Kenny Construction Capitalizes on Rehab Market Success
November 22, 2011Kenny Construction made its name in the underground construction market through its success in tunneling and utility construction. Today — on the cusp of its 85th anniversary — this family-owned and operated construction company has evolved into a leading rehabilitation contractor, seizing on the burgeoning rehab market 22 years ago.
John J. Kenny founded Kenny Construction in 1927 in Skokie, Ill., just outside Chicago, two years before the Great Crash and the onset of the Great Depression. Described as “a tough as nails Irish guy” by his grandson and present-day CEO John Kenny Jr., he established himself in the utility construction market and later tunneling market through hard work, integrity and tenacity — three characteristics that the company exudes today as it continues to push forward.
“My grandfather was a tough, tough old Irish immigrant and my father was one of the most respected people in the industry. Everybody who knew [my father] loved him,” John Kenny Jr. reflects. “They were honest and had integrity and that is how we treat the people who work here. We live by our core values of honesty, integrity and quality of service. We work with a passion and initiative to make those things happen.”
Kenny Construction started with a handful of workers, mostly doing utility construction in and around Chicago. Over time, the company grew, expanding its services to include tunneling, roads and power. Critical to its success — never more so than in today’s economy — has been Kenny Construction’s ability to diversify its services.
Today, the privately held company, through its 800-plus member workforce, earns more than $600 million annually through its seven construction groups: Power Transmission/Distribution, Construction Management, Tunnels, Trenchless and Underground Utilities, Heavy Civil Infrastructure, Buildings and Renewable Energy.
The company’s entrance into trenchless work, specifically cured-in-place pipe (CIPP) occurred in 1989 as company leaders recognized the growth potential of this market and what that would mean to Kenny Construction. Led by Ralph Bonanotte, CIPP has proven itself to be an invaluable member of the Kenny Construction portfolio, earning $65 million in revenue through its success in large-diameter relining projects, as well as manhole rehab.
Over the years, Kenny Construction has grown in size, reputation and stature through its long-term vision, expanding workforce and acquisitions. In 2003, it earned the prestigious Green Cross Medal for safety performance by the National Safety Council — the first and only U.S. construction firm ever to win the award. Through the years of change and growth, the Kenny family has remained a constant as second and third generations took the reins in leading the company.
How It Began
The start of Kenny Construction in 1927 is simple enough: John Kenny had a pickup and a couple of guys. That’s it. As Depression-era public works projects popped up across the country by way of the New Deal, John Kenny was a part of them in Chicago. By the 1930s, the company was doing the first subway tunnel contracts for the City of Chicago and went on to use the first tunnel boring machines in the United States during the 1960s. In the 1950s, the contractor expanded to interstate highway construction throughout the Midwest and California.
In 1976, Kenny Construction began participation in the landmark CSO abatement program, known as TARP, for the Metropolitan Water Reclamation District of Greater Chicago. In 1992, Kenny Construction was called on by Chicago Mayor Richard Daley to stop the bleeding and plug the leaks caused by the “Great Chicago Flood,” a fluke disaster that saw the Chicago River crash into dormant underground coal tunnels, which still connected virtually all the commercial and retail buildings in downtown Chicago, and caused stunning flooding.
Described as a visionary with an old-school mentality, John Kenny instilled his work ethic and core values onto his family and employees. He passed away in 1968, with his son John Sr. taking over the company prior to that and running it with the same sense of vision for growth as that of his father. John Sr. died at 87 in August 2000; though not at the company helm for some time before his passing, John Sr. remained a strong daily presence, coming to the office every day.
Growing up, John Kenny Jr., as well as his siblings got a taste of the family business at an early age, starting, for some, when they were still in junior high school. Their grandfather and father wanted them to learn about the business from the ground up, working at every level — starting at the lowest levels, doing the most menial tasks.
“My grandfather put me to work in the seventh grade, working in the shop and yard and doing the microfilm… My father would tell us that we had to know everything [about the company]. All the kids worked in the field at some point but I stayed out there the longest,” John Kenny Jr. says, noting that he believed he was destined to some day take over the company’s field operations. He says the kids were taken to jobsites on the weekends to see how things were done and it was there they came to know the employees they would one day lead.
“He told us that you will work alongside these guys, you’ll be in the tunnel with them, eat with them, sweat with them and in that way you will be able to earn the respect from them,” John Kenny Jr. explains. “When you earn the respect of the people who work for you, you have everything you can ask for to make it work.”
Serving on the Kenny Construction board of directors, as well as executive vice presidents, are John Kenny Jr.’s brothers Patrick, Phillip and Jim Kenny (a former U.S. Ambassador to Ireland under President Bush) and a sister Joan Kenny Rose.
Today, Kenny Construction is headquartered in Northbrook, Ill., on the north side of Chicago near O’Hare Airport, which the contractor broke ground at for the first jet runway in 1958. The company’s equipment is spread all over the United States in different yards from California to Philadelphia. Most of its rehab equipment is kept in Bedford Park, Ill., near Midway Airport.
Getting Started in Rehab
Kenny Construction is never short on ingenuity and the ability to foresee an opportunity to better itself. As the CIPP market began to take shape in the 1980s, company leaders wanted Kenny Construction to have part of it. The family put its faith in Ralph Bonanotte to coordinate the company’s efforts in CIPP and for him to make it a success.
Bonanotte admits he knew little about CIPP early on and spent a great deal of time researching the best relining method and fit for Kenny Construction. He found the answer with Inliner Technologies, a technology that can span a size range of 4 to 120 in. in diameter and renew pipes with bends, diameter changes or non-circular geometries and be used in both gravity and pressure applications.
“We saw some installs with Inliner and we became an Inliner licensee in 1993 and, now well over 2.5 million ft later, we have never looked back,” Bonanotte says.
Today, Bonanotte is vice president of the Trenchless and Underground Division and manages 120 employees. Most of the relining work is with mid to larger diameters (24 in. and larger), using both steam and water curing.
“We started out with six guys, enough to make up a standard install crew. These men are still with me today and are the pillars of what we do. From Brian Considine, our operations manager, and Tim Szyska, our most senior CIPP superintendent. We brought in Sam Vartanian, a 30-year CIPP manager, and Dan Cohen, a 20-year industry veteran, to help better support our growth, combined with the efforts of Carl Pearson, our chief estimator, and James Oban, the group’s business manager, have been able to create a very strong group,” Bonanotte says. “We went through a learning curve and it’s been a long road. But it’s definitely paid off. When the underground group was formed, it was 100 percent conventional open-cut. Today, the group is 90 percent rehabilitation and 10 percent open-cut.”
Though the bulk of Kenny Construction’s CIPP work is done in and around Chicago, the contractor is looking to spread its territory into the East and Northeast and up into Canada. “We are not looking to shrink our rehab business. We’re looking to grow it and take a bigger share of the market,” Bonanotte says. “We’ve had double-digit growth since the early days, when we did $6 million to $7 million a year. Our biggest growth has happened since 2003. We are still seeing a strong year-to-year growth on the rehab side of the business. It’s been very good.”
The company has expanded its operations west of Illinois with the acquisition in July 2010 of Western Slope Utilities, a Colorado-based civil infrastructure contractor that was also an Inliner licensee. “We acquired its rehab division, restructured it with the help of Dan Cohen, who was WSU’s managing director, and we now have a footprint reaching west into California” Bonanotte says.
In 2009, Kenny Construction teamed with LMK Technologies to market a manhole CIP product, called the CIPMH manhole system, which is a universal, structural cured-in-place seal for manholes and catch basins. Noting his long-standing relationship with LMK president Larry Kiest, Bonanotte says partnering with LMK just made sense and added to its relining services. “We’ve done tens of thousands of feet using the product,” Bonanotte says.
John Kenny Jr. lauds Bonanotte for his efforts in bringing the Trenchless and Underground Group to the forefront of rehab contractors. “He has done a spectacular job of learning this business,” he says. “I think he’s the best there is in this business.”
While the economy continues to slowly recover, the rehab market continues to flourish, especially in Chicago. “[The city’s] underground is crumbling like the rest of the country’s and [Kenny Construction] is addressing almost all of its brick sewers,” Bonanotte says. “The city is addressing every sewer 80-plus years in age and has a very strong program and is doing an excellent job addressing the whole system as we go down the streets: mainlines, catch basins, manholes and laterals.”
Keys to Success
Reflecting on what has made Kenny Construction endure more than 84 years — from the Great Depression to the recent Great Recession — John Kenny Jr. and Bonanotte turn to the core values that permeate every level of the company and are the same core values that were lived through the company founder and his son. They also believe it’s the people who do the work.
“[John Kenny Sr.] would stop by my office and everyone’s office every day, asking how things were and if we needed anything. And he was well into his 80s at the time,” Bonanotte says, noting the impression that made on him and others. “It’s a very strong family. We have some good, long-term people here, a lot of 40-year veterans who make up a good core group with good beliefs, integrity and work ethic. I believe what was taught to me and I pass that on to my guys… Maybe it’s our long history itself that helps us in understanding where we come from and where we want to go, especially during difficult times.”
Will the company be led by the fourth generation of Kennys? It’s too early to say, with John Kenny Jr. noting how few companies today get beyond the third generation with all the world offers today. And what would his grandfather think of the company’s success?
“I can guarantee that my father — set aside my grandfather — never would not have dreamed that in the year 2011 we would be a $600 million company…They would have never envisioned it.”
Sharon M. Bueno is managing editor of Trenchless Technology.