Like Minneapolis-based Adolfson and Peterson celebrates its 80th birthday and working on building a new headquarters, CEO Jeff Hansen has a lot to look back on.
Hansen, who is ready to effective retirement from June 1has navigated turbulence and tailwinds in the construction industry. Three presidential administrations, the COVID-19 pandemic, the $1.2 trillion Jobs and Infrastructure Investment Act, tariffs, the data center boom, and geopolitical conflicts have had a significant impact on contractors and builders over the past 10 years.
Here, Hansen talks to Construction Dive about the lessons he’s learned in the CEO role, the impacts of rates and the data center market, and what he wants his legacy to look like.
Editor’s Note: This interview has been edited for brevity and clarity.
Plunge into construction: You will step down in June after nearly a decade as CEO. What are some important lessons you’ve learned in this role?
JEFF HANSEN: Let’s talk about what happened during the COVID-19 pandemic. It was crazy.
We grew through COVID: Revenue increased 25% from 2020 to 2021, for many different reasons.
Part of that is that we take our experience in markets where we’re really strong and can win work, and explore areas that are emerging.
Jeff Hansen
Permission granted by Adolfson & Peterson
But during COVID, we had to figure it out on the fly, like everyone else. Being considered essential, this allowed us to think very differently about the business, how we run it. We still had to follow everything that OSHA or the CDC was coming out with and manage those expectations as a company.
If I look at some of the other challenges of a company growing from about $500 million to what we’re looking at next year ($2.3 billion), part of that is a culture change.
So the culture was very strong in terms of the values of this organization. But we grew because we grew regionally, and the fact that all the boats were going up increased the overall size of the company.
What are your thoughts on the geopolitical climate and how it affects the construction industry, with the war in Iran, tariffs and issues in the Strait of Hormuz?
There’s a lot of uncertainty about rates, right? And trade policy, what will it do to affect the prices of materials.
What that does for us, it just reinforces what we’re doing on the preconstruction side to stay ahead of the curve.
I mean nobody asked us for discounts today. But if you look at our business, about 80% of our business is already bought, fixed prices with a lot of trading partners, and I think a lot of our risk is pretty minimal today.
What we have to look at is 12 to 18 months, and as soon as oil prices go up, they can go back down. And so we’re monitoring what those downstream ramifications are that are probably a couple of months out. Construction is a delay from an economic perspective.
When a recession hits, it usually really hits us 12 to 18 months later, because we still have to burn through our entire backlog. This is what we face today. We are burning our backlog.
Will there be a couple of short-term hits, maybe with fuel prices and our jobs that require fuel? Yes, but I think it’s going to have a pretty immaterial impact right now, today. If it continues to $200 a barrel, as they say, that’s a bit of a different story.
Where do you see AP fitting into this data center market?
Our journey into the data center market began just under four years ago. Throughout this iteration, we were thinking that maybe we’d end up with project sizes in the $100 million to $150 million range and work like a lot of other people did.
I would say we were a little surprised at how quickly these projects are ramping up to $400 million, $800 million, and $1 billion. They accelerate very quickly.
Part of our challenge was how quickly we pivot and are able to respond to the size of the project that we didn’t expect.
Years and years ago, we wanted every region to have at least one $100 million project. We are now migrating to the point where we would like to have a very large data center project in each region. But you have to grow into it, because if you go too fast, we’ve seen where people can fail.
So, how we look at this market, how we take advantage of it, we will be systematic and a little more selective.
It’s driving our growth, and thank goodness the data center market is there.
We see all the other markets in which we are involved. Education is still pretty good. Healthcare, good, but not everything is great. And I think data centers, the activity over the last two or three years, has masked what I think is an extremely soft construction market.
The thing is, you don’t want to go overboard on your ski tips because of the size of these projects and the risk you take with them. They are so great that you want to be very structured and organized in how you approach them. If that means saying no to a quest, because once you fail one, you could be out of that market.
What do you want your legacy to be to the company?
From my perspective, I want my legacy to say, this company endured many challenges and we stood by our knitwear. We stay focused. We made plans. And when we established them and executed them, that’s the part where I look back and say, “Hey, when we said we were going to do something, we did it.”
And that’s part of what I think the whole team has to share, that success. I operate with goals in mind. Operate with plans. So we plan the work and work the plan and drive that responsibility.
