Dredge & Dock Company - Company Profile, Information, Business Description, History, Background Information on Great Lakes Dredge & Dock Company

2122 York Road
Oak Brook, Illinois 60523

Company Perspectives:

Dredging is a specialized field that can include handling a full range of natural underwater materials--silts, clays, sands and rock formations. Great Lakes applies its dredging expertise to deepen and maintain waterways, shipping channels, and ports; create and maintain beaches; excavate harbors and build docks, terminals, and piers; reclaim land; restore aquatic and wetland habitats; and excavate pipeline, cable, and tunnel trenches.

History of Great Lakes Dredge & Dock Company

Great Lakes Dredge & Dock Company has been in the dredging business for 115 years and has made major contributions to the nation's ports and shorelines. Its dredging operations generally fall into three different categories: capital dredging (involving ports), beach nourishment (replenishing or fortifying eroded areas), and maintenance (redredging and improvements). In addition to dredging in its namesake waters, Great Lakes also builds lighthouses, bridges, piers, and docks. Famous landmarks constructed with the aid and expertise of Great Lakes include Chicago's Navy Pier and Michigan Avenue Bridge; MacArthur Lock in Sault Ste. Marie; the St. Lawrence Seaway between the United States and Canada; the Mackinac Bridge in upper Michigan; and coastal port and pier work in Africa, the Caribbean, Europe, the Middle East, and South America.

In the Beginning: The 1890s

The story of Great Lakes Dredge & Dock Company begins at the end of the 19th century in Chicago, Illinois. William A. Lydon and Fred C. Drews founded Lydon & Drews as a marine construction company. Formed in 1890, the firm described itself as "Contractors for Dredging, Docking and General Pile Driving," and was adept at building bridges, piers, lighthouses, and tunnels. Lydon served as the firm's engineer and first president while Drews, who had worked in marine construction, served as general superintendent. The partners opened an office in the Unity Building on Dearborn Street, which later became the Chicago Chamber of Commerce building.

The marine construction company's first job was to dig a brick-lined water tunnel under Lake Michigan from an offshore water intake at Chicago Avenue to a new "crib" under the lake. The project came to be known as the "Two Mile Crib," and was vital to the growing water works of Chicago. The contract could make or break the fledgling company, especially since the work was set to begin on Friday the 13th of February. Fortunately, neither Lydon nor Drews was particularly superstitious and the Two Mile Crib was completed without incident.

Two years after the company's founding, Lydon & Drews worked on one of Chicago's most amazing undertakings, the 1892 Columbian Exposition. The immense World Fair was to celebrate the 400th anniversary of Columbus's discovery of America and to top the festivities of the Paris Exposition when the Eiffel Tower was unveiled. The reputation of the entire United States rested with the Chicago Exposition, and leading architects and engineers from around the country contributed to the immense undertaking. Lydon & Drews was tapped to fortify the lake's shoreline where numerous buildings were under construction for the Exposition. Some of what was constructed on Lake Michigan's coastline became the foundation for Navy Pier.

Over the next decade Lydon & Drews finished several successful marine projects, including another water intake tunnel and crib for the city's water supply. In 1894 the firm built its first rig, appropriately named "Dredge No. 1," a huge dredging machine with a four-yard dipper or bucket. A second dredger was built in 1896, followed by a third in 1898. By the end of the 1890s Lydon & Drews had earned a reputation for excellence and timely completion. With a major portion of Chicago's livelihood tied to its waterways, Lydon & Drews became instrumental in the city's growth as a pivotal midwestern port. The company's success also allowed it to expand operations to other nearby ports.

A New Century and New Name: The 1900s-20s

In the 20th century, Lydon & Drews had grown substantially through the acquisition of four Chicago companies (Chicago Dredge & Dock Company, Green Dredging Company, Hausler & Lutz, and McMahon & Montgomery). This growth prompted Lydon and Drews to change the firm's name to the somewhat cumbersome Chicago & Great Lakes Dredge & Dock Company in 1903 and then to its present incarnation, Great Lakes Dredge & Dock Company. The latter was incorporated in 1905 in New Jersey because of that state's favorable corporate laws.

At the time of its creation Great Lakes Dredge & Dock (Great Lakes) owned equipment valued at more than $1.7 million, including 13 dredges (11 with dipper-buckets and two with clamshell-shaped equipment), ten tug boats (with one named for Lydon and another for Drews), dozens of scows (flat-bottomed, squared boats often pulled by tugs), and six derricks (sturdily constructed towers for lifting and moving heavy items). Great Lakes also owned and operated two machine shops and had expanded operations into Indiana, Michigan, Ohio, and Wisconsin.

The new Great Lakes had eight board members and 21 stockholders. Lydon and his wife owned 29 percent of the company and Drews, who was not on the board and no longer an officer, held 9 percent. Other Chicagoans who had joined Great Lakes included Harry Wild (Lydon's brother-in-law) as treasurer and a board member, as well as John P. Hopkins (a former mayor of Chicago) and Roger C. Sullivan (a prominent Democrat), movers and shakers in Chicago's tumultuous political arena.

Great Lakes bought Duluth Dredge & Dock Company in 1905 and by 1908 had additional offices in Duluth (Minnesota), Cleveland and Toledo (Ohio), and Sault Ste. Marie (Michigan's Upper Peninsula/Ontario). In 1912 Great Lakes undertook a major project for the U.S. Army Corps of Engineers in the Boston Harbor area, which served two very important functions: not only did the Boston project bring the company substantial work along the East Coast (prompting the formation of an Atlantic Division headquartered in lower Manhattan), but began its long and lucrative association with the Army Corps of Engineers. By 1917 Great Lakes had acquired six more companies, including two in Buffalo (New York) and two in Milwaukee (Wisconsin), to conquer all of the Great Lakes ports. The acquisitions brought the company's assets to more than $6 million.

Great Lakes suffered a shock in 1918 with the loss of its cofounder and president, William Lydon. After a brief illness, the 55-year-old Lydon was dead. He was succeeded as president by Roger Sullivan until 1920, when Harry Wild took the reins as the firm's third president. Despite the loss of Lydon's guidance, Great Lakes maintained solid growth and finished several pivotal projects in Chicago, helping the city become the Midwest's leading cultural and business center. Among the company's contributions were the Franklin-Orleans Street Bridge (1919), the Michigan Avenue Bridge (1922), and the foundations for the Adler Planetarium, Shedd Aquarium, Soldier Field, and the Field Museum (1923). Additional work included building lighthouses and breakwaters, and dredging for construction of the Great Lakes Naval Training Station. In 1924 John Cushing became the fourth president of Great Lakes. The following year revenues topped $13.8 million and earnings were $1.5 million.

Wartime Prominence: The 1930s and 1940s

In the 1930s, as the United States was in the grip of the Great Depression, Great Lakes managed relatively well working in and around its namesake waters. Projects included the Naval Armory in Chicago in 1933, the Inland Steel complex at Indiana Harbor (1935), and breakwater for Calumet Harbor (1935), with stone provided by a Lemont, Illinois quarry the company had purchased. Great Lakes lost Cushing in a plane crash in 1935, and he was replaced as president by John R. Williams, the company's top engineer, who succumbed to illness months later. Williams was replaced by Major General Edward Markham, who had served as chief of the Army Corps of Engineers during the first presidency of Franklin Roosevelt. Markham became the sixth president of Great Lakes in August 1938, and the company finished the year with robust revenues of $20.1 million and earnings of $2.2 million.

Markham's tenure was filled with militaristic discipline and bad blood as many executives left or were fired. During his seven years heading the company, accomplishments were overshadowed by increasing tension in the boardroom. In 1939 Great Lakes undertook a huge dredging job at Lake Charles, Louisiana, and bought a competing dredge company. The early 1940s brought Great Lakes into war production as the country entered World War II. Several of the company's tug boats were commandeered by the Navy, and dredgers were busy digging out docks for battleship construction. Another significant project involved the replacement of the small Sault Ste. Marie lock with the much larger and modernized MacArthur Lock. A round-the-clock project for Great Lakes, the MacArthur Lock ran ahead of schedule and opened in 1943 to much acclaim from the U.S. Navy. Great Lakes was awarded the prestigious Navy E-Flag for its contributions to the war effort.

Markham, the only outsider ever appointed president of Great Lakes, resigned in 1945 to the relief of many. A longtime engineer of the firm, William Freeley, was named president. In the immediate postwar years, Great Lakes shored up its inventory, since a number of tugs and dredgers had been damaged or lost during the war. The company bought two tugs from the Navy and installed two floating drydocks, one in Chicago and the second in Buffalo. The floating drydocks meant Great Lakes no longer had to pay to dock its tugs; they also translated into reduced downtime, such as waiting in line at commercial docks.

Booming: The 1950s-70s

In the 1950s Great Lakes was involved in many projects in and around Lake Michigan. One of the more unusual was the delivery of a captured World War II German submarine, the U-505, to Chicago's Museum of Science and Industry in 1954. The sub arrived at the company's floating drydock where it was spruced up and then towed along with the entire drydock through a dredged canal to the shore near the museum. The sub was then dragged over rail tracks to its home adjacent to the world-renowned museum (where it remains to this day). Great Lakes also was involved in the construction of the famous Mackinac Bridge between the upper and lower peninsulas of Michigan in 1954. The Mackinac Bridge was an engineering feat at five miles in length and 552 feet in height. Also in 1954, Freeley retired, and William Lydon's son, Eugene, was named president of Great Lakes.

Great Lakes was a major participant in the huge 60-nautical mile St. Lawrence Seaway project jointly undertaken by the United States and Canada in the mid-1950s, while also working on Brookley Air Force Base in Mobile, Alabama, and a host of dredging and digging jobs in Florida, Indiana, Kentucky, Massachusetts, Michigan, New York, Wisconsin, and international jobs in Colombia, Kenya, Puerto Rico, Saudi Arabia, and Venezuela. Gene Lydon was felled by a massive heart attack on November 22, 1963, just hours before President John F. Kennedy was assassinated. Great Lakes mourned its own leader and the country's Commander-in-Chief at the same time. Langdon Hardwicke was installed as the firm's new president. Revenues for 1963 reached an all-time high of just less than $33.4 million, with earnings climbing to $3.36 million.

Hardwicke served Great Lakes a little more than two years before retiring and was replaced in 1966. By this time Great Lakes had expanded its operations to include jobs on the West Coast and soon found its primary form of business, dredging, under fire. The growing environmental movement in the United States hit marine construction hard, with a variety of developments stymied by ecological concerns, including the federal government's own waterworks projects. It fell on the new president, John (Jack) Downs, to steer Great Lakes in an increasingly difficult era. Ecological concerns were not the only problems facing dredgers: work was hard to find and most private firms could not compete with the better equipped and funded Army Corps of Engineers. The loss of smaller competitors to bankruptcy may have given Great Lakes pause, yet the dredging giant thrived. Revenues for 1975 hit more than $56.9 million and earnings were $4.5 million. The following year revenues were steady at $57.0 million but earnings nearly doubled to $8.1 million in 1976.

Great Lakes teamed with industry leaders and the National Association of Dredging Contractors (NADC) to take on the Army Corps. The Corps' primary advantage was its line of hopper-dredges, which no private firm owned due to their immense cost. Great Lakes tapped into this exclusive market by building its own self-propelled hoppers, which seemed the future of dredging since they were huge, sturdy, and capable of carrying vast amounts of material. The company's first hopper was completed in 1977, quickly followed by a second and third. At this time the company also segued into huge international projects, with domestic dredging jobs at all-time lows. Great Lakes took its expertise to the Persian Gulf, where it completed a series of jobs, and worked on projects in Latin America. Foreign work constituted more than three-quarters of the company's revenues in 1977 alone, a trend it would repeat in the next decade. Revenues for the year climbed to $87.8 million, while earnings had nearly doubled from the previous year to $15.3 million. At the end of the decade, in 1979, Great Lakes International, Inc. was created as a holding company for the firm's growing assets.

International Expansion: The 1980s and 1990s

After its recent success abroad, Great Lakes continued its emphasis on international projects and branched into another sideline, beach refurbishment or "nourishment." Jack Downs, who had led the company for 17 years, retired in 1980 and was replaced by William Colnon, who stepped down in 1986 in the midst of antitrust lawsuits against the United States' largest dredging companies. Great Lakes was caught in the fray but survived unscathed. Another development in 1986 was passage of the Water Resources Development Act (WRDA), which allocated federal and municipal funding for constructing "super-ports" or upgrading and expanding the country's highest traffic ports. As the number one dredging firm in the nation, Great Lakes not only secured a large slice of the resulting work, but it also had gained the unflinching notice of the Chicago-based Itel Corporation.

Itel Corporation first bought stock in Great Lakes in 1985 from a New Jersey group that pulled out of a possible takeover attempt. Itel originally acquired a 5.4 percent stake in the company and increased it over the next few months to 20 percent. Great Lakes agreed to Itel's friendly takeover, selling the entirety of its stock at $62.50 per share in November 1985. DeWitt Barlow, a third-generation Great Lakes dredger, was named president in 1987; revenues for the year came in at $156.7 million with earnings of $13.3 million.

Despite a decline in domestic dredging contracts, Great Lakes stayed busy with projects like the deepening of Curtis Bay and the Port of Baltimore's 42-mile long channel in 1990, the year of its centennial. The firm also looked into further international expansion. With the resources of parent company Itel behind it, Great Lakes formed a foreign division to capitalize on global possibilities as domestic dredging jobs became harder to find. Late in the following year, however, Great Lakes was sold by Itel to Blackstone Dredging Partners LP, part of the massive Blackstone empire.

In 1992 Great Lakes became embroiled in a series of lawsuits due to repair work on a bridge in Chicago. While replacing wooden pilings, Great Lakes had inadvertently weakened an underground tunnel system built in the early 1900s. The tunnel began leaking and later collapsed, flooding the basements and lower levels of hundreds of Chicago buildings in April 1992. Lawsuits over the damage mounted into the millions, many of them naming Great Lakes along with the city of Chicago. Although initially found liable, Great Lakes was later cleared because the city had not properly maintained the tunnel system and had been aware of leaking and damage well before the flood. Despite the flood imbroglio in 1992, by 1993 Great Lakes had made great strides in its international expansion plans with projects in Africa, the Middle East, South America, Mexico, Denmark, and Sweden.

At the same time Great Lakes had pursued international growth, the company had segued into "beach nourishment" projects along American coastlines. Rebuilding and reshaping beaches and shorelines became an integral part of the company's business. A new president and chief executive also brought a new perspective to Great Lakes as Doug B. Mackie, who had joined the firm as corporate counsel in 1978, took the reins. By 1998 some of the long-awaited WDRA contracts had come to fruition, with Great Lakes securing a number of capital ("Deep Port") improvements from the Army Corps of Engineers, including port deepening in New York, New Jersey, Boston Harbor, and San Juan (Puerto Rico), as well as the construction of a massive pier in Los Angeles. During the same year Great Lakes was sold by Blackstone Dredging to Vectura Holding Company L.L.C., an affiliate of Citicorp (later Citigroup) Venture Capital. Great Lakes brought in revenues of $289 million for 1998 and $302.3 million the following year.

Another Century: The 2000s

By the year 2000 Great Lakes maintained its status as the United States' top dredging firm, with an ever increasing fleet of dredging and digging equipment. Revenues for the year were robust, due in part to WDRA contracts, at $339.1 million. In 2001 Great Lakes entered a related business segment, demolitions, with the purchase of 80 percent of the Boston-based North American Site Developers, Inc. Great Lakes increased its ownership by another 5 percent in 2003. Deep Ports projects continued to bring in the majority of the company's revenues, with projects in California, Georgia, Florida, Kentucky, Mississippi, New York, North Carolina, Pennsylvania, Rhode Island, and Texas. In 2003 Great Lakes was the first American firm to begin work in war-torn Iraq, at the Umm Qasr Port. The Iraq work was dangerous, due to ongoing hostility against Westerners, as was a construction project in the Middle East, in Bahrain. In December 2003 Great Lakes was sold for the third time in 12 years to Madison-Dearborn Partners, a Chicago-based private capital firm. Revenues for 2002 had reached $362.6 million and leapt to $398.8 million for 2003.

In 2004 Great Lakes continued reaping the rewards of the WDRA's Deep Ports contracts, winning bids for work in Louisiana, New Jersey, North Carolina, and several different dredging projects in California. International contracts included further work in Bahrain along the Persian Gulf, and a new airport in neighboring Qatar. Entering 2005 Great Lakes was on solid ground: its revenues continued to climb annually despite being bought and sold a number of times in the previous two decades. Great Lakes continued to maintain the largest and most diverse dredging fleet in the United States with 24 dredges, 27 material transportation barges, two drillboats, and numerous other specialized support vessels, valued in excess of $1 billion.

Principal Subsidiaries: Amboy Aggregates (50%); Great Lakes Caribbean Dredging, Inc. (Puerto Rico); Lydon Dredging and Construction Company, Ltd. (Canada); North American Site Developers, Inc. (85%).

Principal Competitors: Penta-Ocean Construction Co., Ltd.; Koninklijke BAM Groep nv; Weeks Marine, Inc.


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