In the 25 years that Hispanic Business magazine has been tracking the fastest-growing Hispanic-owned U.S. companies, we've never had a more surprising winner. Venegas Engineering Management and Construction, which is known more by its acronym VEMAC, is not only part of a sector that has experienced serious shortfalls in the current market, it is located in an isolated corner of the country not known, in the past, as a launch pad for economic powerhouses. Finally the company's stunning success flies in the face of amiable owner Oscar Venegas' own tongue-in-cheek philosophy about the importance of staying "unfamous."
VEMAC, which provides commercial construction management, general contracting, and related services in El Paso, Texas, participates in an industry that has seen revenues plummet in the past year. The construction sector's woes were recently documented by a Pew Hispanic Center research report indicating that more than 700,000 construction jobs were lost nationwide from 2007 to 2008. Yet, during that same time period, VEMAC substantially increased its sales, staff , and contracting base and enjoyed a sales increase from $691,000 in 2003, the year it was founded, to nearly $35 million in 2007.
Ironically, a key reason for the company's stunning growth was its location in El Paso, a historic, but isolated city of 700,000 people. VEMAC and the city's entire economy benefited from the kind of boost analogous to when a major automotive plant opens up in a community. Except in this case, it was not a car manufacturer providing the business opportunities, it was Uncle Sam.
On May 13, 2005, the Pentagon released its base realignment and closure (BRAC) recommendations. More than 16,000 jobs, both civilian and military, will be transferred to Fort Bliss, a U.S. Army base adjacent to the city's limits, by 2011. Th e army plans to ultimately invest approximately $5 billion in construction to benefit those new personnel and their families.
According to Mr. Venegas, that expansion has kept his company busy since 2005 and should keep doing so until 2012.
"The BRAC was not really anticipated but is definitely the number-one driver behind our growth," he told us. "We're very blessed here -- it's kind of a boom that El Paso hasn't had before."
VEMAC earned BRAC-related contracts without benefit of any Federal designations, such as 8(a). The company is charged with making sure that Fort Bliss can handle its pending growth. With the military contracts have come increased business -- and increased challenges. Bringing in new employees and subcontractors has been crucial to keeping up with the heightened work.
"It's been difficult finding the right trades people because of the boom," said Mr. Venegas. While El Paso is the fourth-largest city in Texas, the recruiting pool is still far shallower than metropolitan areas like Los Angeles, which, Mr. Venegas admitted, made finding qualified people difficult. It was a problem that the company focused on, though.
The recruiting challenge also extended to finding subcontractors. When there simply weren't enough of them, VEMAC became flexible, acting outside the proverbial box. Faced with a shortage of concrete contractors, the company created an in-house division to do those jobs itself.
"We're a town of 700,000, so our depth isn't quite there," Mr. Venegas said. "You may, for example, have only two electrical subcontractors available to you. If you need more, it puts a strain on the city's available subcontractor base."
Financing, on the other hand, has not been an issue. VEMAC's needs have only been for equipment. According to Mr. Venegas, those vendors, much like car dealerships, have their own financing, with good rates and deals to boot. While Fort Bliss-related projects are currently the most prevalent for VEMAC, it is involved in other significant projects, including construction of the first certified "green" school in El Paso. The Soccoro Independent School District's Chester E. Jordan Elementary School is a $13 million project offering energy-saving designs.
Mr. Venegas indicated that while cleantech projects are relatively new to the El Paso area, VEMAC hopes to become involved in other such projects. "Green is probably going to be standard going forward," he said.
Although much of the Fort Bliss work should be completed in a few years, Mr. Venegas predicted VEMAC's plate will remain full.
He believes infrastructure concerns throughout the state present opportunities.
"Texas is worried about highways and infrastructure and is trying to do something about it," he said. "It's something we hope to be involved post 2012."
Looking long-term, Mr. Venegas thinks that with the way the industry is going, a company like his must be able to compete for the larger contracts. "I think to remain successful in the future we must get bigger and bigger," he said, citing Fort Bliss, which bundles its contracts together into projects worth hundreds of millions.
Of course, that could mean, in his words, "jumping way up there," ever closer to that spotlight that he would rather avoid. "I was taught that one should keep a low profile, because otherwise you might become a target," he quipped. Somehow, though, you get the feeling that he truly doesn't mind, in this case, departing from his old philosophies. With growth like VEMAC has enjoyed, it can afford to build new paradigms.
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