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Marketing Strategy of Cianbro Corporation

Marketing Strategy of Cianbro Corporation

Discuss Marketing Strategy of Cianbro Corporation within the Marketing Management forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; Statistics: Private Company Incorporated: 1949 Operating Revenues: $150 million Employees: 1,500 SICs: 1622 Bridge Tunnel Elevated Highway Construction; 1611 Highway ...

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Marketing Strategy of Cianbro Corporation
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Anjali Khurana
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anjalicutek
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Marketing Strategy of Cianbro Corporation - December 15th, 2010

Statistics:
Private Company
Incorporated: 1949
Operating Revenues: $150 million
Employees: 1,500
SICs: 1622 Bridge Tunnel Elevated Highway Construction; 1611 Highway and Street Construction


Company History:

Although Cianbro Corporation is one of the smaller construction firms in the United States, its influence on trends within the industry has been significant. The company focuses primarily on bridge and elevated highway construction projects, as well as civil, mechanical, piping, and electrical and instrumentation heavy industrial projects. Specifically, Cianbro projects have included the Piscataqua River Bridge between New Hampshire and Maine; the Great Bridge Bypass in Chesapeake, Virginia; the recycled fiber facility at Bowater in Maine; and the paper machine and groundwood mill at Madison Paper in Maine. Cianbro is also proud of its employee-management relations and its unique open-shop, non-union philosophy. Most companies with open shops are regarded with suspicion for their union-busting image, but Cianbro management tries to avoid conflicts with organized labor by promoting rigorous safety practices and by reducing employee exposure to stressful job conditions. This efficient worker-management relationship has contributed to the company's reputation for completing projects on time and under budget.

The foundation for Cianbro Corporation was laid by Ralph Cianchette during the 1930s. Cianchette opened a bridge building firm in Pittsfield, Maine, in the mid-1930s, and contracted most of his projects within the immediate region. Cianchette's four sons each started working at the firm as soon as they reached the age of 15. The company grew steadily but slowly until the start of World War II, when all of Cianchette's production crew, including his sons, were drafted into the U.S. military forces. Unfortunately, this unexpected interruption came in the middle of a major construction project, a bridge at Kittery Point, Maine. Cianchette's disappointment was exacerbated by the fact that he had to finish the bridge at the price set before the onset of the war with almost no crew and with materials that were impossible to procure because of the government's strict rationing policy. He finally completed the bridge in 1943, but closed shop immediately afterwards and became Somerset County's deputy sheriff.

After World War II, the oldest of the Cianchette brothers, Carl, decided to revive his father's construction business. From his father he purchased a six-inch pump, a two-bag cement mixer, and some wheelbarrows. He also bought an army trailer and a Willys jeep that had been adapted for civilian use. Carl's first project, the Pittsfield Woolen Yarn building, was completed in 1946 for a total of $8,000. With Carl as sole owner of the company, sales for 1946 totaled $46,000. As the company grew during the next few years, brothers Ken, Ival, and Chuck became involved in its operations, and in late 1949 the four men incorporated their construction firm as Cianchette Brothers, Inc.

By 1950 company revenues jumped to approximately $200,000. The onset of the Korean War, which caused a massive buildup in the United States military, also brought a contract for the Cianchette Brothers to expand the facilities at Loring Air Force Base. After the Loring Air Base project was completed in 1951, the company then signed contracts with the state of Maine to build bridges and highways. In 1955 the company reported for the first time that sales had surpassed the $1 million mark, but it was during the late 1950s that Cianchette Brothers made even more significant strides in its development.

In 1958 the company acquired a machine shop located in Pittsfield which one of the brothers, Ken, turned into a veritable construction design house. A talented designer with a liberal dose of imagination, Ken Cianchette designed the well-known Chinbro Beam Clamp. This product, which was also patented, was used especially for heavy bridge steel. Another product he designed and patented at this time was the Chinbro Pipe Grab, which was used in handling all types of sewer and water pipes.

Even armed with these innovative designs, however, the company did not make large profits. The brothers soon discovered that Japanese companies, which had initially purchased the pipe grab in large quantities, came up with a production technique that allowed them to copy it for much less money than it cost to import the product. The brothers also recognized that the demand for beam clamps was less than they anticipated. Consequently, although these new products significantly affected the construction industry, the brothers were extremely disappointed that their innovations did not result in greater revenues.

To compensate for these unfulfilled expectations, the brothers decided to enter the ready-mix concrete business. Locating their new operation in Pittsfield, the company purchased a number of concrete mixers and a homemade batch plant, and began marketing their new service to customers. The new ready-mix concrete venture began to thrive from the very beginning and helped increase company revenues to $1.5 million by 1960.

Business operations grew slowly during the early years of the 1960s, and company revenues amounted to a little over $3 million by the middle of the decade. Many of the company's projects at this time involved cleaning rivers and streams. In 1967, the company acquired the E.C. Snodgrass Company of Portland, Maine, which provided Cianchette Brothers with highly trained personnel capable of helping Cianchette Brothers gain a larger share of the heavy industrial market. The acquisition also brought a number of projects that Snodgrass had not yet completed at the S.D. Warren paper mill in Westbrook, Maine, and led to the development of a comprehensive paper mill construction service.

In 1969 the company made another important acquisition--Hornbrook, Inc., based in Madawaska, Maine. The purchases of Hornbrook, a small road-building firm, and Snodgrass gave Cianchette Brothers a statewide presence. With most of its contracts in Maine, and a few in Vermont and New Hampshire, the company's sales jumped to $18 million by the end of the decade.

The company changed its name to Cianbro Corporation in the early 1970s, a decade that marked some of the company's best years. It finished work on one of its largest projects, the Piscataqua River Bridge situated between Kittery, Maine, and Portsmouth, New Hampshire. Other major projects completed during this period included the natural gas pipeline for Northern Utilities Company and the giant crane at the Bath Iron Works. The crane, operating on a base constructed by Cianbro Corporation, was reported to be the largest ever used in the Western Hemisphere.

All of the projects completed in the early 1970s were done under budget and sooner than anticipated. The company also added various acquisitions to augment its growing ready-mix concrete business, including the purchase of C.M. Page of Orono, Maine, in 1972; R.K. Brown of North Waterford in 1973; and Foster Sand & Gravel of Farmington in 1974. The company was so successful in the management of its projects and the expansion of its ready-mix concrete operations that the recession of the early 1970s hardly affected its revenues. Sales shot up to $32 million by the end of fiscal 1975, and reached $70 million by 1980.

One of the important elements that contributed to Cianbro's success was the emphasis the company placed on management-employee relations. To attract qualified personnel and encourage worker commitment to the firm, management made it a priority to arrange an attractive package of financial rewards. In 1965 the company established a profit sharing plan for employees who met the eligibility requirements. Cianbro's contribution to this plan in the first year of its existence was $30,000. Throughout the late 1960s and early 1970s, the company continued its contributions to the plan. In 1977 management decided to create a stock ownership trust that would allow eligible employees to purchase Cianbro stock. In 1981 the company made a $5 million contribution both to the profit sharing plan and to the stock ownership trust. By 1985 employees owned over 40 percent of the company's stock.

By 1981 Cianbro's sales increased to just over $100 million. During the same year, the company finished its two largest projects undertaken in Maine up to that time. The first project, the construction of a paper mill contracted by Madison Paper Industries of Madison, Maine, was completed under budget and ahead of schedule. The second project involved the construction of a bio-mass boiler at the paper mill of S.D. Warren Company in Westbrook, Maine. Like the work at Madison Paper Industries, this project was also completed ahead of schedule and under budget.

Unfortunately, by the mid-1980s, the company was rocked by a recession in the construction industry. As new construction projects within the state of Maine became harder to procure, management at Cianbro made the decision to expand into other geographical regions. The company's first acquisition was a site development contracting company located in Tampa, Florida. By 1985 the firm's Florida operation had contracts worth over $20 million, and the prospects for future growth in the state looked very promising. A second acquisition, the N.C. Monroe Construction Company, was made at approximately the same time. Monroe Construction, situated in Greensboro, North Carolina, was involved in constructing commercial and high-rise buildings. The acquisition gave Cianbro access to a concrete building frame system, used primarily for apartment buildings, which was patented and licensed nationwide. The purchase of Monroe Construction also helped Cianbro expand its influence into North and South Carolina and into the state of Texas (with a focus on apartment buildings).

As the recession eased its grip on construction activities in Maine, Cianbro was able to win new contracts. Projects involving paper mill facilities and bridge building were the most plentiful, while a rather unusual project called for the company to reconstruct a dam for the Central Maine Power Company. Having learned a hard lesson about diversification, however, management was not about to cut back its efforts to expand into other states. Consequently, new projects outside Maine remained one of management's priorities. In the mid-1980s, Cianbro was engaged in a wide range of work, including maintenance and construction at a power plant in Maine, rebuilding a food processing facility in New Hampshire, finishing hydro-electrical construction projects in Vermont and New York, building a large warehouse in Connecticut, replacing a bridge in Maryland, resurfacing the Woodrow Wilson Bridge in Virginia, constructing a flood control dam in Florida, and completing a comprehensive $25 million water treatment project for the district of Washington, D.C.

During the late 1980s and early 1990s, Cianbro continued to expand its construction operations in the Northeast and Mid-Atlantic regions of the United States. In addition, the company entered into some rather unique arrangements in order to maintain its profitability. Ranging far from the field of construction building and management, the company entered into a joint venture with E.C. Jordan Company and D.W. Small & Sons. Under the agreement, Cianbro management planned to produce 25 million gallons of ethanol for use in gasoline as an octane enhancer. Although this project initially showed great promise, it did not generate the kind of revenues Cianbro expected.

A second project, even more far ranging than the first, was the development of the Martian Bigfoot, the biggest sphagnum peat moss harvesting machine ever made. The machine, designed by Ken Cianchette, was manufactured at the company's fabrication shop in Pittsfield, Maine. Fifteen times larger than any other comparable machine, the Martian Bigfoot possessed an enormous harvesting capacity&mdash〉proximately 500 cubic yards of peat in one sweep. The machine was used primarily in Russia by entrepreneurial farmers.

Cianbro Corporation also made significant strides during the early 1990s in a comprehensive improvement of its administrative capabilities and organizational structure. The company installed a Computer Project Management Cost Control and Scheduling System (CIPREC), a highly sophisticated, state-of-the-art program created by IBM that incorporated all the latest developments in cost control mechanisms and project scheduling. This program, designed to combine systems by Systonetics and Cal Comp with those of Cianbro, allowed the company to provide it as a service to its customers.

By 1995, Alton E. Cianchette, the son of one of the founding brothers, had assumed the position of chief executive officer of the company, while Chuck Cianchette remained company chairman. Although the leadership of Cianbro was being passed from one generation to the next, the continuity in strategy and employee relations remains intact. For this reason alone, Cianbro Corporation's future is full of promise.

Principal Subsidiaries: Cianbro Realty Corporation; N.C. Monroe Construction Company.
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