After cuts, engineering a comeback

  • Article by: TODD NELSON , Special to the Star Tribune
  • Updated: September 16, 2010 - 2:00 PM

The recession forced painful cuts, but Minnetonka engineering firm RLK Inc. is rebounding with projects paid for, in part, by the federal stimulus package.

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Left to right: Vernon Swing, John Dietrich and Steve Schwanke at their RLK construction project at Hwy. 110 and Dodd Road in Mendota Heights.

Photo: Joel Koyama, Star Tribune

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An eternal optimist, as he says all consultants must be, Vernon Swing is beginning to see signs of hope for an economic recovery.

The company he heads, Minnetonka engineering firm RLK Inc., has benefited from federally funded stimulus-related projects to get through the downturn and now is seeing growth in commercial and other private work.

"We have seen some signs of light on the horizon," Swing said. "My analogy is, I don't think it's the incoming comet. I think it's the dawn of a slightly more robust economy."

Founded in 1991, the company provides engineering and other services for public and private clients in land development, economic and community development, transit and transportation and special services such as civil engineering, landscape architecture and sustainable design. In its peak years just before the recession, RLK had 130 employees and $13 million to $14 million in revenue, Swing said.

Clients have included Target, working on individual stores and larger projects such as the retailer's Brooklyn Park campus; and Medtronic's cardiac rhythm management headquarters in Mounds View. RLK also has done urban redevelopment projects at Calhoun Square and elsewhere in the Uptown neighborhood of Minneapolis.

"Our issue from 2004 through 2006 was we couldn't find enough people to work," Swing said. "We could have been 30 to 40 percent larger than we were, we had that much work going on."

Then the commercial, industrial and office markets slammed into a wall, as Swing puts it, in the winter of 2007 and spring of 2008.

RLK has emerged a much smaller company, Swing said, with 45 employees, $4 million in revenue projected this year and two of its five offices shuttered.

Still, he's optimistic, in part because business began to stabilize in 2009 and turn around this year. That's occurred as RLK has gotten work on a number of outstate projects financed largely by the federal stimulus bill, officially known as the American Recovery and Reinvestment Act of 2009.

Broadening services

The company has also been broadening its range of services, building on existing client relationships and pursuing new and growing markets such as renewable energy.

The largest stimulus job to date has been RLK's work providing design coordination and other services on the reconstruction of 1.5 miles of Hwy. 169, or Minnesota Avenue, the main street in St. Peter. That project contributed $1.5 million of the $2.25 million in revenue that stimulus-related work has generated for RLK.

In the Twin Cities metro area, RLK helped develop the West (Mississippi) River Trail in northeast Minneapolis, which received stimulus money. The company, which is pursuing trails as a niche business, completed the East River Trail in 2009 in a project done without federal financing.

"From our perspective the stimulus, particularly that St. Peter project last year, we would be a completely different company now if that project had not come through," Swing said. "It's been huge. I'd be the first one to say it has kept us in the game."

An uptick in private-sector projects also is fueling Swing's positive outlook. RLK is doing engineering work for a company that is rolling out a new offering in its stores nationally. Swing declined to name the client but likened the assignment to work the company did in 2001 for a grocery store chain that added gasoline stations to its properties.

"They are changing their footprint across the country, and we are representing them in those markets," Swing said. "That's completely different than last year. There was none of that last year. Two more of those would be great."

Howard Noziska, president of Eden Prairie-based consulting engineering firm Encompass Inc., said RLK appears to be making a smart move in broadening its services and moving into new markets such as renewable energy.

Projects tied to land development can be more subject to the ups and downs of the economy, making it tougher to sustain a consistent business, said Noziski, a former executive director of the Minnesota Masonry Institute.

"They have some talented people who can help them out as they're expanding their services," Noziska said. "The 169 reconstruction is a nice project. It's good for them that they've been able to pick up some stimulus money. It sounds like they're going in a good direction. A lot of times the attitude of developers is, 'Let's worry about today, not tomorrow.'"

Tough times

When the recession hit, RLK moved quickly to cut costs. The company closed its Oakdale and Ham Lake offices, keeping its Minnetonka headquarters and offices in Duluth and Hibbing open. Directors went with vastly reduced salaries and sometimes none, Swing said. Employee pay was not cut though some benefits were, including a matching contribution to 401(k) accounts and the holiday party.

RLK adjusted its business model and tried some new things to counter the downturn, Swing said. While the company routinely does design-build projects in the private sector, working in that way with the Minnesota Department of Transportation and its contractor on the highway project in St. Peter was new. Each division now has its own business plan, and each office is returning to current and past clients to look for new opportunities.

The company sees renewable energy as another new focus, Swing said, hoping that survey work on wind or solar farms will lead to engineering and other services. RLK had looked into that market in the late 1990s but didn't make a move then because it was busy enough doing private land development work.

RLK also has been much more aggressive in marketing to generate new business, and is focusing on specific segments in doing so, Swing said. "That's something that should never get cut even though everything is slowing down," Swing said. "It's become more important to be out there with a very direct message."

Howard Paster, development manager at shopping center development and management at Paster Enterprises in St. Paul, said RLK was a great help in getting governmental approvals needed for the redevelopment of the 55,000-square-foot Mendota Plaza in Mendota Heights. RLK did survey work, landscape architecture and engineering for the projects.

"They're well respected because they know what they're doing," Paster said. "They work for a lot of developers, they do a lot of work for retailers, and you don't get in that position unless you're really good, you know what you're doing and you deliver results."

Todd Nelson is a freelance writer in Woodbury. His e-mail address is todd_nelson@mac.com.

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