When the financial cataclysm erupted in the fall of 2008, Thomas Murphy Jr. and his team at Coastal Construction Group took comfort in the big book of business already in the pipeline.
Then came the cancellations, one project after another.
“We had $1.6 billion in active construction projects in October 2008, and about another $1.5 billion in the pipeline. Then two jobs in 10 days said they were putting off construction,’’ said Murphy, founder, chairman and CEO of the family-owned Miami company. “Soon, we had seven jobs for $800 million that were not going to start construction.’’
Soon as the first two projects were shelved, Murphy Jr., 63, huddled with executives to brainstorm on getting through the crisis.
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Coastal, one of the largest Florida-based construction firms, slashed its ranks from 325 employees overseeing 4,000 subcontractor workers at job sites to 150 employees with 1,200 subcontractor workers within six months.
Salaries were cut 10 percent to 25 percent for all but the lowest-paid employees, with executives taking the biggest whack. Benefits were pared back, too, even as employees were loaded with more duties.
Confronting a bleak recession, Murphy Jr. budgeted for no new work in 2009 — a stark difference from the $650 million in contracts in 2008. Reality proved marginally better, with one job for $27 million gelling in November 2009 and $20 million added to an existing project.
“I always believed you go deep fast,’’ said Murphy Jr., whose easy manner and ready sense of humor belie an ironclad will. “If you cut early and fast and get ahead of it, then you can live to fight another day.’’
By the end of 2010, the worst had passed.
Over the past year, the private company, which has no debt, has hired 50 people, rebuilding to about 200 employees at its headquarters at 5959 Blue Lagoon Dr., including many who had been laid off.
“We’re structured to do three times as much work as we have,’’ said Thomas C. Murphy, 43, an executive vice president who oversees new work and the eldest of Murphy Jr.’s three sons.
So far this year, Coastal has signed contracts for $450 million in new work and could exceed $650 million by year-end, according to Murphy, Jr.
That comes after some mighty lean times: New work at Coastal totaled $47 million in 2009, $76 million in 2010, and $265 million in 2011.
Bullish on Miami’s future, Murphy Jr. sees increasing signs of a comeback in the construction of hotels, retail, apartments and condominiums in South Florida. Some developers who put off projects are checking current prices. Architects are finalizing plans. Building permits are up.
To be sure, with many projects still in infancy, such activity has yet to translate into a revival in construction jobs, which in South Florida are still down by roughly half from the pre-crash peak.
“The world wants to come here more than ever,’’ the CEO said. “I’ve been such a believer this town is going to come roaring back.’’
Another sign business is strengthening: Murphy Jr. urged Coastal’s long-time president, Dan Whiteman, to forget about retiring when he turned 65 in July 2012. “He’s the greatest complex problem solver,’’ said Murphy Jr.
“I took a day off for my retirement,’’ said Whiteman. “I went trout fishing, golfing and bicycling.’’
Among more than a dozen current projects, Coastal is building the Marriott Edition Hotel in Miami Beach; Mansions at Acqualina, a luxury condo in Sunny Isles Beach; Oceana, a condo going up at the site of the old Sonesta Beach Resort in Key Biscayne; and The Palace, a senior-living community in Coral Gables.
The company recently completed the St. Regis Resort & Residences, a Bal Harbour project that was stalled during the financial crisis but later revived; SLS Hotel in Miami Beach; Miami Carol City Senior High School, one of many projects for Miami-Dade County Public Schools; and the General Funding Office Building, headquarters for International Finance Bank in Miami.
Coastal’s work spans everything from Camillus House, a residential rehabilitation center for the homeless, to custom mansions on Fisher Island (where Murphy Jr. himself lives) to the University of Miami president’s Pinecrest home, which is named Ibis House after the school mascot.
Over the years, Murphy Jr. has built homes for celebrities such as Oprah Winfrey, Dolphins’ legend Dan Marino and Sylvester Stallone.
The company continues to broaden its reach. In 2011, Coastal joined with Winmar Construction to create a small projects division that handles commercial office interiors, hotel build-outs and smaller new construction jobs.
This year, Coastal formed a joint venture with Providence, R.I.-based Gilbane, a family-owned development and construction firm much larger than Coastal. Among other things, Gilbane has expertise in health-care and higher-education projects, including sophisticated “clean rooms,’’ technologically designed for research and manufacturing.
“We’re looking at 15 projects around South Florida,’’ Murphy Jr. said. “They bring the depth in the technical aspects. We have the local knowledge.’’
Things are buzzing for Murphy Jr. outside of work too.
His youngest son, Patrick “Erin’’ Murphy, 29, is the Democratic candidate for Congress seeking to unseat Congressman Allen West, a Republican representing Florida’s new 18th District, which covers Martin and St. Lucie counties and part of Palm Beach. Patrick Murphy, a certified public accountant who previously worked at Deloitte & Touche, is vice president of environmental services for Coastal.
His son’s bid prompted Murphy Jr. to curtail some of his own political activity: He stopped fundraising for Mitt Romney.
Murphy Jr.’s passion for building traces to his childhood when his father, also a skilled builder, brought him along to a construction trailer.
Growing up in Key West, Murphy Jr. started as a carpenter, driving an old Volkswagen van to small jobs like paneling a room or building a patio. He left the University of Miami without a degree to pursue construction and wound up building Seaboard Construction into the largest builder in the Keys.
Murphy sold Seaboard to Turner Construction in 1988 and started Coastal.
Between 1977 and 1993, Murphy’s firms built most of the public areas in Key Largo’s exclusive Ocean Reef Club and many of the homes.
After Hurricane Andrew in 1992, Coastal grew exponentially amid the rebuilding boom.
When Murphy Jr. met Whiteman two decades ago, they were fast friends. Whiteman had sold his own construction company. He was working on a Ph.D. at the University of Florida and taught Thomas C. Murphy, the CEO’s son, in an undergraduate class. Whiteman joined Coastal in 1997 after serving as an advisor and became president after 18 months.
When Murphy Jr. decided to grow the business, he hired consultants to analyze its culture and operations. Over time, Coastal formalized practices and procedures. The company strives to keep up on technology and to provide training for employees, he said.
“They have continuing education to keep all employees updated. They’ve got a good operation going,’’ said Neil Levy, an assistant project manager, who is among the laid-off employees recently rehired.
Murphy Jr. said a painful aspect of expanding the firm was jettisoning employees who didn’t buy in to the more corporate environment. “Those are the people you have to let go, because they’ll stall you,’’ he said.
He has been equally tough-minded about his own relatives. Eleven family members work in the business, but others have gotten the boot. “I had to let three go,’’ said Murphy, Jr.
“You have to have passion in the belly. If they’re looking at their watch, they’re not going to make it around here,’’ he said.
He coaches his sons to work harder than other employees to combat any perception of nepotism. “Even if you work every day without a break for a year, if you take a week off, people are going to say ‘You know who his dad is,’ ’’ Murphy Jr. said.
Murphy Jr., who credits his father for his values, preaches some basic principles — echoed repeatedly by his top lieutenants during interviews. They are tenets that apply to most any business.
The foremost is putting people first. “Respect people,’’ said Sean Murphy, 41, executive vice president of operations and the second of three sons. “Don’t think you know everything. Settle down and listen.’’
“I could be talking to a billionaire, and an hour later I’ll be talking to a laborer. You have to be able to deal with people at all different levels,’’ Sean Murphy said. “Treat people with respect. We want to earn a good fee, but we service the crap out of things to service the client.’’
Developer Gil Dezer, who has tapped Coastal for the Porsche Design Tower, a luxury condominium planned for Sunny Isles Beach, said: “These are true gentlemen to do business with, which is very unusual in the construction business. I look forward to doing business with them again.’’
“I’m doing my third building with them,’’ said Alan Ojeda, president of the Rilea Group, which hired the firm as general contractor for the Monte Carlo rental-apartment project in Miami Beach. “They are good people.’’
Coastal executives often talk about focusing on long-term relationships and guarding reputation.
“We’re in the business of building, but we’re really in the business of building relationships,’’ said Mike Murphy, a cousin of Murphy Jr. and vice president of quality assurance overseeing the post-construction warranty business. “Today I was at three projects. If you can catch something early, you can be proactive, not reactive,’’ he said.
Another common theme at Coastal: You can’t make a good deal with a bad client. Even in the downturn, Coastal wouldn’t take jobs that looked potentially troublesome.
“We interview people a lot tougher than they interview us,’’ said Murphy Jr.
“One bad job, one bad client can put you out of business,’’ said Sean Murphy.
Coastal boasts that 85 percent of its work comes from repeat business.
“We’ve never been to court with a client — and we’re in the nastiest business there is,’’ said Murphy Jr. “I’d rather take a hit to profits and save our reputation.’’