It's unlikely that Bay West Inc., a respected St. Paul environmental consulting and contamination cleanup company, would have been contacted six years ago to help deal with a mammoth oil spill like the one now occurring in the Gulf of Mexico.
But thanks to a growing national reputation for its work on petroleum cleanups, built over the last six years by new owners, Bay West was asked last week to be ready to help Gulf Coast remediation contractors with manpower and expertise if called upon, which could happen as the bulk of the spill comes ashore.
Meanwhile, the company was shipping thousands of feet of containment booms -- floats with below-water skirting to confine the oil slick for collection -- to contractors working to deal with the oil slick.
Why Bay West? Company President Lon Larson credits the national exposure attached to a growing list of federal contracts the company has won since he and two other Bay West executives bought the business in 2004.
At the time the company was in financial difficulty and operating in "survival mode," as Larson puts it. But the new owners quickly shifted into "growth mode," he said.
The man has a gift for understatement: Actually, the shift was more like an explosion. In three years the new owners tripled revenue, from $8.6 million in 2004 to $25.7 million in 2007, and erased the red ink that was flowing from one of Bay West's divisions. Alas, the looming recession whittled the gross to $20.7 million in 2008 before a slow comeback to $22.2 million in 2009. But despite the shrinkage, Bay West ended its first five years under the new ownership with a creditable annual growth rate of 21 percent.
And given project contracts now in hand, the company is back on a double-digit growth path this year, with revenue on track to grow 35 percent, to about $30 million.
Along with Larson, the partnership that shaped this turnaround includes Gene Kuppenbender, 45, vice president of sales and marketing, and Ed Bacig, 48, vice president of operations. The three implemented a strategy to broaden the client list extensively while rebranding Bay West as an environmental consultant in addition to its contamination remediation services.
Larson said there were several reasons for the company's financial difficulties, largely a dredging service started in 2000 that suffered a string of losses after running into unexpected problems. The new owners shut it down in 2004.
Trouble was, the dredging problems also distracted management from its focus on the principal business of treating contaminated soil and water, leaving the company with a rather narrow approach to marketing its wares.
For example, Bay West had won federal contracts with the Corps of Engineers, but primarily as a subcontractor, and only in six of the the corps' 45 districts. It also had a limited list of state and municipal clients, mainly Ramsey and Hennepin counties and the Minnesota Pollution Control Agency. And among a roster of about 250 commercial clients, it was viewed largely as an "emergency response" operation.
There has been considerable change:
Federal market: Thanks in part to small-business set-aside programs, Bay West has marketed itself to the Corps of Engineers as a prime contractor rather than a subcontractor. In the process, the company has won contracts in 11 of the corps' districts so far.
Meanwhile, the company also added the U.S. Air Force, Army and Navy, the National Guard Bureau, the Environmental Protection Agency and the National Park Service to its client list.
Two contracts won shortly after the takeover helped launch Bay West's rapid growth. One was a $12 million project, still underway, to clean up fuel spills and toxic landfills at the Seymour Johnson Air Force Base in North Carolina. The other was a recently completed $7.1 million contract to clean up fuel spills and coal tar residue in landfills at the Holston Army Ammunition Plant in Tennessee.
As a result, the federal market grew from $2.6 million of revenue, 32 percent of the total, in 2004 to $15 million, or 68 percent of the total, in 2009. Based on contracts in hand, the federal total is expected to climb to $20 million this year.
Commercial market: Once focused on manufacturing clients and used as an emergency service, Bay West added ongoing compliance and maintenance consulting to its service list and broadened its market approach to include property developers, hospitals, clinics and retirement homes.
Growth has been slow, with revenue rising just $600,000 since 2004, to $3.7 million. But the new strategy is paying off, with revenue on track to reach $6.5 million this year.
State/municipal: Bay West added the Minnesota Transportation Department, the state of South Dakota and the cities of Minneapolis and St. Paul to its client list. Growth has been slow: Revenue grew just 19 percent, to $3.5 million, in the five years up to 2009.
It is not expected to grow much more than 1 percent this year. But there are prospects for growth of Minnesota Pollution Control Agency contracts in northern Minnesota, which prompted Bay West recently to open an office in Duluth.
There are statistics beyond the financials that Larson insists on adding: While Bay West employment has grown from 45 to 120 since 2004, the company has gone more than 3,200 days without a lost workday due to injury. Not bad, considering that employees handle explosives, clean up hazardous chemicals and hang around in chemical storage tanks.
As for the future, much of the growth is expected at the federal level, Larson said. In the past six years, Bay West has won 10 of what he calls "contract vehicles": federal contracts that give it the right to bid on projects in competition with a limited number of other choice bidders.
Those 10 contracts carry potential spending of up to $650 million, Larson added, "and history tells us that we stand to win about 25 percent of that total" over the next decade. Which is why he confidently predicts the company will top $50 million in revenue in the next five years.
Dick Youngblood • 612-673-4439 • yblood@startribune.com
