Swinerton Inc. - Company Profile, Information, Business Description, History, Background Information on Swinerton Inc.



580 California Street, Suite 1200
San Francisco, California 94104
U.S.A.

Company Perspectives:

Because we started providing construction services before the invention of the light bulb, the airplane, and the automobile, we've learned to adapt to continuous change over the course of 110 years. But the Swinerton companies haven't simply adapted. We've also set new standards for construction and championed changes in technology that have provided our customers with innovative approaches to their projects, resulting in successful and time-tested buildings and facilities.

History of Swinerton Inc.

Swinerton Inc. is the holding company for several firms that handle all aspects of construction including general contracting, project management and consulting, and property management. Some of the most famous buildings in San Francisco—the Opera House, the Public Library, the Pacific Telephone and Telegraph Building, the Ghirardelli Square retail complex—were built by this company whose origins go back to the 1880s and the dreams of a Swedish immigrant who had come to seek his fortune.

Joining the Land Rush in the 1880s

California in the 1880s was a booming place. The gold rush of 1848 had put California on the map, and the construction of new rail lines set up a competition that made it ridiculously inexpensive to come West. The first Santa Fe Railroad train pulled into Los Angeles in the spring of 1887; thanks to the rivalry between the Santa Fe and Southern Pacific rail lines, the rail fare from Chicago to Los Angeles dropped to a dollar.

Not surprisingly, this caused a "land rush" not unlike the gold rush of half a century earlier. Among the budding entrepreneurs that traveled to California was Charles Lindgren, a young man who had emigrated from Sweden to Chicago several years earlier. The son of a stonemason, he reasoned that the population boom in California would mean a construction boom, so he moved his young family to Los Angeles. Lindgren met many others like himself in Los Angeles, and he began a business with two men, James Boyd and Frank Sharples. The firm of Boyd, Sharples & Lindgren advertised in the Los Angeles city directory as brick masons and contractors, and initially they met with success.

Unfortunately, the land boom in Southern California had inflated prices so sharply that the market was unable to sustain itself. A collapse of the real estate market in 1889 put many people out of business, including Boyd, Sharples & Lindgren. Lindgren continued to work as a brick mason, always watching out for new challenges. One such challenge came in July, when the city of Bakersfield (north of Santa Barbara) suffered a devastating fire. Bakersfield needed experienced builders, and Lindgren was among those who headed north to help reconstruct the city.

Lindgren proved his skills as a contractor in Bakersfield, where he resettled his family. Over the next decade his business expanded and thrived, and he earned a reputation for work that was both high quality and finished ahead of schedule. Bakersfield and the surrounding communities provided plenty of work for Lindgren, but he was ambitious for greater challenges. At around this time, a new building boom was beginning, this time in San Francisco, and Lindgren was intrigued enough to explore the possibility of expanding his business there. He made his first definitive move in this direction in 1900, when he formed a partnership with a Berkeley engineer named Lewis Hicks.

A New Way of Building in the 20th Century

Hicks brought two attributes to this partnership. First, he was well connected in the San Francisco community, which opened up opportunities for larger projects. Second and more important, he was a pioneer in steel-reinforced concrete construction. Hicks was convinced that steel-reinforced concrete would replace traditional wood and brick, in part because it would be more durable against disasters such as earthquakes and fires. He convinced Lindgren, and the two men introduced the new technique into the Bay Area. Not surprisingly, their efforts were met with resistance, in part because the new technique as more expensive than traditional brick and wood construction. Many buildings continued to be constructed this way in San Francisco and its environs.

It took a disaster to change attitudes permanently in San Francisco. The earthquake that hit on April 18, 1906, left much of the city in ruins. Many of the buildings the earthquake left standing were consumed by the fires that engulfed the city for days afterward. Experts examined the buildings that remained standing over the next several months; while some brick and masonry structures had suffered relatively minor damage, it was the steel-reinforced concrete structures that had fared best. Once people realized this, it was clear that there would be no going back to traditional building materials.

One of the buildings damaged in the earthquake was the Fairmount Hotel, which had been scheduled to open in the spring of 1906. The damage resulted from fire, which had burned crates of furnishings in the hotel and gutted the building. A number of the steel columns had buckled and needed to be replaced. This Lindgren Hicks did, under the supervision of a young architect named Julia Morgan (who would later become famous as the architect for San Simeon, the "Hearst Castle.")

As the recognized experts on steel-reinforced concrete, Lindgren Hicks grew quickly. However, Lindgren and Hicks ended their partnership in 1908, apparently the result of a business disagreement. Lindgren formed a new company with his brother, Fred, and set about building a still stronger operation by hiring the most talented people he could find. One of these new hires was a young man who had been studying engineering at Stanford until the earthquake convinced him that a career in building would be more challenging. His name was Alfred Bingham Swinerton.

Bringing a New Focus in the early 1900s

Swinerton's talent and abilities were evident almost from the beginning, and he rose quickly up the Lindgren ladder. By 1911 he was a shareholder and a member of Lindgren's board of directors. In 1913, when Charles Lindgren died, the 30-year-old Swinerton was named vice-president. A year later, Swinerton married Jane Hotaling, a member of one of San Francisco's wealthiest and most prominent families. Jane Hotaling Swinerton was as savvy about business as her husband, and she was named to the Lindgren board of directors shortly after the marriage.

The next few years were busy for Lindgren. Among its achievements were the French Pavilion and the Exposition Auditorium for the Pan Pacific International Exposition, the San Francisco Public Library, and the Southern Pacific Building. Lindgren was earning a reputation not just for quality and speed but also safety. The Southern Pacific building—at the time the largest office building west of Chicago—took less than a year to complete, during which time there were no serious injuries to any of the crew.

In April 1917 the U.S. entered World War I, and Lindgren was chosen by the government to build an army training facility, Camp Fremont, in San Mateo. War projects like this were particularly important to companies like Lindgren, since civilian construction all but halted while the U.S. was at war. The wartime contracts helped keep Lindgren busy until construction began to pick up again in the early 1920s.

Lindgren saw its business grow steadily throughout the 1920s; among its projects were the Pacific Telephone and Telegraph building and the Francis Drake Hotel. The combination of more sturdy building materials and the development of high-speed elevators allowed companies to build taller buildings. Alfred Swinerton how headed Lindgren, and in recognition of his hard work and contributions, the board of directors voted in 1923 to change the company's name to Lindgren & Swinerton, Inc.



During the 1920s, architects, engineers, and contractors became increasingly vocal about their belief that builders should be licensed. In part this was because the building boom was attracting so many new contractors that it was difficult to know which ones were most experienced or had the best safety record. Some saw licensing as a means of keeping the best jobs in the hands of only a select few contractors, so the issue was debated throughout the decade. The California legislature finally passed a licensing law in 1929. Lindgren & Swinerton was the 92nd company out of some 28,000 to apply for licenses that first year; the company's license number remains 92 to the present day.

Struggling Through the Depression

Businesses across the board were optimistic about the 1930s. The stock market crash in October 1929 was viewed as a temporary blip in a strong economy, but as it became clear that a severe depression was at hand, industries suffered severe losses. In 1932, three years after the crash, nearly 500 construction contractors had gone bankrupt, with liabilities of more than $42 million. Projects became harder to come by. Moreover, union activity in the construction trade, which had been weak since the end of World War I, was increasing; as unions gained strength, wages went up.

Lindgren & Swinerton had enough backlogged projects that the company was spared some of the pain of the Great Depression, at least in the beginning. However, there came a point during which work seemed to dry up. Lindgren & Swinerton had put in bids for both Boulder Dam and the Golden Gate Bridge but had failed in both attempts. Swinerton and Walberg debated whether it might be better to close the company during the depression, but they decided instead to take a risk and spend additional money to build on their strengths.

By the mid-1930s things seemed to be getting better, but the country was hardly out of the woods. In the late 1930s, Lindgren & Swinerton was once again getting large projects, including a 312-mile long pipeline from Bakersfield to Martinez and a 263-mile pipeline running over the Andes Mountains through Colombia and Venezuela. These jobs were lucrative, but Lindgren & Swinerton needed capital. The company's bank was unwilling to grant a loan, but Jane Swinerton came to the rescue, putting up money from her estate. In the end, the projects were successful. The Barco project was particularly grueling, since it exposed workers to conditions they had never before experienced. Mosquitoes carrying malaria and other diseases proliferated, poisonous snakes were also a hazard. Sanitation and refrigeration as these workers knew it were non-existent. Occasionally the workers were even attacked by members of indigenous tribes. Lindgren & Swinerton enlisted the aid of a public health official from San Diego to supervise sanitation efforts at the project site. A water purification plant was built, and electric refrigerators were provided (they had to be floated up the Magdalena River). Workers were also required to remain inside their mosquito netting after sunset.

The War Years

The 1930s closed out with some economic promise, but the specter of World War II hung over U.S. citizens. Even without direct U.S. participation, U.S. supplies were being sent overseas. When the United States officially entered the war in December 1941, production at all levels was turned to the war effort. Lindgren & Swinerton had the reputation, but not the cash flow. The Depression years had left the company strapped despite the projects it had built, and its primary bank, the Anglo-California, was extremely cautious. New projects, such as a joint venture with another contractor to build an Army installation in Panama, held out promise, but cash flow was still a critical problem. By the summer of 1941, relations between Lindgren & Swinerton and Anglo-California were so bad that no one knew what the contractor's fate would be. Once again, help came in the form of Jane Swinerton, who, using money from the Hotaling estate, paid off all loans owed to Anglo-California and vowed that her husband's company would never again do business with that bank. Lindgren & Swinerton entered into a new banking arrangement with the much more helpful American Trust company, and the company was able to devote its energies to its business.

In 1942, partly to shield itself from changes in federal tax law that taxed corporations as high as 50 percent of net earnings, the corporation of Lindgren & Swinerton became a general partnership called Swinerton & Walberg.

Postwar Construction Boom

Wartime construction had peaked around 1943 and then fell off, with the U.S. government putting most of its efforts behind manufacturing. Construction companies struggled, but when the war ended they were in for the most widespread building boom the U.S. had ever witnessed. Construction of post-war factories, housing and highways soared; these paved the way for the construction of schools, hospitals, and shopping centers.

In fact, the U.S. government did not eliminate wartime production controls immediately after the war. Fearing that overly rapid growth could lead to inflation, they opted for a more gradual return to pre-war standards. Far from being detrimental to businesses, it gave them a chance to regroup—and also to plan out their futures.

Swinerton & Walberg was able to take its first breath in nearly a decade. And, with its reputation for superior work and integrity, it was able to land numerous important deals during the post-war years. Among the companies that turned to the Swinerton organization in the 1940s and 1950s were General Motors, Kodak, Safeway, American Can, General Foods, Dow Chemical, Hunt Foods, and Kimberly Clark.

Defense production became a major source of business in the United States as well. Swinerton & Walberg participated in defense construction, including a plutonium production facility in Rocky Flats (outside Denver) commissioned by the Atomic Energy Commission in 1955.

The building frenzy did eventually slow down, and toward the end of the 1950s Swinerton & Walberg began to feel the effects. The company looked to different solutions and decided to divest itself of its pipeline division. It also decided to focus more on real estate development, as well as hotel and resort construction. In the early 1960s the company began building in Hawaii, where demand for hotels was high.

During this time the company began to restructure its business. Previously, it operated more like a series of several different companies, each focusing on a particular specialty. Now it would have a more unified, consolidated corporate structure. This was one of the major changes for the company during this time. In May 1963, another unexpected change took place: company chairman Alfred Swinerton, who had started with Lindgren more than 50 years earlier, died at the age of 79. The transition was smooth; Walberg was named chairman and Swinerton's son William was named president. But to longtime employees it was the end of an era for the company.

Continued Growth: 1960s-80s

Swinerton & Walberg in the 1960s was a strong and healthy company. With such projects as Ghirardelli Square retail complex and additional hotels in Hawaii, Swinerton continued to grow. It also looked for ways to increase its range as a means of fending off dips in the economy. The acquisition of Rothschild & Raffin, specialists in heavy construction projects, helped toward this goal, as did continued expansion into the hotel-resort market.

In 1976, chairman Richard Walberg retired after 48 years with the company, and Milo "Ned" Gates was named president. William Swinerton stayed on as chairman. Another big change that took place within the company's structure was that it became a 100 percent employee-owned company; this involved a stock repurchase plan that bought up some 3,000 shares of stock held by members of the Swinerton and Walberg families who were not otherwise associated with the company. It was believed that employee ownership would give management a stronger stake in the company's long-term performance.

Building recessions in the 1970s turned to construction booms in the 1980s, as an office building boom seemed to sweep the country much as the housing boom had some 30 years earlier. Swinerton & Walberg took advantage of this boom and built many of the premier office buildings in San Francisco and other cities during these years.

The 1980s opened Swinerton up to a problem it had virtually never faced in its history: safety problems. Swinerton had long prided itself on its decades-long outstanding safety record. But a series of accidents made the company rethink its safety programs. A crane accident at a Los Angeles site in 1981 killed two Swinerton employees and injured three others. Immediately the company re-examined all its safety efforts, including education programs and closer supervision of all subcontractors. A 1985 crane accident, also in Los Angeles, killed three workers. Again safety measures were examined carefully, and again the company spared no efforts. However, a 1989 crane accident in San Francisco killed five people and injured 21 others. These accidents ultimately led to a strengthening of crane operation safety regulations.

Entering the Second Century

In 1988, Swinerton & Walberg celebrated the company's centennial in the lobby of the Fairmount Hotel, where more than 80 years earlier Lindgren and Hicks had been feted for rebuilding the fire-damaged edifice. Dave Grubb, who had been rising in the Swinerton ranks for some years, was named president, as William Swinerton stepped down as chairman and Milo Gates replaced him in that role.

The 1990s start off badly for the construction industry, with the collapse of the office construction boom in the late 1980s compounded by the 1991 recession. Swinerton & Walberg had enough work to keep the steady through the early 1990s but realized that planning for a sound future still had to be a top priority.

Throughout the 1990s, the company added a number of companies to its family through mergers and acquisition. These included Tucson-based contractor Conelly Construction (1994), heavy construction company William P. Young (1997), Salt Lake City-based Bud Bailey Construction Co. (1997), and El Monte, CA-based Keller Builders (1999). The company continued its efforts to diversify, getting involved in construction management and consulting, and remained involved in property management. The company reached a milestone in 2000 when for the first time it posted revenues of over $1 billion.

In 1996, the Swinerton group was organized under the umbrella company Swinerton Inc., with Dave Grubb as chairman. In addition to the acquisitions above, Swinerton Inc. also included Swinerton & Walberg, Swinerton Management & Consulting, Westwood Swinerton (based in Oregon), and Swinerton & Walberg Property Services. Swinerton believed that its demonstrated commitment to quality and safety, coupled with its ability to adapt to market changes, will make for a strong and profitable future.

Principal Operating Units:Bud Bailey Construction; Keller Builders; Swinerton Management & Consulting; Swinerton & Walberg; Swinerton & Walberg Property Services; Westwood Swinerton; William P. Young Construction.

Principal Competitors:Bechtel Corporation, Bovis Lend Lease, Hathaway Dinwiddie.

Chronology

Additional Details

Further Reference

Abrahamson, Eric. A Builder in the West: The History of the Swinerton Organization, Redwood City, Calif.: Prologue Group, 1998."Accident Revives Question: Is State Lax in Regulating Cranes?," Los Angeles Times, January 19, 1990, p. B1."California Mark IV," Economist, June 4, 1994, p. A23."Economic Recovery Taking Hold but Too Late for 1993 Billings," ENR, April 4, 1994, p. 35.Roberts, Steven V., "California Crumbling," U.S. News & World Report, September 14, 1992, p. 69.

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