VCC Adjusts to Post-Recession Construction Market

VCC rode the national wave of retail construction to new heights when annual revenue hit $710 million in 2007. But the tide waned, and the Little Rock general contracting firm confronted an altered landscape.

Revenue fell steadily to $605 million in 2008 and $520 million in 2009 before hitting $400 million in 2010, its lowest total since 2003. After three years of spiraling downward, revenue improved 12.5 percent to $450 million in 2011.

"When the world ended in 2008, we had to go out and diversify ourselves," said Sam Alley, company CEO. "The positive is it gave us an opportunity to reinvent the company. We now have a full résumé of projects."

VCC continues to pursue large projects around the nation, but the company has expanded its menu to include more renovation work and education-related jobs.

That in turn has led to landing more business closer to home.

"We're doing more business in Arkansas than we've ever done before," Alley said.

In any given year, the company often accounted for few if any entries on Arkansas Business' annual list of the state's largest construction projects. But that has changed.

Five VCC projects were listed on the 2011 roster:

* Ozark Hall Renovation at the University of Arkansas at Fayetteville, $27 million;

* Autumn Woods Apartments in Little Rock, $20 million;

* McCain Mall Renovation/Regal Cinema in North Little Rock, $17 million;

* Cooperative Extension Division of Agriculture Renovation in Little Rock, $6 million; and

* Pediatrics Plus in Little Rock, $5 million.

The VCC staff numbers 220 now after a 10 percent increase in hires during the past six months. Offices in Tampa, Fla., and McAllen, Texas, have joined the company's lineup of regional locations that include Atlanta, Dallas, Phoenix and Irvine, Calif.

"We're seeing things turning," Alley said. "We want to position ourselves so we're ready to go."

He said upstream activity in the construction pipeline was casting a favorable light on future business prospects.

"A lot of architects, engineers and land surveyors are busy," Alley said. "That's a good sign around the country. You have to look at a project before you build it."

Higher equity requirements from lenders have made it tougher for developers to borrow money and start projects. To help make deals happen, Alley has brought additional money to the table through Bedrock Commercial Partners LLC of Irving, Texas, where his son Derek is acquisition manager.

"Some clients ask us to be an equity partner," he said. "We don't want to compete with our customers, and we're very conservative in what deals we do [as a family]."

While VCC is overseeing the construction of Autumn Woods Apartments in west Little Rock, the Alleys are investors in the project with Prescott Realty Group of Dallas through Bedrock.

Bedrock also is an investment conduit to convert Fayetteville's Cosmopolitan Hotel into The Chancellor, with Ike Thrash, president of Dawn Properties Inc. of Hattiesburg, Miss.

Sam Alley is well aware of the risks posed by a construction company investing in its own book of projects. Sizable equity stakes in Georgia, Florida and Texas projects that blew up during the S&L crisis caused the demise of Little Rock's Pickens-Bond Construction Co., where the founders of VCC all once worked.

Pickens-Bond was the 71st-largest contracting firm in the nation in 1985, and Forbes ranked it the 365th-largest private company with revenue of $300 million and 1,000 employees. When it filed for bankruptcy in the spring of 1987, Pickens-Bond listed $80 million of debt and $15.9 million in assets.

"Our construction is purely construction," Alley said. "We learned what can happen from the Pickens-Bond days."