Penta Building president rolls with recession’s punches

The construction industry's definition of "normal" has changed in the 10 years since Jeff Ehret and his business partners founded Penta Building Group in Las Vegas.

It's no longer normal to have a backlog of projects, to be able to pick and choose what the company will build and where it'll build it. The construction market has gone dry in Las Vegas, leaving general contractors such as Penta to either wither and blow away or make painful adjustments to survive.

Ehret said these adjustments are the most interesting part of his job as Penta's president.

"Challenges change every day," Ehret said at his company's office at 181 E. Warm Springs Road. "Now the challenges are primarily centered around getting the company used to the new 'norm.' Obviously, everything was going along in a predictable pattern. That was the old definition of 'normal.' We'll never see that again."

It'll probably be a long time before Penta sees the $690 million in revenue the company generated in 2008. Revenue dropped to $367 million in 2009 and Ehret expects to be slightly below that figure this year.

Ehret, who is originally from Philadelphia, spent more than 20 years working for Perini Building, a major general contractor with a large Las Vegas presence. In 2000, he left the company to form Penta with colleagues Ken Alber and Blake Anderson.

Penta, which has headquarters in Las Vegas and offices in Reno and Palm Desert, Calif., provides general contracting, construction management and design-build services. Projects include hospitality and gambling resorts, convention and meeting facilities, restaurants, institutional, retail, industrial and parking structures.

Question: What got you interested in a career in construction?

Answer: My family. My grandfather had a construction company in New Jersey and my father and three uncles worked for him, so I got exposure prekindergarten. I'd ride around with the labor foreman in a dump truck to collect trash at job sites.

Question: Why did you leave Perini?

Answer: I'd worked with Perini for over 20 years and just felt I was at the midpoint of my working life and wanted to try something different. You're in your mid-40s and you look in the mirror one day and say, "It's time to try to do something different."

Question: What are some of Penta's major projects in Las Vegas?

Answer: Right now it's the Metro headquarters and the central utility plant for Terminal 3 at McCarran. We did the athletic center and student center at UNR, the UNLV student center, Aliante Station, World Market Center Building C and the garage, Hilton Grand Vacations and Grandview. We've done 30 different projects at Caesars, Diablo's at Monte Carlo and the MGM Grand (high-stakes gambling) salon.

Question: A couple of years ago, you were quoted in the Review-Journal as saying there was a shortage of skilled construction workers in Las Vegas. How is it now?

Answer: Right now, obviously, this year there's no shortage of either skilled professionals or skilled craftsmen. But our situation right now is short term. For the long term, there is clearly a chronic shortage of skilled management professionals and skilled craftsmen.

Question: The construction industry has lost an estimated 80,000 to 90,000 workers in the past couple of years. How many layoffs has your company had?

Answer: We had about 180 salaried employees and 350 craftsmen at our peak in 2008 and now we've got 120 salaried and about the same number of craftsmen. We're not hiring.

Question: You were active in starting a construction management program at University of Nevada, Las Vegas. That program may fall victim to higher-education budget cuts. Do we still need the program?

Answer: Las Vegas always manages to reinvent itself. We may be down now, but Las Vegas will come back. We need to have our homegrown construction professionals. The in-state university provides an affordable option versus going out of state, which is double the tuition. It's $25,000 at Arizona State University, where I went.

Question: How can a general contractor survive in this economic environment?

Answer: You have one of two options to survive. You either have to be willing to diversify into a different type of building or geographic market. Then you have to constrict. You have to downsize to the bone, to almost nothing. The other option is to selectively identify and choose a different building market or geographic market, or both.

Question: Why are you optimistic about Las Vegas' future?

Answer: I believe Las Vegas will come back for a few core reasons. It's an attractive place to live and work in terms of the weather, in terms of the lifestyle, obviously the tax climate, no personal income tax. It's a typical Sun Belt state. In terms of the business climate, there's such a critical mass. Las Vegas is still the entertainment capital of the world. There's such an abundance of creative, smart people in the business that I'm confident Las Vegas will always be the leader of the pack.

Question: Where will your work come from? Don't we have enough casinos?

Answer: We believe a lot of work will come from refurbishing the product already existing on the Strip, not new properties. Just refurbishing and remodeling what's there. In addition, we are diversifying for the long term where 50 percent of our work is outside of Las Vegas, whereas two years ago, it was closer to 85 percent of our work was in Las Vegas. So we're not as reliant on Las Vegas.

Question: You've been in Las Vegas since 1996. How has it changed?

Answer: The competition is more intense. Owners have adjusted their priorities, again primarily driven by how project financing is secured or obtained.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.