Q&A: Mortenson CEO Dan Johnson on stadiums, renewables and what's next for the company
When Mortenson Construction was founded more than a half-century ago, the company's founder questioned its ability to succeed. M.A. Mortenson began the business at 48 years old in Minneapolis, knowing the risks of starting a construction company in a saturated market following the post–World War II boom.
Sixty-three years later, that same company has made a name for itself among the nation's top contractors and has cracked Forbes' list of America's largest private companies multiple times, posting annual sales of $3.8 billion in 2016.
Part of the company's success can be attributed to chance. Mortenson has become a key player in renewable energy and a prominent name among stadium builders, though the company didn't actively seek out those markets. Instead, they seemed to open up to Mortenson at opportune moments. The company placed its bets — and its resources — on them, setting the stage for decades of big-ticket projects in the categories.
But it wasn't all fate. Just before the new millennium, the company transitioned from being a competitive builder to a multi-faceted service provider. Dan Johnson, now Mortenson's CEO, began his career with the company as a project manager in 1986. He saw that evolution firsthand while serving in several leadership positions before beginning his current role at the start of this year.
Construction Dive spoke with Johnson about his first year as CEO, how the company has changed during his tenure, and how he hopes to see Mortenson grow in the coming years.
This interview has been edited and condensed.
How is your first year as CEO going?
JOHNSON: It's been very fun and it's going very well. It's certainly made easier by good economic times and a lot of momentum and backlog from prior years. It's allowed me to spend a lot of time visiting our operating groups and our projects, being front-and-center with our people and our customers, and thinking about the future.
What has it been like seeing the company change over the past 30 years?
JOHNSON: When I joined the business and the company back in the mid-1980s, the industry was pretty much a competitive bid, blood-and-guts industry. That was a lot of who Mortenson was, as well.
Over time, that [focus] changed to construction management and design-build and integrated project delivery. We view ourselves, and our competitors view themselves, as more professional services providers than just as builders.
What's been the hardest part of your transition to CEO?
JOHNSON: Letting go. As chief operating officer, I felt like I had my hands on all the levers. I've had to find myself not being in all the meetings that I used to be in and not making all those decisions or being informed about them.
What have been some of the challenges in getting a renewable energy vertical off the ground?
JOHNSON: We were asked to get involved in wind work before we realized — or the world realized — what it could be when a local utility asked us to put up a wind farm. That created a capability, and we recognized the opportunity by applying more resources as that industry grew.
Solar was more targeted. We knew renewables were going to be part of our future and so we placed bets on a number of renewables businesses. Solar became the big winner, so we put resources toward it and have been fortunate to grow with that industry. Now, we're combining that with battery storage and other capabilities to round out renewable energy as the energy solution of the future.
Why did you think it was a good idea in the first place?
JOHNSON: We could see the future, but I don't think you can necessarily predict the future. We were doing gas combustion turbines at the same time as we were doing wind energy. It became apparent to us that [renewable] was going to be the wave of the future, so we redirected our resources to wind and, subsequently, solar. Because of our capabilities, many of the customers that wanted wind also wanted solar, so we started to do solar work. And then we pulled out of gas combustion turbines altogether. It's definitely paid off.
It's been a natural progression to go from wind, to solar, to battery storage, to things like the Denver Peña Station Next [smart city test bed] project, where we're viewed as a renewable expert.
In a previous interview with Construction Dive you referred to the renewable energy sector as "the most exciting part" of Mortenson's business right now. Is that still the case?
JOHNSON: It is for sure. We see tremendous growth there. If you look at what's happening with the coal power plants being shut down and nuclear power plants — even the ones under construction — being shut down, all roads lead to renewables for the future of energy in our country. We feel good about the position we're in. That future is borne out of cost competitiveness, not just that it's renewable energy.
Mortenson has also made a name for itself in stadium projects (top image: the Milwaukee Bucks' BMO Harris Bradley Center). What has been the impact of those projects on your business?
JOHNSON: It's certainly a big part of our brand. We do a lot of big projects that nobody hears about or sees, but sports projects are the ones everybody talks about and sees.
We've built our sports business very similar to our renewable energy business. They're the most high-profile projects that we do, and they take a tremendous amount of senior leadership time. We've built that capability very painstakingly over the years and we now have the capability to do multiple sports projects in multiple locations. Still, we're very careful about what projects we take on and where we take them on. There's a constant need for newer, larger, more revenue-producing facilities for both collegiate and professional sports.
What kinds of technology have been the most impactful for Mortenson?
JOHNSON: The use of virtual design and construction, or BIM. It saves time, it saves our customers from having misconceptions about what they're getting. If you show craft workers and people in the field something in a 3-D picture, they can visualize what they need to do a lot better than if they're looking at a set of 2-D drawings.
It has also allowed us to do prefabrication work. Now we can build in the virtual environment with very accurate dimensions and then we can prefabricate and pre-assemble more of the components offsite. That reduces construction cost and time, and it improves project quality.
Where do you see those technologies going in the future?
JOHNSON: We're going to see more of the [virtual design and construction] capability be in practitioners' hands. It wasn't that long ago that only our integrated construction managers could use that technology. Now, it is at the fingertips of everybody out in the field on mobile devices. Construction foremen who probably never opened a laptop before now won't leave the trailer without their iPads because it's where all their [project] information is stored. The ability to have that real-time information in the field is a powerful thing.
What’s next for Mortenson?
JOHNSON: We're certainly focused on growth and, in doing so, we're constantly adding new business lines, services, capabilities and finding new ways to bring value to our customers. That provides opportunity for our team members and allows us to bring people into the organization that have diverse capabilities and backgrounds.
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