As Matrix Service Co. (NASDAQ: MTRX) celebrates its 30th year in business, one might expect Chief Executive Officer John R. Hewitt to talk about the company’s transformation from its early years as a 14-man operation to a top-tier engineering, construction and maintenance company with more than 5,000 employees. But truth be told, while Hewitt is passionate about what the company does, he is even more passionate about why.
“Our work directly impacts the lives of people all over North America. Not many companies can say that,” he said. “The gasoline we use in our vehicles, the electricity that powers our lights and computers and other equipment, the steel and copper used in residential and commercial construction — it all starts with the infrastructure our customers trust us to design, build and maintain. And that trust comes down to the values-based leadership of our people.”
Reaching for a wristband he wears that says “Stand for Something” — one he received while attending an event for the Little Light House, a special needs school in Tulsa, Oklahoma — Hewitt makes the point it’s easy to be values-oriented during good times but much harder when times are difficult. Yet it is in the difficult times values matter most, he said.
“You have to be able to fall back on a strong foundation, and that foundation is your values,” he said. “Our values define expectations we have of each other, as well as what our customers can expect when they do business with Matrix.”
The backstory
Founded in 1984 as a storage tank repair company, today Matrix Service Co. provides engineering, procurement, fabrication, maintenance, construction and capital project services in the energy, power and industrial markets throughout North America. Matrix also holds a leadership position in the design, fabrication, construction and repair of above ground storage tanks and specialty vessels. The company’s work also includes refinery turnarounds, power generation, high voltage infrastructure, mining and metals, upstream projects, material handling and industrial cleaning.
Financially, Matrix continues its trend of improved performance and produced a record-setting fiscal 2014 for revenue, backlog and earnings per share. Matrix is recognized as one of “Forbes’” Top 100 most trustworthy public companies, as one of “Fortune” magazine’s 100 Fastest-Growing companies and also is ranked No. 56 on “Engineering-News Record’s” 2014 Top 400 Contractors — the seventh consecutive year the company has been listed among the top 100.
Yet while financial results and recognition are powerful measures, Hewitt emphasized the company’s commitment to achieving best-in-class safety is even more so. “We know best-in-class safety is a journey, but it’s a journey worth taking,” he said. “Because we also know every incident is preventable and each of us can make a difference.”
The company’s journey to zero incidents is one that demands the leadership, energy and focus of every employee every day, said Hewitt. “Our culture, attitudes and mindset about safety, as well as our fundamental belief all incidents are preventable, are what fuel results. No one sets a higher standard for us than we do, and we know each employee can make a difference.”
The company’s best-in-class safety is so important, in fact, that while employees know they have both the right and obligation to stop work in an unsafe situation, the Matrix leadership team will also not contract for work if the safety risks cannot be mitigated.
Said Hewitt, “I’d rather tell the analysts and shareholders we missed our guidance because we turned down a project where the safety risks were too high than to experience one serious incident. Safety is that important.”
From safety to solid financial results, Hewitt says it’s all a direct reflection of the commitment and leadership demonstrated by the 5,000-plus people who work for Matrix Service Co. and its subsidiaries.
Listening, learning and leading
“Everything we do rises and falls on leadership. So, whether you are responsible for yourself, lead a department, a multimillion-dollar project or an entire business unit, our employees understand they make a difference by the quality of their leadership. When they execute projects safely, deliver the best possible quality and do so with integrity, we positively impact our own customers, their customers and society as a whole,” he said. “We understand why we do what we do.”
He speaks with both pride and humility.
“You can’t lead first and then listen and learn. We listen to our customers so we can understand their expectations and then learn from them what they believe we’re doing well and where we can do better,” he said.
According to Hewitt, it is this transparent dialog — having an open, learning mindset and a willingness to change — that has strengthened the relationships Matrix Service Co. and its subsidiaries enjoy with their customers.
The company’s relationship with TransCanada Corp. — one of the largest builders and operators of North American energy infrastructure — stands as proof.
Originally awarded the contract for tank construction at TransCanada’s Cushing, Oklahoma, facility, Matrix has since entered into a strategic alliance for all of TransCanada’s tank construction and some critical balance of plant terminal work. This long-term partnership, said TransCanada Corp.’s Keystone Pipeline President Corey Goulet, came as a direct result of the values they saw at work inside Matrix.
“It was evident in our first meetings Matrix has a high commitment to its employees and customers, strong commitment to safety and quality, and operates with integrity. Those tenets are the same for TransCanada, and for us that’s essential,” he said, adding that commitment to one’s values is what builds trust, which is necessary for a successful alliance.
“You have to be willing to put effort into any partnership if you want it to be successful,” he said. “When we look at the time and commitment of the entire Matrix organization, from the executive team to the field, the actions and behaviors of their employees match the intent of their word.”
A second example of Matrix employees’ values in action comes from Tesoro Corp.’s Anacortes, Washington, refinery. There, an unplanned outage at the height of gasoline season came when it was determined the overhead accumulator in the crude unit — described by Tesoro Construction Superintendent Jim Bern as the heart of the refinery — needed to be replaced.
Doing so meant shutting down a significant part of the refinery.
“As the main contractor, Matrix set the bar in exceeding our expectations,” he said. “And in a refinery, where lost time can cost millions of dollars, they also executed the project in half the time we had estimated for completion. That let us get back to what we do — making gasoline so people can drive their vehicles.”
Bern described the longstanding relationship Tesoro has with Matrix as a partnership.
“We’ve counted on them on multiple occasions for very critical projects,” he said. “They share the same culture we have, especially in terms of safety, and that’s a huge victory for us. At the time of this particular project, we had been working 13 months without a recordable incident — a plant record — and Matrix was a big part of that.”
Another less recent, but unforgettable, example came two years ago when Superstorm Sandy, the deadliest and most destructive of the 2012 Atlantic hurricane season, caused power outages across 20 states and the District of Columbia, most notably New Jersey, New York, Pennsylvania and Connecticut. In that emergency, Matrix employees immediately took stock of their customers’ needs and mobilized to support more than seven major utilities in restoring electrical service as quickly as possible.
With more than 300 of the company’s employees working around the clock for 21 days, the work was demanding. But with 8.2 million homes and businesses without power, and temperatures well below freezing, what the company did was critical and why was never more clear.
“It all goes back to people and leadership,” said Hewitt. “Both the customer and the contractor have to understand and believe in the benefit and strength that come from working together as one team to accomplish the customer’s goals.”
The opportunities ahead
Looking ahead, Hewitt is bullish on the opportunities for Matrix Service Co., its employees and its customers across all of the markets the company serves.
In oil and gas, he points to Deloitte’s 2014 Oil and Gas Industry Outlook, where vice chairman and U.S. Oil & Gas leader John England notes in 2013 alone, midstream capital spending soared 263 percent to $46.4 billion while downstream also increased 11 percent to $24.7 billion. England projects continued increases in spending in midstream infrastructure, refinery operations and petrochemical facilities to keep up with demands from new and currently producing regions.
Hewitt agrees. “We’re still in the very early stages of building out the North American oil and gas infrastructure, especially in the shale play regions like the Eagle Ford, Permian Basin, San Joaquin Basin, Marcellus, Bakken and the Canadian oil sands,” he said. “The infrastructure needed to support the distribution of crude and refined product coming from these areas includes major oil and gas processing hubs and terminals, as well as LNG export facilities.”
The opportunities are equally significant in power generation, where the U.S. Environmental Protection Agency’s Mercury and Air Toxics Standards, along with the Clean Air Act, Clean Power Plan and Climate Action Plan, more strictly regulate power plant emissions. As a result, in its 2014 Annual Energy Outlook, the U.S. Energy Information Administration predicts up to 60 gigawatts of coal capacity will retire by 2020.
“These retired assets will need to be replaced with cleaner forms of power generation such as gas-fired combined cycle power plants,” said Hewitt. “Our acquisition of Kvaerner North America at the end of 2013 brought substantial expertise and leadership to Matrix specifically in combined cycle power plants and also added bench strength and geographic reach to our large-scale capital construction capabilities — important in all of the markets we serve.”
Generally, as the North American economy strengthens and domestic energy sources come on line, electrical infrastructure opportunities and industrial markets in the U.S. will continue to grow, creating additional opportunity for Matrix in areas such as high voltage electric, mining and metals, and gas value chain projects such as fertilizer plants to name a few.
“In the four segments we operate in — storage solutions; oil, gas and chemical; electrical infrastructure; and industrial — the opportunities ahead are significant,” Hewitt said. “We’re focused on those opportunities and helping our customers to achieve their objectives.”
Part of ensuring the company is positioned to meet growing demand is its continued focus on regional growth and strategic business acquisitions, as well as substantial investment in its people and leadership development. Ultimately, though, Hewitt says it is about ensuring the employees of Matrix stay true to the company’s values.
‘It isn’t what we do but why we do it’
As Matrix Service Co. grows — and it is growing fast — Hewitt admits maintaining the company’s culture will become more challenging, but he and his team are committed to doing so.
“It is incumbent upon us to make sure our core values don’t ever become just words on paper — that they continue to define who we are,” he said. “Every organization has to stand for something. For Matrix, that ‘something’ is found in the downstream impact of our work. Our people know it isn’t what we do but why we do it.”
For more information about Matrix Service Co. and its subsidiaries, visit www.matrixservicecompany.com or call (918) 838-8822.
