Chicago’s Inland Electric grows through acquisition, partnerships, service

How does a 23-year-old company grow in a residential market from a “mom-and-pop” company to the largest residential contractor in the Chicago area? The company, Inland Electric, which until recently didn’t even have a Web site and has never conducted any formal promotion, likes to dub itself “the quiet company.” But this self-proclaimed soft-spoken company has acquired three major electrical contractors in the past decade and has become the firm of choice for a majority of the major residential builders in the Midwest. And the company still has higher aspirations. To continue its pattern of growth, Inland hopes to acquire more contractors beyond the Chicago area while expanding into a national presence.

Inland’s secret has not been sudden growth, but rather a slow, steady increase in residential building. Inland Electric was formed in 1981 when its soon-to-be founder and president Ed Mattox left the field-electrician work he did for a variety of residential contractors. Mattox started his own company with a handful of trucks and employees. Residential work was what Mattox knew, and it was the market he targeted. That hasn’t changed. About 75 percent of the company’s work is in the residential market.

Today, the company averages $50 million annually and has grown 10 percent every year. This constant, deliberate growth has made it the residential leader, the choice of five of metro Chicago’s six biggest builders, firms such as Centex, Pulte Homes, Lennar, Town and Country, and Cambridge Crossing. Inland also works with 47 of the area’s Top 50 builders.

Next, Inland hopes to expand into other metropolitan areas. “In our plan we want to take our footprint out of the Chicago area and look outside,” said Pasquale (Pat) Selvaggio, executive vice president.

How has the company accomplished this controlled growth? It has in large part through acquisitions, the most recent of which was Continental Electric Residential Division, an established Chicago company with both residential and commercial sides. Selvaggio said the two firms “had mutually exclusive clients,” and the acquisition secured Inland another prominent builder.

Selvaggio said some of Inland’s previous acquisitions have led the company from strictly single-family residential to “vertical residential” projects such as hotels, high-rise apartments, condominiums, and assisted-living and rehabilitation facilities.

But Selvaggio said there is more at play than just strategic acquisitions. The customer is king at Inland Electric. For instance, it offers customer maintenance, 24 hours a day, seven days a week.

“The key thing is taking care of the customer,” he said.

Because it has built long-term relationships with its clients, Inland is able to provide reliable, high-quality installation and competitive prices. Those prices are kept competitive, in part because of Inland’s unique relationship with its suppliers.

Having a big company in a tight market can be an advantage for purchasing, but size is not the only advantage. Inland has spent years building relationships with their distributors. Larry Byrd, the current director of purchasing, came to Inland because of what he described as good purchasing relationships. Like others in the industry, Inland was hit recently with the rising cost of steel; prices are as much as 300 percent higher than they were a year ago. Manufacturers and distributors have been forced to pass on those high costs to their buyers. But Inland has not been hit as hard as many, Byrd said.

“We’ve ridden through this better than most,” he said, which is due to 25 years of strong loyalties and relationships with manufacturers and distributors. “Profit margins may not be what they were,” Byrd said. “If you take care of partners who’ve been strong with you, you’ll make it up.”

With the rising steel prices for conduit, contractors are often scrambling to find better prices. “Everyone wants to be your new best friend,” he said. “[But] we’re going to dance with the person we came with.”

He added that Inland has been so successful because of its partnerships with quality manufacturers. Byrd, who was originally an Inland supplier, ended up joining the contractor as a purchaser. He claims Inland’s success is not related to size as much as it is related to attitude.

In addition to wreaking havoc with schedules, the volatile steel market has made it harder for contractors to know how much they have to pay suppliers, who may hold a price for only 10 to 15 days.

“It’s a matter of performance,” Selvaggio said, adding that the company atmosphere includes good a project-management plan and cost control.

When a large developer comes to town, there are a limited number of contractors who can undertake the volume of residential work they need, and within that group, they must pare down further to the company that is known for delivering on time. To make all this happen, Inland has developed its own project-management plan, which was done in-house since there are no project management models for residential electrical contractors,

While Inland may be the dominant residential electrical contractor in the Chicago area, Selvaggio added, “We’re not interested in being No. 1. We’re interested in serving the customers and we have grown that way.” Much of that growth, of course, has been the result of attrition—attrition the company hopes to continue.

The company has three divisions. The biggest division, about 75 percent of the business, is residential, with the smaller divisions representing commercial and voice/data/video (VDV).

Four years ago, the company predicted it would continue with managed growth, using founder Mattox’s principle that if something is measurable, it is manageable. Thus far Inland Electric has proved that more of the same kind of steady growth has been both measurable and manageable. EC

SWEDBERG is a freelance writer based in western Washington. She can be reached at claire_swedberg@msn.com.