Friday, July 10, 2009 | 3 a.m.
It’s been a long and winding road for Frank Martin.
The 62-year-old co-founder of Martin-Harris Construction, launched in 1977, has been a player in Las Vegas’ development over the past three decades. The son of a former sharecropper turned oil field driller, he moved from town to town in Wyoming, North Dakota, Colorado and Montana as a youth.
Martin-Harris Construction, which started as a two-man operation with Frank Harris, who was Martin’s apprentice/understudy when they were both working as carpenters early in their careers, has built such projects as O’Sheas casino, Tahiti Village, Manhattan and Boca Raton.
IBLV: How did you get to Las Vegas?
Martin: One day my dad got a call from another friend to come to Las Vegas and start drilling holes for bombs instead of holes for oil. My dad moved here in the spring of 1961, and my mom followed six months later. He started drilling holes for bombs at the Nevada Test Site.
So when you moved here, you had some stability?
When we moved here, even then we lived in a motel out in Henderson for probably two months before we moved into an 8-foot-by-32-foot mobile home.
How did you get involved in construction?
From about the time I was in the sixth grade, I knew that I wanted to be a carpenter. I liked working with my hands and still like working with my hands today. I like working with wood. When I was in the sixth grade, I started taking shop classes in every school that offered it. Rancho High School in the ’60s had a class called vocational carpentry, and I took that. It was three hours a day, five days a week. We would work in the shop or go out and work on someone’s house — framing, laying plywood and hanging drywall. I just always knew I wanted to be a carpenter.
Where did that lead you then?
I got close to graduating in 1965. I won about three different scholarships. I went and joined the Carpenters Union and I got indentured into the Carpenters Union, and then three days later they went on strike. They were on strike from May until Sept. 5, 1965. I got my first job as a carpenter on Sept. 7, 1965. I went to work at the Nevada Test Site. My dad was out there as an operating engineer.
Why did you form your own business?
One day I was out on the job site and Frank Harris came by and he looked up and said, “Why don’t we go into business for ourselves?” I had just been overlooked for the general superintendent’s position. I felt like I should have gotten that position. I didn’t and so I was a little bitter. When Frank Harris came to me about going into business for myself, I said, “That sounds like a really good idea. What should we do?” We were both carpenters. We were both working for a subcontracting firm. So we sat down one night and figured we ought to be general contractors.
Once that was determined, we asked how are we going to finance this thing. We decided because of our trade experience — carpenters do a little bit of everything — we were going to buy a house, fix it up and use the profits that we made off that sale to start Martin-Harris Construction. We went to an attorney and he drew up the partnership agreement for us. We bought a house in greater Vegas, off Bruce (Street) and Bonanza (Road) and ripped it all apart and rebuilt it.
Where did you get the money?
I do know I borrowed $10,000 from Valley Bank, and Frank borrowed $10,000 from his father-in-law. We used that to pay for the house and finance the materials we needed to buy to fix it up ... We netted $15,000 on the deal after we paid back the loans.
What were your first projects after the house?
We put a roof structure on a building and the second project, a ground-up project, was building a house on Quail Avenue. I will never forget as long as I live, Frank and I both lived on the east side of town, we drove up Russell (Road) and made a left turn and right on Quail. Quail had a hump in it and as we drove up Quail and over the top of the hump, and we looked down to where we were building the house, there was a water truck and a front-end loader and a motor-grader sitting there. There was no bigger thrill for two guys in their lives to drive over that hill and see that yellow iron out there working in the dirt on our job. We parked on that hill and just looked at it for a while. I will never forget that as long as I live. In those days, we built some very nice custom homes.
How did it work?
We would go out there with our own hands and frame the houses and lay the plywood and hire the subs to do the electrical and plumbing.
Where did the business go from there?
We were in business working on our third or fourth house when a prominent developer here in town, Irwin Molasky, came to us. Working for Architectural Components, Frank and I had worked on many of his projects. His folks came to us and wanted us to do some tenant-improvement work. Irwin’s company took our company from billing $30,000 a month to billing $300,000 a month in a period of about three months. We were going crazy. I was working 24 hours a day, seven days a week. We had an office on West Desert Inn Road. There were many days I didn’t even go home.
What about hiring workers?
We couldn’t hire people. You had to pay them. It takes awhile. We get a job and start on Feb. 1. We don’t get our first pay until March 15. We had so much put on us, and it was just Frank and me and our bookkeeper. Eventually, we got there. Irwin took us, and we built shopping centers up here on Maryland Parkway. We built Miller’s Outpost stores and banks, savings and loans. He started taking us all over the place. He really is the guy that put us on the face of the Earth.
And from there?
We started putting up signs on every project we had going. And we just didn’t put one up. We put two, three or four signs. We wanted people to know Martin-Harris Construction was working on that street corner. That, in itself, did more for our image than anything else and introduced us to Las Vegas. Las Vegas, in those days, was a very small town. You had to bust your tail for a very long time just to prove to the Irwin Molaskys of the world, and the Mark Fines, and those kinds of people that you were going to be here, you were the real deal. It took two, three to four years to prove that to people. In the meantime, we kept building this image up about Martin-Harris Construction.
And that was one of the things we did early on that allowed us to appear more than what we really were, which brought in more customers. About 1984 or so, Las Vegas finally decided that we were here to stay. When we got discovered, work came in from all over the place. We were building for Federal Express and the Las Vegas Valley Water District and building for the Clark County School District and doing jobs at the Nevada Test Site.
What do you mean you weren’t what you appeared?
We were a company grossing $3.5 (million) to $4 million a year, a nice size for those days. It was a unique time. We always seemed to have the ability to attract really good people, and we grew a lot of them from the inside. We weren’t risk averse. We would take risks. One time Irwin came to us, and he just bought a company called Lorimar Productions (which made the television series “Dallas”). He wanted us to build a corporate headquarters in California, and we went down there and built it. We figured we were young and invincible, and we went and did it and made it a success. We worked for Irwin from mid-1978 all the way to 1991-92, when he kind of backed out and his two sons went into the development business.
Is Frank Harris still part of the company?
I bought Frank Harris out in 1979. He continued working for us until 1991.
Why did you keep his name?
Part of the deal in those papers was the guy who did the buying got to keep the name. In the early days in Las Vegas, you had to prove your worth. For a company to have only been in business in Las Vegas and then change its name, you might as well go out and put a bullet in your head. That would have sent the wrong message. I always believed that if a person truly believes in his business, the name should be on the door. It shouldn’t be ABC Plumbing Services or XYZ General Contractor. We own three construction companies and a number of other companies, and our name, in one manner or another, is on every one of those.
What else did your company do that helped you grow?
The next thing you know we started to remodel rooms at the Las Vegas Hilton. We would take one wing of the hotel and go from the top all the way to the bottom. At one time, we had seven superintendents and over 200 carpenters working over there seven days a week, 24 hours a day remodeling rooms. We then remodeled steak houses, the kitchen, the convention center area. In late 1988 they invited us to bid on O’Sheas.
We bid on that and we got it. That was a $15.7 million project. It was the single largest job we had done. It was double anything we had done before. In those days, there was no fear. It was just go do it. We started work on that with no contract, just a handshake. The contract came two to three months later. It was just that way.
How did that turn out?
We pretty much lost our butt on O’Sheas. By the end of 1989 I had lost all the money we had made in the previous 12 years of being in business. We had grown so fast. From 1984 to 1989 our revenues went from about $3.2 million to about $36 million, which if you do the math on that, that is a 150 percent growth every year. The wheels came off. It is like building a 120-story building on a five-story foundation. We really struggled finishing O’Sheas. We got it done when we were supposed to get it done. We got it open when we were supposed to have it open. We continued to work for the Hilton Hotels Corp. for the next couple of years.
How did you cope with the loss on O’Sheas?
When I lost that amount of money, I did a couple of things. I had a peer group that came in and did a review, and they said, “Frank, you are in so much trouble right now.” It was unbelievable. I thought I was the young cocky guy that had all the answers — that I was God’s gift to the construction business. Out of my peer group, I was the single largest guy at that point in time. We had hundreds of people working all over Las Vegas, and they took one look at our company and our financial statements and went out and visited some of our job sites and they said, “We don’t know if you are going to survive the year.”
What was your response?
I said, “What are you talking about?” Then they laid it out for me and they laid out the story that showed how many bad jobs I had and how much money I was losing. I had a million dollar credit line at that time, and I was into it for $855,000. I had only 150 grand worth of credit and almost no cash in the bank. They said, “You got two choices. You hire FMI,” which was a consulting firm specializing only in the construction business, “or you better get yourself ready to take out bankruptcy.” For me, bankruptcy was never an option. Ever. So I went to FMI and brought them in. They did a management audit on Monday, Tuesday, Wednesday and Thursday. On Friday, we sat down in my office. We laid out in that three-hour debrief a 30-day business plan for the survival of Martin-Harris Construction (in 1989).
What happened with O’Sheas?
I misjudged how much it took. It wasn’t our typical project. There was a huge amount of structural concrete. We had poured concrete for years, but we just had never done a huge amount of structural concrete. We had subcontractors who went bankrupt, and we were too stupid to bond them at that time. We had labor overruns and schedule overruns. We just didn’t know how to manage a $15 million project. That is all there was to it. Once we got it, we were OK. Now we do a great job on $115 million projects.
How did you survive?
What I did after the debrief was lay out a 30-day business plan. We found out in this business audit that we had a lot of people who were there who had been promoted beyond their capabilities. I had always been a big believer in bringing people along with me. (The consultant) made me face the cold hard facts that I had too many people in the wrong spots. In this 30-day business plan was a complete reorganization of this structure. He told me, “Frank, you have this team you are going to keep, but what you are going to do is lose 25 percent of this core group because people don’t do change very well.” I took that 30-day business plan and executed it in seven days.
How many people did you have?
At that point in time, well over 120. The interesting part was we didn’t have to lay off a lot of carpenters, cement masons, laborers and field hands. Who we laid off were people working in the office, managing the work. Some superintendents who we had running $5 million projects were well qualified to run a $1.5 million project. They had been there for 10 years, then we just put them on a $5 million project. You basically set them up to fail. What I did every night at 3 o’clock after I made my layoffs, I brought in what was left and explained what was going to happen over the next four days. That core group of people I decided to keep, I didn’t lose a single one. It was a valuable lesson there. You always tell people what you are going to do and you tell them again and tell them again, because in the space of a vacuum people will fill that with their own thoughts and perceptions. When I filled the vacuum that was created every day with facts and clear, concise direction, it gave them a clarity of what this company was going to look like when we got done.
What did you do then?
I took a nine-day sabbatical. I went home and took every financial statement that had been produced in that company for 12 years. I took a book on how to write a business plan. I didn’t know how to read a balance sheet. I didn’t know how to read an income statement. I had just been flying by the seat of my pants and in 12 years I had never written a business plan. In that nine days, I learned how to read financial statements and analyze them. I put together a budget, which we had never operated on before. I put together a business plan that outlined all the people in the company. I did everything I had never done before. On Sept. 30, 1989, I mentioned I had a $1 million credit line through Valley Bank in Nevada. On Sept. 30, I owed it $855,000. I had a net worth of less than $100,000, counting all my personal assets. On March 31, 1990, six months later, I paid the $855,000 off because I had a plan and worked the plan. I developed an $18 million budget. We did $27 million. We made back every dime we lost plus $500,000 in one year. It came from having a plan and working the plan.
What did you learn from the experience?
It got me focused in a direction that was good businesswise. That’s when I made the transition, I believe, from being a carpenter to a businessman. I had 100 people who were buying houses; they were buying cars. They were paying babysitters. They were paying day care. They were going to the grocery store every Friday. I had 100 people depending on me. I couldn’t be a carpenter any more. I had to become a businessman.
How did you do that?
What I did was I changed where I spent my time. I spent my time before out on the job sites thinking I was getting the right thing done. What my role was as president of the company was setting that strategic direction that moved you out here somewhere. I still have to think, one year, two years and five years out. You can’t think about today. We get involved in little fires every now and then. But if you’re going to be a real entrepreneur, you’ve got to have your attention on what is going to happen three years from now. That was the lesson right there.
You came close to failure, didn’t you?
Every contractor in Las Vegas and every subcontractor is one project away from failure no matter how big you are. There is so much risk in this industry. Our risk is in labor. We employ a huge number of people. Labor costs will generally be 45 (percent) to 50 percent of the total construction costs. At that rate, if the guys don’t produce for a month and you have 60 guys on the job site and they produce half of what they should be producing, you eat it because you signed the contract. You are only going to get paid this amount of money. Manufacturers raise their prices. In 2005-2006, steel was going up sometimes 15 percent a month. If a company had signed a contract that the project lasts five months, seven months, eight months, they could be paying twice as much for the material as when they signed the contract and they have no recourse.
You mentioned that during your childhood there was a lot of time spent in one-room apartments and motels, only a few weeks at a time in some cases before the family left for another town. What did that experience teach you?
It taught me to make friends in a hurry — to get to talk to people, to get to know people because I may only be there for two weeks. I really feel like it is one of my strategic advantages now as a businessman because when I meet people, I value the meeting. That is what moving taught me — to value every acquaintance, every handshake and value the person behind it.