C.W. Driver’s Karl Kreutziger on building economic opportunities

Editor’s Note: Karl Kreutziger, who has 35 years of experience in the construction industry, is president at C.W. Driver Cos., which ranked No. 11 on the Business Journal’s annual list of Construction Companies with $263 million in revenue from its OC operations in 2021; the company is active in the education sector. The Business Journal’s annual Education Special Report begins on page 17.

California’s 116 community colleges play an important role in developing the state’s workforce, offering education and skills training to students who may not be interested or ready for a four-year university.

C.W. Driver, a local leader with more than 100 years in general contracting and construction management services, is a major force in building these local campuses, with recent work at Mira Costa, Long Beach, Riverside, Mount San Jacinto and Orange Coast, to name a few.

While our experience in building extends far beyond education (including commercial, office, hospitality, civic, multi-family, and retail developments), we feel especially proud of our work creating campuses and places to learn. Higher education is the tide that lifts all boats, improving communities by providing more job opportunities and creating tomorrow’s workforce.

The business of construction is relatively straightforward: an idea leads to planning, funding is secured early on, a groundbreaking, an execution, and finally, a grand opening with comically large scissors.

Even so, there are intricacies. Changing legislation, fluctuations in the economy, and (as seen most recently) global pandemics can all change the course of a project.

Boy Scout Thinking

It’s no secret that the biggest challenge for businesses during the pandemic was the disrupted supply chain.

Everything was in short supply and, you don’t need an economist to explain it, more expensive. Businesses that embrace the Boy Scout motto to always “Be Prepared” may find it challenging to live that reality when dealing with an unprecedented global event. Materials are everything in construction.

During the first year of the pandemic, prices of processed wood products, such as softwood lumber and plywood, nearly quadrupled. According to the U.S. Forest Service, wholesale prices for plywood increased from $400 to $1,500 per thousand square feet.

And that’s just one of the many materials needed in the construction industry. Wait times tripled on everything. Major gear delivery times, mechanical components like switch gear, for example, formerly took 16 to 20 weeks once ordered to arrive. After the pandemic, the wait time increased to 52 to 72 weeks.

While the supply chain will likely catch up by 2023, it’s a tough task balancing projected work against available materials.

At C.W. Driver, we have several projects in the pipeline that are scheduled for completion within the next two years: College of the

Canyons Boykin Hall Modernization and Mt. San Jacinto Community College STEM Science and Technology Building to be completed in 2023; and in 2024 Riverside Community College Life Science and Physical Science Renovation; Mira Costa Community College Chemistry & Biotechnology Building; and Orange Coast College Chemistry Building.

And every one of them has a fuse that was lit years ago. Our value on the front end of planning with the client is instrumental in creating a workable budget and schedule. Likewise, we are planning now for projects in the more distant future.

Another set of obstacles to maneuver is the constantly changing regulations brought by new legislation.

As 2023 approaches, construction is working at breakneck speed to finish and get approval on specific pieces of work before the 2022 California Building Code (CBC) changes go into effect on Jan. 1, 2023. This change is an update to the 2019 California Building Code. All projects submitted after this date will have to be in compliance, which will most likely adversely impact cost. But ultimately, while we can complain about red tape and bureaucracy that may drive design and increase costs, it’s better to be aware and “be prepared” for those changes.

Quiet Hiring

The Great Resignation of 2022 should more accurately be known as The Great Re-Shuffling. The nationwide labor shortage prompted many employees to seek higher wages or more desirable conditions. Yet workers didn’t quit and fall off the face of the earth. They took new jobs.

The construction industry was hit especially hard since our workforce is comprised of diverse providers trained in their specific skill sets, so it’s important to hold on to your crew.

With that said, we were less affected by the scarcity of talent at C.W. Driver and are proud of our low turnover. Last year, we saw a voluntary retention rate of 93.8% (well above industry standards). This fact is due to our emphasis on maintaining a positive and supportive company culture with our 300 employees.

And while there has been much talk about “quiet quitting” in today’s workforce (the practice of some employees choosing to dial back their performance rather than quitting and searching for a new job), at C.W. Driver, we have been actively “quiet hiring” through our internship program.

Every summer, we have a major league “farm system” where we recruit top college juniors to teach different aspects of the industry, often bringing them back in their senior year to continue their training. From that pool, we make job offers, ensuring we are continuously hiring the best of the best. We are a construction company that builds more than buildings. I like to think we also build up our people, ensuring they feel supported and satisfied. Our loyalty to them is reciprocated.

The Crystal Ball

As noted, in construction, we are already working on projects that are at least three years out. There is great economic stability in working on bonded government contracts like colleges.

We also recently finished all new construction on Schools First Federal Credit Union headquarters in Tustin. They serve Orange County and other California school employees and are the largest educational credit union in the nation. But it’s important to remain strong in the private sector with commercial, office, hospitality, multi-family, mixed-use, and retail development. There is no crystal ball to foretell which are the safest investments, so we do our best to listen to the signs and indicators to guide our decision-making.

The Architecture Billings Index (ABI) is a good leading economic indicator in construction. It gives us a sense of spending and demand for non-residential construction activity.

Our staff also dedicates time to different organizations and groups, like the Design-Build Institute of America (DBIA), to listen and learn. Conferences and panels are also important. We are regulars at the annual Community College Facilty Coalition (CCFC) conference, and often take part in school panels at Chapman University and USC’s Lusk Center for Real Estate, to name a few. Our leaders are active in industry associations and sit on a few boards, including the Construction Management Association of America (CMAA). Our work requires more than brick and mortar. It requires a brain trust.

I’m proud to say that it’s also my 40 years of relationships with architects, brokerage, and developers where I gain insight. I’m excited for what lies ahead in California’s construction landscape.

Looking at the state’s sustainability and energy initiatives, we look forward to building tomorrow’s electric car charging facilities (as California has set a goal of 100% new zero-emission vehicle sales by 2035), and solar panel parking lots and structures (like our clients have implemented at Chino Valley USD and Schools First Credit Union.

The future looks bright.