Branch Highways Inc.

Employee ownership makes workers feel like a branch of the family tree. Branch Highways is not a description of a roadway but the name of a company and the man who started it – Bill Branch. Founded in 1963, Branch Highways Inc., in Roanoke, Va., is one of the companies owned by the Branch Group.

A building/grading contractor from 1963 to 1986, Branch Highways was spun off from the building division and incorporated in 1986.

Now an employee-owned (ESOP) company, a culture of commitment defines it. “The Branch Group and all of its affiliates [are] an employee-owned company, so we all have a vested interest in the success of the group as a whole,” says Michael Tomlinson, vice president of estimating and business development. “This directly relates to growing shareholders’ wealth. We all have shares in the company, and each employee is basically their own employer.

“One component that defines our corporate culture is that we are a very conservative company,” he continues. “We consistently identify ‘projects in crisis’ and recognize the potential losses early. Profits are recognized very conservatively. In other words, we do not count our eggs until they are hatched.” By this, Tomlinson means that Branch will address a problem instantly that might cause losses, but not relax its diligence if a job looks profitable.

Branch Highways Inc. does business in Virginia, West Virginia, Maryland and North Carolina. “We’re basically a grading and utilities contractor working in both the public and private sectors,” Tomlinson explains. Grading includes clearing and grubbing, erosion and sediment control, and site grading. As a utilities contractor, the company does storm drainage, water and sewer.

Branch Highways offers complete site packages to its clients and customers. In addition to departments of transportation projects, Branch constructs airport runways/taxiways, constructs and manages landfills, and constructs dams and reservoirs. It also provides site work packages, design/build projects, and PPTAs to the public and private sectors.

Weathering the Recession

The company is weathering economic storms this year, Tomlinson reports. “We were fortunate we entered into this downturn with a rather large backlog of work,” he says. “But like every contractor now, we’re trying to gear up for 2010 and subsequent years after that. We burn off quite a bit of backlog per month.

“We’re fine for this year and going into next year, but like most contractors, we are scrambling to acquire our perceived market share. Since design/build projects are becoming the trend and gaining in popularity, we are heavily involved in this method of delivery.”

Material costs are low now because suppliers are trying to reduce inventory, but they know they can’t keep prices low forever. “On just your everyday jobs of six to eight months’ duration or less, we’ve seen a decrease in material costs,” Tomlinson notes. “But if we have a job that goes out three or four years, we are seeing material increases.” Tomlinson cites a 42-month job that was recently bid with material price guarantees for the entire project duration but with provisions for a variable fuel cost index.

A typical job is the divided four-lane, asphalt-paved Hillsville Bypass in Virginia. This is a $90 million segment of Branch’s PPTA. This particular segment is a 6-mile bypass with shoulders that is part of 37 miles of U.S. 58 being built, which has a total contract value of $370 million. Included in the 6 miles are seven bridges and earthwork and associated disciplines. Started in September 2007, this segment is scheduled for completion in early 2011.

GPS Makes the Grade

GPS technology is being used to speed grading and accuracy. “It has improved our grading operations tremendously, as far cost goes,” Tomlinson insists. This is an automated system that assures accuracy of the grading operation.

It involves building a computer model of a site with proposed grades. These proposed grades are relayed to the construction equipment via a GPS satellite, which beams it down to the construction equipment so, in this application, the equipment’s cutting edge (blade), with the operator’s monitoring, will be adjusted automatically. The company implemented this system about two years ago.

“It cuts down considerably on job site surveying,” he continues. “We do not have it on all our equipment yet. We have the system installed on our equipment that we typically use for large highway projects or large site projects. For smaller highway projects, such as a road-widening project and smaller site projects, it is neither convenient nor cost-effective.”

“As this industry gets more and more competitive, we have to look for and implement cutting-edge technology to make us more competitive and looked to as the contractor of choice by our clients,” he emphasizes. “We’re reducing our costs on actual surveying, and we are also reducing our production costs.”

Family Safety First

Employee ownership affects safety training at Branch Highways, Tomlinson maintains. “We’re well below the industry average experience modification rate for workers’ compensation,” he notes. “The lower our mod rate indicates the better job we are doing relative to employee safety and the lower our insurance premiums are.”

Branch Highways’ mod rate is 0.72. “We have a full-time safety director who works for the Branch Group,” Tomlinson explains. “Reporting to him are safety managers for each company. We want the employee to return home in the same condition he or she left in the morning, so we’re very big on safety. It’s very difficult to go and knock on someone’s door and say, ‘Sorry to tell you, your husband or your wife were hurt on the job.’ They are all part of our family, and we take care of our family.”

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