Timing is Everything (Again)
By the late 1980s, we had moved our business and our families to Visalia, a town in the Central San Joaquin Valley of California. The work had long since diminished in San Luis Obispo to the point that our firm was already doing most of our work in the San Joaquin Valley. By that time, one of our main customers was Southern California Edison.
We were awarded a Southern California Edison project in a nearby town, which consisted of installing power conduit and vaults down the center of a wide street just east of downtown. The job lent itself to a high production approach; there was plenty of room to work and not much in the way.
I was speaking to one of my competitors before the job began, and he asked me: “Why don’t you grind the pavement on that job instead of sawcutting it?” I had never heard of this process, and had no idea who did the work. My competitor supplied me with the phone number of a company in that business from Los Angeles. I called the owner, and his price was the same as I had bid for the sawcutting, so I gave him the job.
When that contractor came up and performed that job, which only took one day, we were stunned. Not only was grinding a ditch faster, but doing so changed the nature of how one went about the job, and reduced our costs on the job overall dramatically.
Within a couple of months, we had bought a similar but much more versatile and better machine to grind or mill pavement, which was made by a German company, Wirtgen. Soon, we were not only using that machine on our own jobs, but had
formed a small subsidiary company to do similar work for other contractors.
It quickly became evident to us that there was a lot more money to be made in the asphalt grinding business than the underground construction business. That business also offered the opportunity to work for a much more diversified group of companies than the few public utilities we had been working with over the previous decade.
Accordingly, we took all of the equipment we had been using for the prior business to an auction in San Bernardino, California and sold it, intending to do a 1031 exchange with the proceeds to purchase more asphalt grinding equipment.
By the time we took the equipment to the auction, I was already traveling around California bidding grinding work, so I was in Mill Valley when my brother called to tell me what occurred at the auction. I remember what he said on the phone exactly; “Well, do you want to hear the good news or the bad news?” I answered, “The good news.” “Well,” my brother recounted, “our iron went for a lot more money than we thought it would!” “What could be the bad news, then?” I countered. My brother was laughing, and he answered, “I lost track of Dad, and he spent all of the money on the other side of the auction, buying everything he thought we needed to grind!”
So, the die was cast. As it turned out, that was the best money we ever spent.