Kiewit: Extraordinary Success Story of a Low-Key Masonry Contractor
With a low-key beginning as a local masonry contractor, Kiewit has grown into a multi-billion-dollar firm, marking its name as a construction and engineering leader with an outstanding track record for delivering the highest quality results on budget and ahead of schedule. Throughout its course of over 136 years embracing self-performed construction approach, the Omaha-based contractor has been successfully delivering some of North America’s most challenging projects.
Driven by four key ethos of people, integrity, excellence and stewardship, this juggernaut has literally built the world – leaving its footprint across all major markets and segments, such as transportation, mining, energy, underground, electrical, and marine – while redefining how to operate as an ethical and engaged corporate citizen.
Let’s delve deep into the “uncommon” story of Kiewit to figure its growth trajectory for a breathtaking success.
Establishing Initial Foundation for Robust Success
Kiewit has its roots dating back to 1884, when Peter Kiewit and his brother Andrew founded their own company – so-called Kiewit Brothers – as a masonry contracting partnership. That turned out to be a logical move for two sons of a brickmaker, who moved to the booming city a half dozen years before.
As the close of the century approached, Kiewit Brothers began taking on sizable commissions, including its largest masonry contract, the 7-story Lincoln Hotel in 1889 and a large-scale construction project on the Bekins warehouse as a general contractor in 1900. The partnership between the two brothers lasted some 20 years before they agreed to dissolve it in 1904. Onwards, Peter Kiewit continued the business as a sole proprietor and managed to steer its growth into a major national contractor during the 20th century.
The foundation for success had been firmly established, and the company lived on under the leadership of Peter Kiewit and his sons. Namesake and youngest son, Peter, came aboard in 1919 and was at the helm by 1924. Within that year, the company reached the 40-year milestone and landed its first million-dollar contract — the 10-story Livestock Exchange Building in the South Omaha meat-packing district. Besides, along the late 1920s, this behemoth was awarded several significant projects that remain Nebraska landmarks – the Nebraska State Capitol Tower (1927), Joslyn Art Museum (1928) and Union Station (1929), to name a few.
The young Peter’s hard work, moral integrity and visionary leadership – whose legacies endure today – could be attributed to such promising business performance. “Although Peter rose to unbelievable heights, he never lost the sense of being a working man. Instead, he reached out to all who would join him and gave them the capacity to help others,” commented Rev. Matthew Creighton.
As shared Ralph Kiewit, his older brother, “Pete had a fantastic capacity to organize the details. He was far better than I was. If he saw something wrong, he took care of it right away, whether a foreman wasn’t performing up to standard or some other change.”
When Peter Kiewit took a decision, he was tough and would sledgehammer his way through the opposition. “There is no progress without risk. You can’t hope to develop your maximum potential without taking some risks,” he said.
By 1931, when his elder brothers left, the young Peter made up his mind to dissolve the family firm and get it reorganized as Peter Kiewit Sons’, Co. Actually, the CEO did not care much whether the company was the biggest – instead, he expected it to be the best.
Driving Through the World Crisis
With the company assets up to $125,000, he began selling shares of company stock to key managers to conserve cash while motivating employees’ morale – such a philosophy of “employee ownership” then proved critical to the business’s future success.
As Peter Kiewit became the majority shareholder and president of the firm, the Great Depression landed in and wreaked havoc on the whole nation. Realizing that the limited building work available had a tendency to go at or below cost, Peter, as a visionary entrepreneur, saw the need for change, deciding to steer the company’s growth trajectory into heavy and highway construction markets.
Notwithstanding the fact that the Great Depression was in full swing and numerous companies were cutting back on their workforce, Peter widened his employee base and took on new types of projects, diving into highway work to survive the crisis and propel it forward. Notably, he gathered a core group of 4 talents – Walter Scott, Homer Scott, George Holling and Ted Armstrong – to accompany him to develop “the Best Contracting Organization on the Earth”.
“From the beginning, I realized I was working for a man with great integrity, competitive drive, rare business and financial talent, and a gift for organizing and inspiring men,” shared Homer Scott, Senior Executive & Major Shareholders at Peter Kiewit Sons’.
His previous move of “employee ownership” did wonders amidst that time. “One of the reasons our results are better than our competitors is that all of our stock is owned by employees – people who are actively engaged in our business. Each one is, in fact, a part owner of our company and is, in a sense, working for himself. Certainly, this should, and I believe it does, provide a definite incentive to our employees and a corresponding benefit to the company,” shared Peter Kiewit.
“As I see it, personal success is being the best you can be. Often, the key to realizing your full potential is the willingness, and the courage, to take a calculated risk. I don’t mean a reckless, impulsive risk, but one in which the prize for success is high and the penalty for failure is not catastrophic. Even failure often contributes to your growth. Improvement is seldom made without reaching beyond your abilities and trying to do something you have never done before. Sometimes the effort fails, but it is the reaching, the striving, the divine discontent that generates greater strength and knowledge.”
In the mid-1930s, whereas the company was yet to earn a profit, it managed to broaden its highway business to neighboring states, including Wyoming, Colorado and North Dakota. More significantly, people value did “hike” as “we hired, trained, and developed a number of able people – many of whom became valuable employees, officers of the company, and major shareholders.”
Enlisting in “Military Buildup”
Following the Great Depression was the World War. As storm clouds gathered in Europe, America’s leaders began to prepare for war and amidst that period, Kiewit was awarded a $7.5-million military buildup contract at Fort Lewis, Washington.
During that time-restrained and demanding Fort Lewis project, Peter’s great leadership abilities and temperament were outstandingly demonstrated. “Just remember, a big job is no more than a lot of little jobs put together.” This president, more than anyone, rolled up his sleeves and took action, having an eye on all operational activities from evaluating supervisors’ work, developing incentive programs, recognizing outstanding performance, weed out poor performers to patterning the rest of the operations after those who were getting the job done. Interestingly, Peter did not like an “all-yes” man – he wanted his man’s ideas.
Under his leadership, he changed the entire feel of the job during wartime. Accordingly, his company earned a reliable reputation, received the coveted Army-Navy E Award (for excellence), took on numerous contracts after the Fort Lewis project as well as got exposed to several new geographic areas.
“When you harvest wheat, the tallest stalks – those that stick up their heads – are the ones that get the scythe,” Peter quoted his father, reflecting on his desire to keep a low profile.
Focusing on Infrastructure Expansion in Peacetime
If not for the Great Depression, Kiewit Corporation might remain a local masonry contractor. Yet, “thanks” to a couple of political-economic events that forced it into new lines of work, the giant was ready to branch out when the time came to construct the U.S. interstate highway system.
In fact, Kiewit is the (lead) contractor behind some of the most challenging and picturesque miles of America’s highway system, including sections through Arizona’s Virgin River Canyon and Colorado’s Glenwood Canyon, the Fort McHenry Tunnel beneath Baltimore Harbor, and the Eisenhower Tunnel through the Colorado Rockies.
Having built more lane-miles of the interstate highway system than any other contractors, Kiewit grows into one of North America’s largest transportation contractors whilst its “magician”, Peter Kiewit, is well regarded as “The Colossus of Roads.”
Besides highway and commercial building work that dominate Kiewit’s business, Peter Kiewit did capitalize on another key trend – the growth of the western states that needed water projects.
Actually, one of its first post-war projects for the Bureau of Reclamation was the Friant-Kern Canal, a 152-mile project designed to supply water to agricultural lands in California’s Central Valley. Besides, the company took on the construction work of Monticello Dam near Sacramento, a concrete arch dam developed to feed water into the California Aqueduct. The other two of Kiewit’s most notable dam projects during that period were the concrete-arch Flaming Gorge Dam on the Green River in Utah and the earth-fill Garrison Dam on the Missouri River in North Dakota.
“Just as a rock is not shaken by a strong or sudden gust of wind, neither should we be affected by praise or success. We must not be satisfied with our past accomplishments and we should make every effort to improve and expand our operations — but only in an orderly and beneficial manner. A company cannot stand still for long — either it goes ahead or it slides back.” Whilst Kiewit yielded stunning success, especially with Interstate Highway System as a key growth driver, Peter Kiewit never stopped looking for ways to optimize its operational excellence and new opportunities to thrive on.
“Just as a rock is not shaken by a strong or sudden gust of wind, neither should we be affected by praise or success… A company cannot stand still for long — either it goes ahead or it slides back.” – Peter Kiewit, Former President of Kiewit Corporation.
Fostering Transition in Leadership
“Before you can go on to a position of greater responsibility, someone must be trained to do your job, unless the job you are doing is not an essential one. If any of you fellows wants to admit that your job is not essential, you do not need to do anything about trying to see that anyone else is trained for your job,” stated the ever-great Peter Kiewit, stressing the importance of succession planning.
In parallel with enhancing business core operation, Peter invested in developing his successors. He appointed Bob Wilson to immediately succeed him in 1969, yet his foresight in training Walter Scott Jr., 11 years Bob’s junior, came to bear when Wilson experienced heart issues and died soon after Peter.
Peter Kiewit’s succession planning efforts proved fruitful when Walter Scott brought in several growth opportunities for the company, especially with his aggressive acquisition approach. Particularly, Walter Scott made several major acquisitions with the biggest being Continental Group in a deal for $3.5 billion. At the time it was the largest public company to be taken private.
“The engineering and construction business has an enormous graveyard of competitors that never made the grade. If you set out to replicate the Kiewit Company, you could put as much capital into the business as it has. You could move into corporate quarters that rival Kiewit’s. You could even buy all its equipment and replicate its organizational structure. But, you would not be able to build a culture like Kiewit’s. That culture is the result of the vision of an extraordinary man, carried on and moved forward by extraordinary people. You could canvass the world, recruiting the top picks from Stanford, Harvard, you name it, and you would never replicate the magic and success that is the culture of the Kiewit Company. I am so very proud to be its neighbor,” commented Warren Buffett, a business magnate, investor, aka Chairman and CEO of Berkshire Hathaway.
“Peter Kiewit didn’t just build buildings – he built confidence and integrity. He built leadership. I’m convinced that Kiewit leadership benefited from a superior corporate ethic and a unique mentoring culture.”
Gaining More Growth Momentums
Under the leadership of Walter Scott and succeeding CEOs, Kiewit continued to foster its prosperity, capturing more contracting opportunities in the public sector as well as strongly expanding into significant markets within the private sector.
The giant has been making significant investments in new ventures outside its core businesses, with an emphasis on energy and telecommunications, including MAPCO, CalEnergy, Continental Can, Level 3, Metropolitan Fiber Systems. Such diversification eventually led to a reorganization into Kiewit Construction Group and Kiewit Diversified.
The challenge with acquisitions is that every business “boasts” its own history, its own traditions, and its own unique culture. A healthy corporate culture can be a magic intangible that makes the difference between a winner and a loser, yet, it is still tough to instill that in another company. Notwithstanding that, Kiewit, with strong culture solidified by Peter Kiewit, did successfully invest in, grow and spin off several major companies.
Thanks to that, from a small, local company from its Nebraska roots in masonry, Kiewit now emerges as a leading firm behind countless large-scale and iconic projects in transportation, infrastructure, mining, oil and gas, power and wastewater.
Current Business Performance Under the Leadership of Rick Lanoha
Having started his career with Kiewit as a part-time employee and held many key leadership roles onwards, Rick Lanoha stepped into the role of CEO in January of 2020, becoming the sixth executive to lead the company. Meanwhile, Rick also sits on the board of Valmont Industries, Inc and is a member of the Business Roundtable.
“The Kiewit organization and leadership team are as strong as they have ever been. Rick has done an outstanding job as president and COO and is fully prepared to take on CEO responsibilities in 2020,” stated Grewcock, Kiewit’s Former CEO. “He understands all facets of our business and is a strong leader who is well-versed in Kiewit’s culture and history – yet he also brings a fresh, valued perspective that will position the company well for the future.”
In practice, the newly appointed CEO’s leadership has been well demonstrated amidst the past COVID-19 pandemic. Whereas the construction landscape coped with unique challenges and serious damages, Kiewit managed to weather through all these adversities and generated staggeringly $12.5 billion in terms of revenues, with no operational long-term debt.
Let’s cast a quick glimpse over Kiewit’s business activities by sector and project scale during the challenging 2020.
Area Coverage
Growth by Project Size
The Bottom Line
Growing from its roots of basic commercial building construction, Kiewit has been disrupting various segments within the sphere and stands as one of the most highly regarded contracting firms. This could be attributable to the fact that this behemoth remains faithful to the corporate goal set in 1946 by the late Peter Kiewit: “To be the Best Contracting Organization on the Earth.”
With a storied growth trajectory as well as great legacies of integrity and visionary leadership, there is every likelihood that Kiewit’s prospect keeps brighter in the foreseeable future.
