Posted on June 18, 2019
DredgeWire Publisher Peter Bowe sat down with JF Brennan CEO Matt Binsfeld during the Chicago WEDA (Western Dredging Association) conference for a wide ranging and exclusive interview. Matt was expansive and candid, and generally enthusiastic about the prospects both for his industry and for his company in particular.
DredgeWire:
Congratulations Matt for winning the prestigious “2019 Dredger of the Year” award from WEDA! That’s a big deal!
DredgeWire:
What industry trends do you see impacting your business these days?
Binsfeld/JF Brennan:
1) People – How we recruit, train and retain and that fundamentally goes to the culture of your business. How do you build a culture, a team that people want to be a part of. What is your purpose? How are you using training opportunities to not only build better teams but also to help people build better careers within your company. We work in the dredge industry, but fundamentally this is a people business- thinking about how you become the best people business is as important as thinking about your next dredge job.
2) Asset management and the deployment of capital. Utilization, utilization, utilization. How are you maximizing your ROA so that you can better deploy your firm’s capital.
3) Brand awareness- How do you build a brand and then communicate that brand to your clients, employees and project partners. There are more avenues today than ever to communicate with your stakeholders, how are you using it to convey the message that you would like to convey?
DredgeWire:
How are you using technology differently today than you did previously?
Binsfeld/JF Brennan:
Of course the low hanging fruit in the technology development is the type of soft and hardware available to automate and improve the dredge process which we are fully invested in. But we are also using technology in different ways for instance, how we monitor our work and detect problems early, how we connect our job sites with our headquarters, how we improve safety and compliance making job sites safer and more compliant in an era of rising regulations, how be build teams looking at personality traits to determine team strengths and weaknesses.
Innovation of course is a big part of technology. At Brennan we have a saying “to be on the leading edge of innovation, you must be prepared for the bleeding edge of innovation”, which is to say you have to be willing to take measured risks to find better ways you have to be willing to fail. That’s what our culture is about, finding better ways to do things, no matter be it mechanical, software or otherwise.
DredgeWire:
How has the regulatory environment affecting your business changed in recent years?
Binsfeld/JF Brennan:
Certainly it has raised the bar. The regulatory environment will only increase as time goes on. Sure the pace may quicken or slow depending upon a certain office holder, but we are on a steady march towards more regulation. New regulations can be difficult, but we welcome the opportunity to figure out how to operate and thrive in a new environment. There are certainly costs to regulations, and in the long run industry passes those costs to the market. That said, regulations generally make things better and safer, so ultimately regulations drive sustainability in our workplace.
DredgeWire: Given tight labor markets, what are you doing to recruit new talent and retain existing talent?
Binsfeld/JF Brennan:
A very wise friend of mine, outside this industry, passed some very good advice on to me. She said “Everything matters, because everything communicates”. When it comes to employment, EVERYTHING COMMUNICATES, meaning that you must have a brand, and your brand must be purpose based. Recruiting never stops, but neither does training. People stay at a job or in a career longer when their work has purpose and they know they can advance within the company. It is also about making our leaders better coaches: are we having the necessary development conversations in the right way; Are we creating the right partnerships with our construction trade unions? They are one of our most important business partners, and the construction unions are doing some groundbreaking stuff in terms of skills and leadership training. We want to tap into that, we want to be their partner in that because that is completely inline with our strategies and our culture. Recruiting new talent is not affecting our budgets, but it is affecting our future growth rate.
As leaders we are rethinking the business. Sure we dredge and have barges and equipment. But we have really come to understand that this is a business that can affect a great many lives in a positive way. That’s purpose and when you can combine that with innovation and a learning culture. You have something that inherently will attract people.
DredgeWire:
What new investment plans do you have?
Binsfeld/JF Brennan:
Our asset management strategy is one where we are hyper-focused on knowing our costs, knowing market costs to the extent possible, and closely analyzing each dollar invested in a similar way you might evaluate a stock.
A metric we watch closely is net asset value as a percentage of total asset value. We have certain goals in this area, which leads to our consideration what our CAPEX spend will be. Typically, to keep the metrics where we want them to be, we are spending high seven to eight figures annually on the business.
DW note— That’s over $10mm annually!!
DredgeWire:
Has the 2017 tax reform law affected your business, and if yes, how?
Binsfeld/JF Brennan:
Absolutely! Who wouldn’t love direct expensing of equipment? It certainly affects how we time our expenditures given what an annual income can look like. That said, you certainly have to be careful about your expense levels because what’s good today may not look so good in a few years as the amounts we can expense change. Also, when you expense more in earlier years, you leave the cupboard bare, so to speak, for later years for a depreciation sense, which ultimately creates more incentive to reinvest, which is not necessarily a bad thing, but you must have the business prospects and good cash flow to justify.
On the income side of things, net net, the new tax law has not necessarily affected our business because you are no longer allowed to deduct state income taxes. And yes, most of our business is in states with hefty state income tax.
DredgeWire:
What are the biggest challenges facing you today?
Binsfeld/JF Brennan:
When you say challenges, my mind really goes to opportunities because every company faces challenges, so how you deal with those challenges is what is going to create a potential business advantage.
So the three areas of opportunity to create business advantage are: First, in people, as in our employees. How do set ourselves apart and be the employer of choice. How do we create a culture that people can thrive in, can take measured risks, innovate and own their decisions? Any functional portion of the business and how well we do as a company are directly correlated to quality of people and the collaboration of the teams on which the operation is built.
Secondly, people, as in our project partners. You can’t effectively own every part of the project value chain. How do you create meaningful partnerships where you collaborate, innovate, and share risk with one another that lowers costs, not margins but costs, for our clients?
Thirdly, finally, it’s people as in our clients. We are in a time and place where baby boomers are leaving the job market and being replaced by Gen Xers and millennials. We have the opportunity to establish new relationships with people who prefer to communicate in ways different than those from their predecessors. So the question is, how do we effectively disseminate the Brennan message, so that our clients not only understand our thinking and process on any given specific opportunity, but also understand our company from a larger viewpoint? What we do, how we approach business, how we collaborate and how we insure that their goals and objectives are met.
So there you have it, when it comes down to it, the biggest opportunity moving forward is people, people and people!
(DW aside: Binsfeld noted that Brennan had recently updated its mission statement, in part to appeal to its evolving and various people clienteles: “We create and execute innovative solutions to the world’s most complex maritime, environmental and infrastructure challenges.”)
DredgeWire:
What achievements has your company accomplished that you are most proud of?
Binsfeld/JF Brennan:
I am most proud of the fact that we have survived as a business for 100 years. My great grand father founded the company in 1919, and since that time each generation has taken the baton and run its leg of the race to the best of its ability. In the last few years, knowing that our 100 year anniversary was coming, we embarked on a journey to write our history down in a book. I think one thing I take from that is that over the last 100 years, the business has evolved and changed, but the culture, fundamentally is still the same. We hail from a rural area of northeastern Iowa and are now headquartered in a rural area. The midwestern values that guide our corporation, how we treat one another and do business with our clients, are the same today as in 1919.
DredgeWire:
Tell us something about yourself personally that most people would not know.
Binsfeld/JF Brennan:
I love skiing! Whether it is water skiing or snow skiing. Skiing is like breathing air, it is necessary for life. I have four daughters, and we ski together quite a bit. It won’t be long before they are outskiing me. I guess that’s the downside of getting older!
Interesting Facts about JF Brennan:
Now has about 600 employees, with a little under half of that in their Wisconsin headquarters
Business mix is roughly 50/50 between the private and public sectors. “The private sector is humming along.”
Binsfeld is a fan of the book ”Astroball: The New Way to Win It All” about the Houston Astros.
Brennan now has a full time social media coordinator.
Here is an excerpt of WEDA award to Matt Binsfeld for “Dredger of the Year”:
“…..In recognition of his commitment to the dredging community, to the health and safety of the workers in the dredging industry, to the importance of information sharing and for always being available to help others.”
