A Video Conversation with David Welch, Owner–Operator of Welch and Rushe Inc.-Building a Resilient Business for 50 years

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A industry-leading mechanical contracting company serving the Washington, DC metro area and beyond

David Welch is the owner–operator of Welch and Rushe Inc., a mechanical contracting company located in Upper Marlboro, Maryland. Co-founded by David’s father, Linden Welch, in 1966, WRI has grown from a two-man operation to a 200-person operation serving clients locally and internationally. Today, the company is recognized as a leading mechanical contractor in the Washington, DC market, and has worked on numerous projects of national significance, including the National World War II Memorial, the Washington Monument, and the US Capitol Visitor Center.

 

OFFIT KURMAN: Welch and Rushe has been in business for over 50 years. To what do you attribute the company’s longevity?

 

DAVID WELCH: When the recession started in October of 2008, all construction companies were hit very hard, and some of the larger companies are now out of business. We saw some very, very large companies go out of business. Some doing hundreds of millions of dollars a year are no longer in existence. What we did—which was very tough when ’08 hit, and then we got into ’09 and ’10: we downsized significantly. We cut our company almost in half. We realized that the prices for jobs were going too cheap, that we could not do this work and make a profit, and that if you’re losing job over job, you’re going to be out of business. What we did was we let go employees that we had to. We kept all of our key employees, we downsized—so that we had a reasonable market share—and then we invested very heavily in our prefab department, our coordination department. We found ways to do the work smarter, ways to do the work quicker and better, so it wasn’t about just telling our guys, “you have to do the work faster,” because you can’t tell a man that. It takes 10 hours to weld a joint; you can’t tell the man, “you have five hours to do it,” because you’re going to get subpar work, you just can’t physically do that. So, we had to find better ways to do that.

 

One of the ways we did that was we invested heavily in our prefab shop. Ten percent to 15% of our work runs through the prefab shop, so by the time it gets to the field, it’s already built. They’ve got ideal conditions back there.

 

We also found that during those times that finding and keeping key personnel was absolutely critical. The industry kind of had a correction, if you will, because all the companies in ’08 just had bodies. Everyone had so much work that you just needed people to get the work done. When the recession hit, we went through and we looked very hard at our key employees, decided who some of those key employees were. We actually raised the salaries of some of those key employees. We didn’t want them going anywhere, but we asked them to do more. We expected more from them and it got us through. Another thing that we did prior to ’08 was we kept ourselves cash-strong—we never overextended ourselves, we were very careful with the jobs that we took, and we remain very careful with the jobs that we take now.

 

I would say that overall the economy for us in Washington, DC, as a mechanical contractor will probably never be, at least in my career, as strong as it was in 2008 and maybe the decade before. It has leveled off. It’s definitely the profit margin still are lower than they should be, the risk is still higher than it should be, and the owners still expect a lot of things done for free that we just simply can’t do for free. I would say that we’re very close. I think that this is the new normal, what we’re seeing now, and 2017 is the new normal, so I don’t think we’re ever going to see times as plentiful as they were in 2008. A lot of us learned the hard way. We got kind of lazy leading up to 2008 because there was so much work we didn’t have to go and get it. We made a lot of changes with the way we market ourselves with our networking and how we go out and may keep our basic market share.

 

One of the things that we do to try to keep ourselves a step ahead is we invest very heavily with our employees. We strongly encouraged our core employees to continue their education. We have a program set up where we will pay a certain amount of their education every year, and that renews every year for our employees. I’m always encouraging the employees to better educate themselves. You can never have enough education. From my 18-year-old employees up to my 65-year-old employees, I encourage education all the time. We think that’s the most important thing. There are always new products coming out, new ways of doing things. On the IT side, things change. It’s almost reinvented. It seems like every five years, we’re doing things completely different on the IT side than we did five years earlier so, we’re not afraid to invest in new technology. We just switched our project management software over to a software called Procore. We’re in the process now of investing in new software for our service department, just trying to stay ahead of the curve.

 

Something else that we’ve done to keep Welch and Rushe strong through this recession is diversification. We’re probably 50% private, 50% government work, and we’ve had some really incredible jobs that we have the honor of performing. Most recently, the World War II Memorial—Welch and Rushe did all of the plumbing on the World War II Memorial, which was a real honor to work on. We did all of the plumbing for the FDR Memorial. We’re in a pretty much any base that you can name around Washington, DC—there’s a Welch and Rushe truck there now. We do a lot of work in the White House, EEOB, the Pentagon—all the main government buildings downtown. We spend quite a bit of time down there working in those buildings.

 

 

 

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