Making All the Right Moves
By Sharon M. Bueno Dec 02, 2013
The St. Louis-based contractor started out in the CIPP and tunneling markets but has quickly broadened its fleet of products and services, making it a rising star in the trenchless community.
Many times, a start-up company sprouts from humble beginnings. Usually the first office is in the back of their pickup or the basement or garage of their home. Typically, they struggle early on, doing good work while trying to make a name for themselves within industry circles.
For SAK Construction, that wasn’t their story because SAK Construction is not your run-of-the-mill trenchless contractor. For starters, the company’s founders were already established industry leaders when they opened their doors for business in 2006. In fact, combined, the founding trio has more than 100 years of experience in the trenchless industry — not too shabby for a start-up company.
Jerry Shaw, Robert Affholder and Tom Kalishman — who put the S, A and K in SAK Construction — have a rich and respected history in the trenchless industry, with their roots wound within the fabric of the company that brought the in situ process to North America.
After leaving Insituform Technologies in 2005 and going their separate ways, Shaw and Kalishman decided in 2006 that they wanted to create their own contracting company, using what they knew about the pipe relining and tunneling markets to set the company apart from the competition. Affholder soon joined them in 2007.
“We saw that the need in the market to rebuild the crumbling infrastructure that was going to continue to grow. At the same time, we saw that the cured-in-place pipe (CIPP) patents that were held by Insituform were expiring,” says SAK Construction CEO and chairman Tom Kalishman. “We felt that if we built a company with the culture and values that we built once before, we would continue to attract the best people in the industry. We felt the market would be better served by a company that focused on serving customers and delivering the best quality product.”
Home for SAK Construction is an 115,000-sq ft facility in O’Fallon, Mo., located on the west side of St. Louis. The facility, which serves as the company’s headquarters, has undergone expansion projects over the years to address its growth, with the most recent addition of 27,000 sq ft to add a state-of-the-art manufacturing plant for its small diameter CIPP tubes. Company officials hint that more space for administrative, equipment fabrication and manufacturing needs is a possibility.
In just six years of operations, SAK Construction has grown from the three principle owners to more than 300 employees nationwide, with satellite offices in the Baltimore/Washington, D.C. area (in the process of developing), Sacramento, Calif., Tampa, Fla., and Phoenix. Currently, SAK has active projects in 21 states serving both the rehabilitation and new installation markets. In 2011, the company topped the $100 million mark in revenue. Working beyond North America’s borders is in their business plan.
Pipe relining and tunneling for the underground sewer market are SAK’s primary services. However, the company has broadened its trenchless fleet of services in recent years to include water relining — becoming AquaPipe’s North American licensee — and spiral wound pipe relining through its partnership with Sekisui SPR. Expansion into other markets continues to be researched and readied for development.
“Our mission and our vision has expanded dramatically since we started the company. We were originally focused on sewer pipes and focused on CIPP and tunnels. We now have a portfolio of products to offer our customers and are going after other markets in addition to the sewer market. We are in the water market. We are moving into the oil and gas and mining markets. We expanded beyond a regional company to a national contractor and now we are expanding internationally,” Kalishman says.
SAK Construction is an embarrassment of riches when it comes to its company history — the contractor is led by two industry pioneers and a second generation industry professional. All three names are synonymous with trenchless technology, particularly in the CIPP and tunneling communities. Jerry Shaw, Robert Affholder and Tom Kalishman have been critical members of an industry that over the last 10 to 15 years has exploded in popularity and municipal acceptance.
Affholder — the 1996 Trenchless Technology Person of the Year and a 2014 NASTT Hall Of Fame inductee — started his tunneling company, Affholder Inc., in 1968 and became an Insituform licensee in 1982, taking the rehab process into nine states across the Midwest. Insituform Mid-America (IMA) was formed in 1987, bringing all of Insituform’s licensees under Affholder’s leadership, as well the company becoming publicly traded on NASDAQ. IMA continued to grow and officially merged with Insituform Technologies in 1995.
During these years, Shaw came aboard, joining Affholder Inc. in 1979 and eventually leading the tunneling division. Kalishman (whose father Jerry served as IMA’S CEO) joined the company in 1991 after obtaining his MBA and later served as co-manager of IMA’s North American Rehab Division, then president of the United Pipeline Systems division and later joined Insituform Technologies board of directors.
Changes were coming to Insituform, which led to Affholder and Kalishman leaving the company and board in 2005; Shaw left Affholder Inc. (which was then under the Insituform umbrella) that same year. The three went their different ways professionally.
“We had no plans to start this business,” Kalishman says. “Jerry [Shaw] and I got together about a year later and we saw this market opportunity …When you know the business best and know it’s a great business and you have the right people, those are once-in-a-lifetime opportunities.”
SAK Construction formed in 2006 with the idea being to capitalize on the underground construction work needed in order to upgrade the deteriorating infrastructure. Unlike the early days when the idea of trenchless technology was foreign to municipalities, the climate for its use had evolved to the point where trenchless methods, products and technologies are now accepted as a first option by those once skeptical and hesitant.
Affholder remembers those early years, when it was a struggle to convince conservative municipalities that cured-in-place pipe relining was the better option for their sewer lines. “In the early 1980s, when we sent sales people to call on engineers to show them the CIPP product, we really struggled,” he says. “Now [CIPP] is widely accepted. It has changed the trenchless technology industry tremendously. It’s unbelievably different today.”
The three relished the idea of working together again, infusing the company with the philosophies, strategies and values they knew best: safety, quality and customer service. Each one offers a unique and invaluable facet to SAK that sets the company apart from the rest, they say. “With Jerry Shaw, we have tremendous operational excellence and technical background. Bob Affholder brings the culture and experience and I focus more on strategic thinking and management,” Kalishman says.
Given their standing within the trenchless industry, the men were confident in the success of the company and their ability to attract the leading trenchless professionals to work with them — people who had worked with them during their years at IMA and Insituform.
“We have a long, working relationship with the vast majority of the people in this company. Many are industry veterans,” Kalishman says, noting such longtime colleagues as Boyd and Steve Hirtz (whose father worked under Affholder at Affholder Inc.), and Charlie Kuhnmuench, who all serve in critical roles at SAK. “The family ties run deep. Several generations of employees, who literally grew up in the industry, play key roles in the company.”
“It all goes back to experience and the people we have,” Shaw says. “We have people in this company who have been doing this for 30 years … They know the business.”
SAK officials are quick to heap praise on its workforce as the drivers of the company’s success, explaining that they buy into the company’s philosophy of: safety first, quality second and a constant focus on the customer. “If you follow that philosophy, the numbers will take care of themselves,” Kalishman says. “We don’t have to put the numbers first. The numbers are a result of focusing on safety, quality and our customers. Everybody in our organization from top to bottom understands that.”
The company’s reach extends across the United States with regional offices in Phoenix, and Tampa, Fla., as well as in Sacramento, Calif., — the latter through its 2011 acquisition of Pipenology Inc. A regional office in the Baltimore/Washington, D.C., area is also in the process of being established.
SAK made its mark serving the municipal sewer market through its CIPP products and installation (6 to 94 in.) and tunneling (5 to 15 ft). The contractor owns nine tunneling machines in its fleet and manufactures its smaller diameter liners at its St. Louis facility (additional liners are acquired from Mississippi Textiles and Applied Felts). In 2009, SAK became the North American licensee for AquaPipe, giving the company entry in the water relining market — a market that has been slow to catch on in the United States, but has shown some inroads in recent years.
“We are doing more and more water reline work, which is nowhere the magnitude of what we are doing on the sewer side,” says Shaw. “[The water market] is still in its infancy in the United States and those pipes are in a different stage of their lifecycle than sewer. In Canada, it’s the complete opposite. They are doing a lot more water relining there.”
Affholder likens the water market of today to the sewer market of some 30 years ago, with regards of trying to convince municipalities of the benefits of using trenchless technology. “There is a substantial need for [water relining] in the United States if they would just recognize it,” he says. Just like the sewer market was slow to take to trenchless at first, “It’s the same with water. You have to promote it and get business development to call on these markets. We believe this market will move forward.”
SAK wants people to know that it’s more than just a CIPP contractor and a tunneling contractor. “We have a portfolio of products that includes more than CIPP,” Kalishman says. “We have Sekisui SPR Spiral Wound products and offer sliplining with HOBAS Pipe. We are developing other products as well because we believe that the key is to have the right product to solve the customer’s problem as opposed to having a product that we are trying to sell the customer into.”
By offering more products and services, SAK Construction can set itself apart from a growing and strong competitive market. SAK says though the company serves a national market, each market in itself is local. “We can’t say enough about having the right people out there, having people who can make their own decisions in the field. That’s what you have to have to be a competitive contractor in today’s market,” Shaw says. “Back in the day, if we put 1,000 ft of liner in the ground in a week, we were ecstatic. Today, a crew needs to be putting 4,000 ft in the ground a week to make it. Prices are very competitive. Between equipment, the people we have, the different methods of installation we provide, we are able to be competitive.”
Kalishman concurs, adding that the competition today is fierce with the multitude of products and contractors available, making SAK’s diversity and experience critical to its success. “Ten-plus years ago, there was just one player in town because of the patents [which have since expired],” he says. “Trenchless technology has dramatically changed because of new competition and the new products. It’s not a one-size-fits-all solution, but it’s a very important to have the right solution for each customer’s specific issues and there are many excellent products out there today.
“What we have built at SAK is a tremendous team that has significantly more capacity to grow,” Kalishman says. “We will be very opportunistic when looking at acquisitions and building for the future.”
Sharon M. Bueno is managing editor of Trenchless Technology.