The company's six principles: make a profit so that the company will remain financially sound; help to develop the people in our organization to achieve their maximum potential in a climate that creates good working conditions, mutual trust and happiness; encourage our people to practice thrift, to take an active interest in their church or synagogue, community projects and government, and to be good citizens; manufacture products and provide services of the highest quality, so that we may merit the respect, confidence and loyalty of our customers; be a source of strength to our customers and suppliers, conducting all of our transactions with them with fairness; plan and carry out all of our activities so that the company can expand its leadership and be regarded as a model in industry.
Atlanta-based Abrams Industries Inc. is a construction and development company focusing on the thriving Sun Belt markets of Georgia and Florida and consisting of three business segments. Of these, Abrams Construction Inc.--which builds, remodels or expands large commercial properties such as shopping centers, stores, banks, and warehouses--performed well during the 1980s and 1990s. The real estate segment, represented by Abrams Properties Inc., had begun to recover in the mid-1990s from what some observers saw as an over-dependance on a single client. To a larger extent, recovery was the name of the game at the company's third subsidiary, Abrams Fixture Corporation, which creates displays for retail stores. In spite of sometimes troublesome circumstances in recent decades, Abrams' leadership--several of whom were sons or grandsons of the company's founder--remained unshaken in their optimism for the company's future.
Alfred Abrams and His Sons
In 1925, World War I veteran Alfred R. Abrams, then 26 years old, started a construction business in West Palm Beach, Florida. It was a pioneering effort in more ways than one, because Florida's boom years still lay ahead. Air conditioning was still relatively new and far from universal, meaning that people were not yet flocking to Miami and Fort Lauderdale, as they would in coming decades. Abrams himself would move his business north 15 years later, to Atlanta.
Not long after Abrams relocated in 1940, America entered another world war, and when it was over in 1946, his company began producing in-store fixtures for retailers. This was the origin of Abrams Industries' manufacturing segment, which became Abrams Fixture Corporation. At that time, however, the overall company was simply A. R. Abrams Inc., a sole proprietorship. In 1960, Albert Abrams incorporated Abrams Industries under Delaware law. That year also saw the beginnings of the company's third segment, real estate.
Alfred Abrams had two sons: Bernard, born in 1925, the year Alfred began his business, and Edward, born in 1927. Like his father, Bernard Abrams entered the military and considered a career in the army, but suffered wounds during the Korean War, in which he served as a captain, that forced him to return to civilian life. Younger son Edward Abrams would later describe his father as "a real martinet" as a corporate leader. The statement, in an Atlanta Journal and Constitution article about family-run public companies, referred not to the elder Abrams' policies with his work force in general, but rather to his treatment of his sons. Clearly Alfred Abrams did not want his boys to grow up thinking that just because they were the boss's sons, they should have it easy.
When Alfred Abrams died in 1979, at the age of 80, his sons had long since taken charge of the company; within just a few years, their sons as well would come on board. Thus Abrams Industries, whose stock is traded on NASDAQ, would become both a public and a family-run enterprise.
Ups and Downs in the 1980s
In the mid-1980s, Bernard Abrams served as chairman and chief executive officer of the company, while Edward Abrams served as president. The company had several things going for it, but it faced potential challenges as well. At that time Abrams Industries consisted of seven subsidiaries, including a division specializing in electrical and fire protection contracting. A 1986 profile of the company in the Atlanta Journal and Constitution lauded the development of what had grown from a small construction company into a $61.5 million-a-year corporation, but also regarded the firm as on the defensive in the face of declining market share.
At the time a single client, discount retailer Kmart, accounted for more than one-third of Abrams Industries' revenue, and this company's share of Abrams' total business had declined from 44 percent in 1983 to 35 percent in 1985. With such a heavy reliance on a single client, the company's fortunes were bound to rise and fall with the retailer's, and the Journal and Constitution reported that "Kmart and other retailers aren't adding stores and fixtures as they used to."
Moreover, Bernard Abrams's outside responsibilities created another challenge, because they placed a strain on his time and diverted his attention as chairman of the company. Though he had long since left the army, he remained committed to acting on behalf of the military, becoming involved in public work to improve communication between U.S. citizens and their armed forces by working as an aide to the Secretary of the Army. These activities, along with his other civic commitments, often divided his attentions, and in 1986 he admitted, "I feel as though I must give more time to the business."
The Journal and Constitution article noted that Abrams Industries had "the kind of strategic defense any soldier would write home about," and the military-minded Bernard Abrams spoke of how his experience in the army had taught him to handle "moments of tension." His defensive strategy involved relying on the most successful parts of the company to make up for those that lagged behind, and also required that management stay calm: "If a wall falls down," Bernard said, "we don't panic. We'll just fix the wall."
In fact, while Abrams Industries had experienced slowing in some areas, other segments helped offset losses with larger profits. The electrical and fire protection segment was small, and would eventually be discontinued altogether; production of store fixtures, however, while not being the largest area of the company in terms of dollar volume, was nonetheless highly profitable. Contracting and engineering had suffered losses, though, partly because of overbuilding in the multi-family housing market, and real estate had likewise posted losses.
The Third Generation of Abramses
In the 1980s, a third generation of the Abrams family began to move into management positions. Edward's sons Alan and J. Andrew (Andy), and Bernard's son David, all joined the family business. Edward told the Journal and Constitution in 1989 that he had wanted his sons to join the company for several years: "I thought, wouldn't it be a shame not to give these kids an opportunity to continue?" Bernard said proudly of his son and nephews, "These men know that my brother and I have worked very hard for this business."
All three of Alfred Abrams's grandsons had extensive educations. Alan R. Abrams, who had studied history at Columbia University and earned an MBA from Atlanta's Emory University, had first gone into investment banking before joining Abrams Industries. Andy Abrams graduated from Notre Dame University with a double major in English and electrical engineering, and he too found himself being invited into the family firm. "Dad had never asked me for anything," he told Susan Harte of the Journal and Constitution, adding that "so when he did, I listened." His first job with the company was hardly one that put all his education to work: "I can still shape a very nice ditch," he recalled of his early employment at an Abrams construction site in Florida. By 1989, he was working as construction coordinator for Abrams Properties. As for David Abrams, he was the only one of the Abrams cousins who had "an underlying assumption that the family business would be a part of my life." Hence his education most closely mirrored the needs of the company: a chemical engineering degree from Princeton and MBA training from Harvard.
By 1996, the company's annual report would show that Alan Abrams and Andy Abrams, who had grown up less prepared for a career with Abrams, remained with the company. Alan Abrams was serving as president of Abrams Properties Inc. while Andy Abrams was named vice-president of Abrams Fixture Corporation. As for the older generation, they had changed roles: Edward Abrams was now chairman of the board and CEO of Abrams Industries Inc., and Bernard Abrams was chairman of the executive committee for Abrams Industries Inc. Seven years had brought a great deal of change, not only in the company's leadership, but throughout Abrams Industries.
The Uneven 1990s
In the quarter ended July 31, 1990, the company reported net losses of around $300,000 for the company, attributed mainly to Abrams Fixture, the segment that created merchandise displays. According to Bernard Abrams, this disappointing showing owed chiefly to the fact that two large retailers had postponed orders until later in the year.
The poor performance of the manufacturing segment portended future results in that area of the company. Once a highly profitable part of Abrams' operations, by the time of the 1996 annual report, the subsidiary had definitely fallen on hard times. In response, management decided to "build our business to our customers," rather than "build our customers to our business," by re-engineering the manufacturing segment. Toward that end, according to the Abrams annual report, leadership decided to redesign Abrams Fixture Corporation from the ground up: "Our people were told that nothing was sacred," the report relayed. Abrams instituted a three-part renovation of the company which would last into the summer of 1997. As for revenues and profits from the manufacturing segment during this time, profits had dipped in 1993, risen slightly in 1994, and then plummeted in 1995. By 1996, the losses were smaller, and the company anticipated gains from the closing of some facilities.
Real estate was in better shape, partly because the company had redeveloped a Kmart location in Jackson, Michigan, that it had owned since the early 1970s, creating a 105,000-square-foot shopping center with Kroger and Big Lots as its "anchor stores." Abrams properties also had activities at a North Fort Myers, Florida, shopping center in which, by adding a large portion in 1996, it held 240,000 square feet of leasable area. It also had properties in Oakwood and Tifton, Georgia; Englewood, Florida; and other locations. Revenues from real estate were down from a 1994 high, and losses exceeded $1 million on receipts of almost $11.5 million. The company attributed the shortfall to two factors: the loss of rental income during the renovation of the Michigan site and costs of maintaining and retenanting that and other locations. Again, the company was optimistic about future returns from present activities, in this case its addition of new leasable space.
In contrast to the corporate picture a decade earlier, construction was the brightest spot for Abrams. In 1996, the company completed more than 130 projects in some 22 states, mostly for major retailers. Revenues in this area exceeded $108 million, and earnings were nearly $3 million. The company attributed the success of its construction segment to "the untiring effort and dedication of all our people to produce the customer's product in the most efficient manner and in the shortest possible time."
While dramatic changes had taken place in corporate structure and performance, some aspects of Abrams were much the same as before. Uneven performance of the different subsidiaries remained, though the underperformers had shifted. And a high degree of reliance on a few customers still existed, though now the emphasis had shifted away from Kmart. In 1996, the company did 48 percent of its business with Atlanta-based Home Depot Inc. and some 18 percent in building and development for Baby Superstore.
Alan Abrams, as Abrams Properties president, told the Atlanta Business Chronicle in 1997 that the company had sold off two Kmart properties besides the one in Michigan, the others being in Georgia and Oklahoma. More importantly, the company was adopting a new diversified strategy in its real estate operations. To that end, Alan Abrams and executive vice-president Gerald T. Anderson II had spent a great deal of time on the road, drumming up new business.
For the fourth quarter of its 1997 fiscal year, which ended on April 30, the company had posted profits in all three of its segments. Alan Abrams told the Business Chronicle: "It's important for people who follow us to know that we're using the proceeds to invest in a more diversified mix." He added, "We had 22 properties where Kmart was either the lead tenant or single tenant in all but one. We've now sold several of those Kmart properties, and we're trying to broaden the base of our tenants." Among the significant elements in the invigorated real estate strategy, he said, were a new involvement with office and industrial properties as well as a focus on "second-tier" cities such as Chattanooga, Tennessee, and Macon, Georgia.
Gerald Anderson told the Business Chronicle that he and Alan Abrams had "lived on airplanes for quite a while" as they went around the country to grow the business and "turn our portfolio." Alan Abrams was cautiously upbeat: "We had a couple of tough years," he said, "but the companies, especially the manufacturing subsidiary, have done a remarkable turnaround."
Principal Subsidiaries: Abrams Construction Inc.; Abrams Fixture Corporation; Abrams Properties Inc.
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