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SBA Financing Puts Charge Into Du-Rite Electric’s Green Jobs, Contracting Work
When she was a young girl, Tracie Malesa often played a game in her family’s electrical contracting business. She and her sister often would imitate her grandparents by holding imaginary business meetings of their own, pretending to schedule service calls and typing up little invoices, just to have fun.
There’s no playing around for her these days. Malesa grew up to run Du-Rite Electric, an Elkhorn-based family-owned company that’s seen revenues climb 25 percent over the past year, and should soon expect another $1 million in growth thanks to burgeoning federal contracting work and the rising popularity of green projects.
Getting involved with federal contracting jobs
Du-Rite Electric has served local metropolitan homeowners, builders and contractors since the company was founded by her grandparents in 1958, but becoming a contract holder of the General Services Administration schedule opened the company to work on government projects creating an additional revenue stream.
“The programs were for projects to improve infrastructures, and in most of those projects, electrical work would be needed,” said Malesa, who turned to the Procurement Technical Assistance Center at the Nebraska Business Development Center’s Omaha office for certification help. “We saw it as an opportunity for a new line of work we hadn’t done before.”
Contract work will prove crucial; while the company’s revenues fell along with the rest of the construction industry during the recession, “it’s beginning to climb again,” she explained, “although we do have to do more projects now to reach the same revenue because our profit margins have decreased.”
Some of those projects include retrofitting light fixtures with state-of-the-art LED systems and other electrical projects in the Edward Zorinsky Federal Building and the Roman L. Hruska Federal Courthouse in Omaha, the Robert Denney Federal Building and Courthouse in Lincoln and the Nebraska Games and Parks Commission.
“We’ve seen a big demand for retrofitting fixtures from the traditional metal halides to LED, which is a greener version of lighting,” Malesa said. “Customers are seeing savings in utility bills as well as noticeable differences in the brightness of their lights.”
And not just for those government jobs. The company retrofitted light fixtures in a handful of hangars at a private airport in Minnesota, and did similar work for Westroads Mall in Omaha. They’ve also snagged jobs installing large exhaust fans for Planet Fitness, area colleges, the Washington County fairgrounds and several large manufacturing plants in the area.
Then there are several in-depth remodeling jobs for fast food franchises in Omaha and Fremont. “From the lighting right down to the electrical outlets to plug in the fryers,” she said.
The company continues to take on residential jobs, too. Malesa said the company has found a niche working with outdoor pools, spas and kitchenettes, sunrooms and home automation systems.
Staying competitive in a challenging industry thanks to SBA financing
“We don’t do any advertising,” Malesa said, proudly. “All business is referral or word of mouth.”
Visit the Elkhorn site during the morning rush—and it is a busy rush--and you’ll see one shift returning trucks, equipment and tools as another checks in for their assignments that day. With a grunt or two they’ll load up their trucks and off they go to job sites all over the area.
Although the company is faring well overall, there are continuing challenges in construction-related industries.
“Up until two or three years ago, once we had an established relationship with a builder, we didn’t need to continue bidding with them,” she said. “Now, with the volatility in the industry, the contractors have to do more bidding as well.” Subcontractors in all specialties, Malesa added, are dealing with more bidders for each job.
Cutting costs for the company isn’t just a smart thing to do; for Du-Rite Electric, it was a matter of survival in that increasingly competitive environment. Restructuring the company’s debt load was the first step beyond survival to thriving; for that financing, Du-Rite was approved for an SBA 7(a) guaranteed loan through Omaha State Bank (now Core Bank) in August 2012.
“We cut our interest rate, which gave us more operating income and more room to move financially,” Malesa said. And with that more comfortable operating margin, Du-Rite Electric could handle larger jobs, completing its move from chiefly handling residential work to larger commercial projects.
The loan approval did one other thing, she added.
“After we got the SBA loan, we added three apprentices who were learning the trade,” Malesa said, growing the company workforce from seven to 10 employees. “We taught them our way of doing the work and our habits.”
Growing a farm team of qualified electricians
Even finding three apprentices to bring aboard was hard. Malesa claimed Du-Rite Electric actually has had to turn down projects “because we can’t find enough qualified electricians. There is a large pool of kids not even interested in going into the trades. You talk with other people in the trades you find most of them are so busy right now they are running behind schedule. Like us, they are finding it a challenge to add qualified people to their teams.”
Malesa is doing something about that. Du-Rite Electric is working with the Association of Builders and Contractors, an industry organization group, to promote career choices for high school and college-aged young people, especially a school for at-risk kids in Omaha, to open students to the idea of pursue careers in HVAC, electrical, plumbing and other trades.
“We’re seeing if we can offer something back to the community,” she added.
Malesa, who owns equal shares in the company with her parents, left the family business for a while to work for a debt management company, but when her grandparents retired in 2006, she felt the pull to return, this time to run things. She soon brought the operation up to date, replacing handwritten, green ledger books with modern spreadsheet software. Seeking SBA financing to restructure the company debt, hiring new apprentices, and pursuing government contracting opportunities isn’t just good business, either.
“My family name is on the line here,” she admitted. “It’s rough when it’s a family business … my dad, my uncles, my brother, my sister, we’re all depending on this business. It takes all of us to get a job done. From the time my grandparents started this company, it has been through cycles of good times and bad times. If we can figure this all out and survive, we will be stronger, better and poised for the future.”