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Thanks to founder and CEO Jim McShane, McShane Construction has expanded to become a three-pronged business empire.

Jim McShane’s role within his family’s company has changed considerably since he founded the firm in 1984. The McShane family business started out as McShane Construction in 1984, looking to enter the industrial construction sector in the Midwest. However, circumstances and a desire to diversify would push the small, family-owned firm to grow into a much larger entity with an ever expanding presence in the construction and real estate businesses.

Today, The McShane Companies comprise three separate entities—McShane Construction Company and Conor Commercial Real Estate, both based in Rosemont, Illinois; and Cadence McShane Construction, headquartered in Dallas.

The firm is recognized as a national real estate developer and construction services provider.

“We had a consulting firm spend time with us in the late ‘80s, and they basically said, ‘If you don’t have more arrows in your quiver, you’re probably going to go out of business,’” McShane told CEO Magazine on the incentives for the company’s expansion and diversification. “They said, ‘You will not survive unless you are a marketing-driven company.’ So in 1990, we began to diversity geographically and through the creation of two additional companies.”

“We went to Dallas during the recession of ’89-‘90, and a tremendous amount of real estate was available and the banks were in trouble. To a great extent, it was this recession that motivated us to expand geographically, which resulted in offices in nine cities across the country.”

RELENTLESS SERVICE

Today, McShane Construction and its affiliates operate as a leading national industrial, commercial, and multi-family developer and builder. Yet Jim McShane insists they aim to be more than merely a real estate developer and general contractor. The firm sticks hard to the goal of turning its clients’ visions into realities, whether it’s through increased employee productivity, improved patient and caregiver welfare, or a greater sense of community.

McShane describes the business philosophy behind all three McShane companies as “relentless service,” to the degree that he believes the quality of service offered by any player in the construction industry can make or break a firm. In this sense, McShane claims he learned a great deal from studying GE’s legendary former CEO, Jack Welch, whose tenure during the 1980s and ‘90s saw the company’s value rise by 4,000%.

“The idea of relentless service is something that all construction companies need to look at,” McShane elaborated. “It’s very easy to just think of a building and how we’re going to make a profit instead of trying to put ourselves in our client’s shoes and understand their needs and wants. For example, when we build for a company like Apple, we need to understand how they operate, how they want to be treated, and how they want to make sure we’re taking care of their needs.

“A lot of that is really a sit-down process, working through it with the client. Those early meetings have a lot to do with how successful a project will be. If we’re communicating properly from the very beginning, schedule delays and budget problems generally don’t happen.”

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LOOKING AHEAD

McShane described all three McShane companies as market-driven firms in the sense that they carry out substantial research on the coming trends in the real estate and construction industries, both of which are changing rapidly and can be difficult to predict. “Right now, we’re pushing hard into market sectors that we see growth in which, for the foreseeable future, will continue to be some form of housing,” McShane explained. “It may be student housing. It may be affordable housing. But it’s certainly going to be senior housing, and senior housing can have quite a few different components to it—everything from skilled care to intermediate care to independent living.”

“We see senior housing as probably the biggest growth sector we’re looking at right now, but we’re also looking at continuing industrial growth and market rate housing,” he elaborated. “These are components that we weren’t in ten years ago, but we looked far enough ahead to see that those areas were going to grow and then we hired people who had the expertise needed to build these buildings.”

“In the short term, we are working hard at training young people. There was such an exodus during the Great Recession that we lost a lot of people in our industry. Now, we’re hiring millennials and they want to advance their careers, so we need to train, develop, and provide career growth. One of the things we look for at McShane is continuity and whether we have people right behind the top leaders who understand and believe in the mission and, therefore, can carry it forward.”

BROADENING HORIZONS

In the long term, McShane also sees the companies continuing to grow geographically, a strategy guided by both industrial trends and homeowner demographics. “We watch places like Texas where there’s tremendous demographic growth,” he highlighted. “People are moving to Texas every day. When people move to an area, they need supermarkets, they need churches, they need roads, they need so many different things.”

“Meanwhile, in Chicago, where we’re based, people continue to need services,” McShane insisted. “You see companies like UPS, FedEx, and certainly Amazon moving in. They’ve already built their distribution warehouses on the perimeter, and now what they’re looking for is the last mile. We need to find an area that’s re-developable and then accumulate three or four properties there.”

LONG-LASTING RELATIONSHIPS

McShane stressed the importance of strategic relationships in the construction industry, particularly as technology reshapes the sector and clients seek to hire and source products and components locally to help the economy.

“On any given project, we’ll have between 40 and 50 subcontractors, and we evaluate them on the basis of their skillset,” he explained. “We regularly bring subcontractors into our office, and they talk to us about what they see as far as new technologies and how we can adapt them to our needs.

“Right now, we’re building a large facility in northern Minnesota,” McShane outlined by way of example. “We need suppliers from that area because people want to hire local, but not everyone has the necessary expertise. For example, there aren’t that many precast concrete suppliers in the area, so it’s important to talk to the suppliers we do have on a daily basis to see what we can do differently to help them be more efficient.”

McShane went back to the philosophy of relentless service as the key to gaining customer confidence and being ready for any eventuality in the unpredictable industry that his companies serve. “There are always issues in the construction business: it hails, it snows,” he emphasized. “Something happens. It’s how we react when these issues arise that’s important, though. That’s an attitude that we try to train our people to have. We’re going to have problems, and it’s how you deal with those problems that’s going to set you apart from everyone else.”

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