In 2005 and 2006, companies were expanding left and right in Charlotte. Building permits were skyrocketing, and if you were in the construction industry, times were good.
Cox Schepp Construction was only about 5 years old at the time, still an infant of a business, but the Charlotte-based company was riding high, taking on jobs and hiring workers.
“’05, ’06 was good,” Andy Cox, one of the company’s two founders, told me this week. “There was a lot of projects.”
Then came the country’s economic slide. Lots of general contractors have been struggling since then, but Cox Schepp has had to take the unfortunate step of filing for Chapter 11 bankruptcy protection.
At 9:42 a.m., Thursday, Jan. 5, it was official: The company’s case was entered into U.S. Bankruptcy Court for the Western District of North Carolina. It’s the first time the company has filed for bankruptcy protection in the decade since it was launched, Cox said.
It might come as no surprise to anyone in the U.S. these days to hear that a general contractor is hurting, filing for bankruptcy protection or even going under.
Still, Cox Schepp’s story is sobering news that hits close to home. This is one of the biggest contractors in Charlotte, after all, one whose name is on a Central Piedmont Community College construction academy for high school students.
A story on Cox Schepp’s Ch. 11 filing generated some hateful comments on The Charlotte Observer’s website. One commenter called it a “dirt bag” company and accused it of mistreating subcontractors. Other readers bashed it, too.
So much for if you don’t have anything nice to type, don’t type anything at all.
Cox Schepp’s been dealt a tough hand, but Andy Cox blames the company for what went wrong.
“We’re doing the best we can under the circumstances that we’ve created ourselves,” he said. “It’s one of the toughest things that I’ve dealt with. I’m not blaming anybody.
“As opposed to expanding in a couple markets, would we have been better off to kind of contract? Who knows what would have been better at this point in time?”
Expand Cox Schepp did, maybe too fast for its own good. From 2004 to 2007, the growth didn’t stop.
“We doubled our volume, hired a lot of new people,” Cox said. “We were enjoying the success of winning projects and new projects. You get a lot of momentum.”
The economy began collapsing, but Cox Schepp kept taking on project after project. The company did preconstruction work on them, but contractors really don’t make money in preconstruction. It’s when construction starts that a contractor really begins billing clients and the cash starts rolling in.
It works in a normal economy, because preconstruction switches to construction pretty quickly. But with the economy rotting, developers couldn’t get financing, projects got delayed and Cox Schepp found itself having too much overhead while revenues were falling.
“If I would have known then that these projects and financing was going to be difficult, I would have been much better off, essentially, cutting overhead at that point in time … and not pushing forward so much,” Cox said.
Indeed, Cox said, he should have responded differently to the downturn.
If he could do it all over again, he would not have opened a sales office for the company in Rochester, N.Y. It was hard to keep tabs on an office that far away, he said.
That office is now closed, as are Cox Schepp offices in Raleigh, Charleston, S.C., Jacksonville, Fla., and Atlanta.
Cox Schepp’s empire has shriveled to just one office, in Charlotte.
Like a tsunami rolling ashore, the recession and the company’s missteps have torn away other parts of Cox Schepp: As recently as a year ago, the company had 190 employees. It now has about 25.
Cox said he expects to sell some company vehicles to further cut expenses.
Cox is 50, a married man with four children ages 6, 11, 18 and 21.
He’s from the Midwest – he graduated from Iowa State University in 1985 – and came to Charlotte that year to take a construction job.
Now, he’s trying to keep his recession-bruised business alive.
“We totally understand the construction business, understand how to run one,” he said. “It’s just making sure that we focus on profitability and watching our overhead.
“Hindsight’s 20/20. Looking back on it, I think, you know, there was probably signs that we didn’t recognize.”
ROBERTS can be reached at [email protected].