Trained as an engineer, Michael Creed has devoted much of his career to designing and building a successful business. He and fellow N.C. State University alumnus Herb McKim founded an engineering firm in Wilmington that has expanded to Virginia, Georgia, Florida and Texas.
Last fall, 36 years after the launch of McKim & Creed, Creed announced he was stepping down as the firm’s chairman and CEO and entering a period of transition.
In a recent interview, he reflected on his – and the company’s – entrepreneurial journey, which began after the two NCSU grads worked for other firms for a few years elsewhere, but acknowledged their shared interest in creating their own firm.
“In 1978, Herb visited with his father on vacation in Florida. His father said it would be a good time
to open a structural engineering firm because his [Wilmington-based architectural] firm had a lot of work lined up. Herb asked me if I wanted to join him in Wilmington,” Creed said.
Creed accepted the offer.
“There’s a picture on our website of our first office … in the Murchison Building. We literally built the drafting tables ourselves, and we had a wonderful time, just the two of us,” Creed said.
The big jobs envisioned by McKim’s father – contracts for the Pender County Schools – never materialized when the school system’s bond issue failed, halting plans for new construction.
“We thought, ‘We’ve got to go out and get some work,’” Creed recalled. “We started cold calling in person and in the summer of 1978 managed to get some amazing contracts. Coastal Carolina College’s [now University] Wheelwright Auditorium was a significant project for us. Then, with the same architect, we did Socastee High School. Those projects we won by virtue of cold calls. We were 30-year-old guys, but we had good credentials.”
Another call – this time in 1979 on International Paper’s Riegelwood Mill – netted a small project. That project led to others for the company, and by 1992 “that single client made up 42 percent of our work,” Creed said.
But NAFTA and an altered regulatory environment changed the paper industry, according to Creed, and by the late 90s, the Riegelwood work was gone. The partners learned early on that they needed to spot cycles and trends and to diversify. With a weather eye on emerging markets and needs, the firm began increasing its capabilities. First the partners added surveying and civil engineering to their quiver. They saw opportunities in the water resources field, and hired a friend with that expertise.
By 1988, the firm had three “pretty significant and identifiable” units: planning, development and industrial, Creed said, adding, “From 1988 to 1992 we grew from $3.2 million gross to $12 million gross.”
Somehow, during these years, both partners found the time to earn MBA degrees, which changed their focus, Creed said, from “working in our business to working on our business.”
With a new structure that placed Creed at the helm as CEO and president and McKim in charge of operations, in 1990 the firm looked for new growth opportunities.
Soon, McKim & Creed began to pursue a mergers and acquisitions strategy. The first purchase expanded the Wilmington company to Raleigh, a rich pool of talent and ultimately the firm’s headquarters location. Soon after, the partners bought a company in Florida, an important step toward their next goal: within five years having offices from Virginia to Florida so McKim & Creed would be a Southeastern U.S. firm.
“The 90s were a difficult, challenging time for us. We were investing in mergers and acquisitions. At the beginning [of the decade], the industrial market sector was 60 percent of our business; by the end of this period it was about 5 percent. We were replacing a bunch of other work while struggling to grow,” Creed said.
It was again time to take a broad view of the marketplace.
“In the early 2000s we saw there was tremendous spending on water, transportation and residential development,” he said. “Many of our services aligned very well with these. We put people in place and grew rapidly. In 2003, gross revenues were $22 million; in 2007, they were $64 million.”
Then came the recession, paralyzing development. McKim & Creed’s year-over-year revenues shrank 30 percent in 2009. To survive, the firm had to reduce its costs, and its biggest cost was labor. By mid-2009, the partners had laid off more than 200 people from its workforce of 500-plus.
“Our people are our most important asset. It was very difficult and very stressful to go through something like that with great talent you’ve worked hard to get,” he said. “Some agencies didn’t survive, sometimes because they weren’t willing to make difficult decisions.”
In 2010, construction activity began to resume, and each succeeding year has been better, Creed said. As the company’s business environment became more stable, Creed considered what might put it on the best path to success at the next level.
“I decided in the fall of 2013 it was time to bring in a new CEO,” he said, acknowledging that nursing McKim & Creed through the recession had taken a large toll on him emotionally. “We restructured the board of directors, leading to a board that has more outside than inside directors.”
After a national search, John Lucey became the firm’s new CEO in November 2014. McKim, who now lives in Tennessee, is involved with high-level business development for the firm.
McKim & Creed is less about the names on the front door and more about its employees, many of whom have been with the firm for decades, “through thick and thin,” Creed said.
