We had a great conversation with Atul Raj, President of Pepper Lawson Waterworks, about commercial construction and the need for municipal water treatment facilities in Texas.
Please excuse any typos, below is a hasty transcript.
Jay Curry: Hello Texas. Welcome to Texas Business Radio. We’re starting a great program with this segment. You’re going to live it. We’re going to be talking about construction. Folks you know Texas. There’s construction going on everywhere. I mean it is huge business. It’s a big economic boost for our state and we’ve got some really top notch interesting CEOs and business leaders in our studio. Matt Register by the way is trying to herd them up outside. So we’ve asked George Walden our partner and friend to join us. George, this is going to be an interesting show.
George Walden: Oh, it really is. You know we take for granted our drinking water and we think it just appears, somehow randomly on our table. Reality is there’s a lot going on to make sure that glass of water is available to you. We’re here today talking to the president of Pepper Lawson Waterworks. There are a large construction company in the marketplace and they do wastewater treatment or wastewater plants. So we’re going to learn a little bit about water today.
Jay Curry: Yeah. And the constructions and all the types and how they go about this. This is a very successful business and I’m not going to steal your thunder but it’s like 36 billion dollars over the next 20 years. Folks you know what’s going on in Texas. We’re growing like crazy, so this is important. Before we get to our guest, let me remind everybody that if you’re driving just relax everything’s on Texas business Radio. Everything about our sponsors, each one of our guests, there’s a video of their presentation to us. Everything’s there, Texasbusinessradio.com. If you want to call in, ask a question. We invite and encourage you too, the numbers 844-814-8144. That’s a 844-814-8144. Also, we monitor #TBR on Twitter #TBR as in Texas business Radio. So we’re just getting started with a great program and our first guest is Alut Raj. Did I get that close?
Atul Raj: Very good.
Jay Curry: Very good, All right. Alut is the president, as George told us, of Pepper Lawson Waterworks and we’ll get into the complexities of the organization because you’re owned by somebody else right. Which is kind of a new thing but, Alut welcome to the show.
Atul Raj: Thank you very much.
Atul Raj: So tell us what is Pepper Lawson Waterworks and you’re related now company Weber. Tell us what that’s all about?
Atul Raj: Sure. Pepper Lawson Waterworks is about a 25 year old group. We specialize in building water treatment, wastewater treatment facilities around the state. We started organically as a group of one.
Jay Curry: One being you.
Atul Raj: One being me, yeah. And we are currently at three hundred ninety one people, thirty five projects around this state. And our project sizes range from, oh, as small as $50,000 to a couple of hundred million dollars in single project. We for most of our history have been part of Pepper Construction out of Chicago. However, a year ago we were acquired by Weber. A large contractor here in Texas with over 50 years of history in Texas. And Weber of course is part of the Frovio Group which is a hundred thousand people worldwide.
Jay Curry: Wow!
Atul Raj: 15 billion strong. So a lot of horse power behind organization now.
Jay Curry: So, but, you’re the president of Pepper Lawson Waterworks, which really focuses on Texas and then building wastewater plants. Right?
Atul Raj: Wastewater and water and reuse.
Jay Curry: And you serve as the general contractor?
Atul Raj: Usually the general contractor. Often we’re called the construction manager at risk, which is a slight difference in the delivery method. And more recently where we’re venturing into design build as well.
Jay Curry: Interesting you started with one. How did you do that? I mean you guys are a major force in the water plant development. You do the general contracting and you’re expanding now into design and construction as well. So tell us how you took a company from one to what 400, almost 400 people.
Atul Raj: Yeah. So you know, it was very slow, it was organic. It was one project at a time. We were blessed to have some good resources. And also, we were part of an organization in Pepper Lawson. That ran very lean in terms of its overhead. It also had great values particularly in terms of people values and that was very appealing to our stakeholders. And our stakeholders being the clients, the the subcontractors we work with and the people we needed to hire that were in our industry.
Jay Curry: Talk to us a little bit about the general contractor responsibility, means you’re not building necessarily, you’re not digging, you’re not… you’re bringing in talent, you’re bringing in other companies, you’re managing it overall.
Atul Raj: A good mixture of both. We self perform in water and wastewater treatment plant. Always, we self perform the processing. Which is the piping, the process equipment. How this stuff is actually going to make water or treat water. So that we have a high degree of control in the process. However, we also have capabilities to do our own concrete. We often do our own excavation, road work and those sorts of things. More recently as we’ve become part of Weber, we’ve got even more substantial horsepower.
Jay Curry: So, you’re kind of the heart and you bring in what you need to get the job done. You’re talking about projects server like 50,000 small project I would think.
Atul Raj: Very small.
Jay Curry: To the what, one, two, three hundred million.
Atul Raj: Yes, sir.
Jay Curry: Big time, big time stuff. When you started, were you the same as you are now or would you just start small and kind of did it all yourself. Are you subcontracting? How did you do it?
Atul Raj: Our first project was eight and a half million.
Jay Curry: Well, that’s not bad.
Atul Raj: And so we started with projects in the 8 to 10 million dollar range. One project at a time that I self-managed.
Jay Curry: OK. Also, let’s talk a little bit about water in Texas. This is Hot Topic and you obviously build more than one type of plant. And I don’t know if people recognize there are more than one type of plant, more than one grade of water.
Atul Raj: Sure.
Jay Curry: What’s that all about?
Atul Raj: Sure. Of course everyone recognizes that we have clean water plants for our drinking water supply. We have also, wastewater plants for our sewage. More recently, we are seeing more and more reuse plants. And then within these major categories, there are very specialized categories as well. Things like desalination or brackish water treatment, grey water plants for irrigation.
Jay Curry: So there’s all kinds of water. Demand here in Texas is growing. You know the population is growing. What are some of the other drivers?
Atul Raj: Yeah. There’s several drivers for demand. One of course is the population. But if you take the Houston, the Gulf Coast region would get subsidence. And so we need to stop drilling wells. That’s the driver for the 1.6 billion northeast water plant. That’s being built by the city of Houston, as well as they’re partnered with several water authorities around the community here. We’re proud to be part of that project. Another driver is if you go into the areas we’ve got aquifers like Austin, San Antonio. We want to decrease the dependence on those those aquifers. In West Texas we’ve got drought conditions that are pushing demand for more and more reuse. Further technology is driving a lot of things. As an example, as the cost of certain high tech processes goes down, we can take water that 10 – 15 years ago was considered not treatable, cost effectively and now it’s cost effective.
Jay Curry: So, technology is definitely having an impact on your business. Folks were talking to a Alut Raj. OK? The president of Pepper Lawson Waterworks. Very interesting, rapidly growing. Wish we had another 10 minutes but we don’t. Folks stick with us. We’re going to be right back after we pay a few bills. We’re talking construction. This is Texas business Radio.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.