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The rise of Phoenix Excavating
Spring 2014
As the recession began to swallow Scott’s Excavating in 2009, Teri Reisch and Aaron Riley helped their employer with the painful closing of his lifelong business. Along with a soft construction market, their bank had just failed and the FDIC auctioned its loans. Reisch, however, remained optimistic about their leverage. Half of the $10 million fleet was already paid off, and she’d developed a sound strategic plan to negotiate with the new financial institution. That hope went up in flames upon meeting its owner.
A stern hedge fund representative thumbed his plan across the table to Reisch and didn’t mince words. It could be done the hard way, he said, or the easy way. He was there to liquidate assets and didn’t waste any time.
Reisch and Riley cooperated by day and planned by night. With a combined 40 years of construction experience — Reisch in finance, banking and bonding; Riley in field operations, equipment and estimating — their skill sets were a solid match. Together, they had the potential to form a business partnership that would provide smarter and leaner solutions with a more balanced, long-term financial approach.
Phoenix rises
Phoenix Excavating, Vancouver, Washington, rose from the ashes in 2010 determined to embody its namesake. The company has grown to 30 employees and revenues doubled from 2012 to 2013. With steadily improving markets and work volume, the underground utility contractor partnered with Portland-based Feenaughty Machinery to rebuild the company with a fleet investment that includes five Doosan excavators — a DX140LC-3, two DX225LC-3 machines and two DX255LC-3 models — and a rented Doosan DL250-3 wheel loader.
“When we evaluated potential rental costs for the excavators, it made more sense to purchase,” Reisch says. “Production is key and downtime is not acceptable. Having new machines and a dealer and manufacturer who are willing to stand behind us with an extended warranty is important.”
With a full fleet, Phoenix Excavating started accelerating its plan to function as a general contractor or a site work subcontractor and any mix in between to deliver excavating, utility installation, road planning and construction services. Doosan machines are helping the progressive firm carve out a strong market position with commercial, residential, industrial and governmental developers in southwest Washington’s Clark and eastern Washington’s Franklin and Benton counties.
Residential market returns
Like many housing markets, homebuilding came to a virtual halt in Clark County during the economic slowdown, and developers today are working fast to alleviate inventory demand for the growing market outside Portland, Oregon. Through August 2013, the U.S. Census Bureau was reporting a significant rise in housing construction permits in the area with both single-family and multi-family dwelling starts compared to 2012.
“Bank financing is still pretty difficult with the additional regulations in place, but many projects have started up because it now pencils even with the cost to have an outside investor finance projects,” Reisch says. High in the hills overlooking the city of Camas and the Columbia River, Phoenix Excavating is helping to expand housing availability by preparing the infrastructure on a 34-lot subdivision for Lennar Homes, one of the nation’s largest homebuilders. A typical production cycle for Riley and his crews, Phoenix Excavating constructed 7,800 square feet of retaining walls, installed the dry utilities, supervised the storm, sewer and water placements, and rocked the roads before the rainy season set in around the middle of October.
A DX225LC-3 and DX255LC-3 worked in tandem with a variety of scrapers to remove 37,000 cubic yards of dirt to pare the land down to lots ranging from 8,000 to 20,000 square feet. In addition to the aggressive schedule, Phoenix Excavating crews were tasked with a 15-acre site that sits in a bed of clay on top of a foundation of camas basalt — a high-psi rock native to the Columbia River region.
Equipped with a 24-inch bucket, the DX255LC-3 was responsible for digging trenches for the catch basins and the placement of storm water and utility pipes. Riley operated the 167-horsepower DX225LC-3 excavator outfitted with a 60-inch bucket to carve out a wall up to 14 feet high from the bank that runs along the east property line. Designed with a maximum digging height of 31 feet 4 inches, the DX225LC-3 supplied the vertical and horizontal reach Riley needed to peel away layers of soil and contour the first of six retaining walls on the project.
The DX225LC-3’s two variable displacement axial piston pumps produce faster cycle times and provide Riley with additional power to efficiently manage the clay and basalt mix. “You have to have good hydraulics to dig in this ground,” Riley says.
The Doosan 172-horsepower DL250-3 loader, with its bucket and fork attachments, assisted crews with utility pipe staging and finishing tasks such as backfilling trenches and roadways with aggregate. Meanwhile, Doosan excavators worked simultaneously on the company’s other residential projects, including a 34-lot subdivision in Ridgefield, Washington, and an apartment complex in nearby Vancouver, Oregon.
Reducing cost of ownership
A young company with astute financial oversight, Reisch and Riley continually focus on increasing uptime and reducing their cost of ownership. In order for their equipment to effectively pencil out, Reisch says it needs to provide key fiscal advantages through price, fuel consumption and maintenance.
Fuel consumption is one of the biggest input costs for the operation, and one that can be impacted with more economical equipment designs. The Doosan excavators’ efficient horsepower curve delivers increased torque using less fuel. The high-pressure common rail fuel injection system helps reduce emissions and allows the interim Tier 4-compliant engine to have a 6 percent improvement in efficiency compared to previous Tier 3 models.
“At $4 a gallon for diesel, a one-gallon-per-hour savings makes a huge difference. If we have 20 machines out working for 10 hours a day, that’s 200 gallons of fuel we can save,” Riley says. “That one gallon per hour in fuel across our fleet equates to about $800 a day, or $210,000 a year. Industrywide, Doosan competes with everybody on fuel efficiency.”
Riley also values the aftermarket auto greaser,* which helps him simplify and control daily maintenance. “Everything we can do to take human error out of the equation is a win. The auto greaser saves time and energy. You’re actually using less grease and you’re not paying your guys at the end of the day to do it. And, you’re not getting as much wear and tear on the machine because it’s being greased on a set schedule,” Riley says.
The owners both say the ability to create revenues with an asset that requires a smaller initial investment and at a lower cost per hour will help keep Phoenix Excavating in business longer during good times and lean times.
“Our thought process is you can have more machines and create more revenue at a lower cost this way, as long as the machines are capable of performing the workload,” Reisch says.
Riley agrees: “And you need the backing of the dealership that can get issues taken care of in a timely fashion, or get you a replacement machine, to keep you going."
Engaged, balanced and growing
Going forward, Reisch and Riley believe Phoenix Excavating’s survival hinges on engaged ownership, relevant growth and a balance of resources. Reisch points out that the company already operates smarter and is more risk-averse than it was in its previous life.
“We have two banks, clients in several industry types and we’re not tied into one brand for all of our equipment, but Doosan is where we have our excavators. It’s all about balance,” she says.
Riley echoes that entrepreneurial team spirit. “If you’re not growing, you’re dying. If we can see an opportunity coming, we want to be in a position to discuss it. And, if we agree, make it happen.”
