Will Hodges, President, Cadence McShane
Invest: interviewed Texas construction firm Cadence McShane’s president Will Hodges, who spoke about the strengths of the Dallas market. He highlighted that Cadence McShane fights to maintain its competitive edge through diversification and consistent employment of methodical, disciplined business strategies.
What have been the most significant milestones achieved by Cadence McShane over the last year?
We’ve been awarded a couple of large projects, most notably the Nebraska Furniture deal in Central Texas. We are also moving our corporate headquarters from Addison to Plano. The city of Plano attracted us with economic incentives, and we look forward to deepening that partnership. Plano’s environment — due to its walkability and atmosphere — will be a great place to operate out of. We’ve already completed a number of projects in Plano over the years, so working out of the city will be an excellent bonus.
Are there any sectors in which you are receiving more requests over other industries?
The last 12 months have been relatively flat. There hasn’t been a lot of work in the industrial markets, and the office sector is effectively dormant. We’re starting to see a little movement but it’s challenging to complete an office deal and get it financed. Capital markets are stuck, and it’s difficult to get deals done. If developers and building owners can’t complete their deals, our company can’t build, which is the main challenge within the private sector. We’re seeing a select few opportunities in multifamily housing, but these deals are unique. The general consensus is that development will start moving again during the first half of 2025.
On the public sector side, there is a large deal of activity. Cadence McShane doesn’t do municipal work, but we do work with many school districts. There’s a lot of public sector opportunities and movement in that space with big public work projects, city projects, and bond programs that have passed. There’s a lot of activity in those markets. Industrial and manufacturing are starting to experience an upswing, and people are taking advantage of competitive construction pricing, as pricing is down in the construction market.
How do the challenges your company faces affect your business strategies?
We are trying to stay disciplined. Even though activity has been dropping off a bit, we’ve been lucky to land a few larger projects. We’ve diversified both geographically and in the types of projects we pursue. That diversification allows us to weather tough times. If we only handled one product type and that product was down, we’d be in trouble. Because we’re in both the private and public sector, and due to our geographical and product diversification, we are able to make smart decisions and be disciplined in the types of work we pursue. When you start to see less work as a contractor, it’s easy to start making bad decisions, chase bad projects and make bad pricing decisions. Contractors then pay the price a few years down the line when the market is on an upswing. We’ve been fortunate that diversification has allowed us to keep work in our pipeline.
What makes Dallas a great place for a company to operate out of?
Whether you’re a contractor, in real estate or in business, it’s a big market. During tough economic times, Dallas doesn’t seem to struggle quite as much as the rest of the country. I believe this is due to its diversity and business-friendly climate in the surrounding region. If one area isn’t welcoming to a developer, businesses can easily move to neighboring municipalities in the region that will welcome them with open arms. The size and diversity allows for a favorable place to do business.
How does your company stay ahead of the curve competitively?
The competition in our market is fierce, particularly in Dallas. The advantage to working in Texas is that there isn’t a high barrier to entry for contractors to come in and do business. There aren’t licensing requirements, and owners are generally welcoming to newcomers. Our business remains relationship driven. We want to do work for people we have strong relationships with. We differentiate ourselves with service. If a business’ competitive edge is based solely on low pricing, then you’re simply a cheap commodity, and you look the same to everyone. The advantage to being in a large market like Dallas is that there is generally enough work to go around, and you can always find someone that aligns with your work philosophy.
What is the biggest challenge your company is facing today?
All of these new, incoming companies are hiring, so finding the right people is an additional challenge we are contending with. This hiring competition is thinning the local pool of available talent. We are still doing the same amount of work, if not more, with the same amount of people. People will continue to be the biggest constraint, not only for our company, but for contractors in general. We have a partnership with TEXO, a construction association, which has created a program called “Build Better” that invested $1 million in an 18-wheeler semi-trailer that travels to high schools and trade locations. The trailer has simulators for students to sample and foster interest in trades and skilled work. Build Better partners with local higher ed, universities and trade schools to connect students with those programs to then funnel kids in those directions.
How are you leveraging technology to stay ahead with your projects?
We are trying to do more with less, so we need software and systems to help people be more efficient. This can be a challenge because we sometimes see software as a silver bullet, and there are no silver bullet solutions. We want to ensure the structure and how software is utilized is allowing people to truly operate more efficiently. We’ve invested time and energy into ensuring that when we make a software acquisition it is actually solving the problem, instead of unintentionally creating more work for people by having to navigate challenging products. All contractors typically use one of a few software programs. We partner with Procore to integrate our software to avoid redundancies, allowing for a single entry of data across platforms.
What priorities do you expect Cadence McShane to focus on over the next few years?
People are our main priority. We need to make sure we have the right people on board. This has been the biggest challenge for the last few years, especially through COVID. Navigating the workforce in the right way remains our main focus. It is also imperative that we remain disciplined in our project selection and focus on projects that align with our strengths. We want to give our people the best opportunity to be successful. We anticipate growth over the next few years, not only for our company but also for the construction industry as a whole.
