Gage Brothers’ $40M project planned as nation’s most automated precast plant

By Jodi Schwan

Gage Brothers Concrete Products is starting work on a massive new facility that will increase its size by 50 percent, add technology and improve the work experience for its 265 employees.

The 210,000-square-foot building will be on 45 acres in an industrial park in northeast Sioux Falls and take Gage off the property it has occupied since it was founded in 1915 at 4301 W. 12th St. The project cost is estimated at $40 million.

“We believe this will be the most automated, efficient precast plant in North America when it’s done,” Gage president Tom Kelley said. “We need the capacity. We need a better place for our employees to work, so we can recruit and retain employees. We need to bring technology and automation.”

Gage grows

When Kelley started at Gage in 1980, there were 50 employees and the business generated $5 million in annual revenue.

By 2015, revenue exceeded $60 million and staff totaled 280.

Changes in construction have been good to Gage. A decade ago, Kelley estimates 90 percent of brick was full brick laid by masons in the field. Today, 40 percent is a thin brick, half an inch thick, laid on precast panels by manufacturers such as Gage.

“Three years ago, it was 30 percent,” he added. “Today, it’s 40 percent. It’s going to be 70 percent in no time. It’s a better product, more cost-effective, and it’s faster.”

New energy codes and tightening of the labor force further support the precast and prefabrication industry, he said.

“With the cost of labor and the labor force that’s out there, laying a brick or block at a time is the way it used to be done. It’s not the way of the future. There aren’t the bodies to do it.”

Prefabricated building also allows some of the messier parts of construction to occur in a factory and not on site, resulting in less commotion and saving time and money.

“Time is money,” Kelley said. “Nobody has time enough to build anything. Schedules get shorter and shorter. So that’s a big part of our growth.”

When Gage was founded by childhood friends William Gage Sr. and Harold Gabel, they started by pouring concrete for Sioux Falls sidewalks.

The birth of the interstate system helped drive growth in the 1950s through bridge construction.

Now, the company makes precast concrete panels, pre-stressed concrete panels, bridge girders, core floors, monuments and architectural wall panels.

Projects include everything from hospitals to stadiums, manufacturing facilities and office buildings.

Gage primarily does work from Denver to Chicago, and “Minneapolis is where about 50 percent of our work goes historically,” Kelley said. “So Minneapolis is a really big market for us.”

Recent high-profile projects there include Target Field and TCF Bank Stadium, which “really got us through the recession,” he added.

Around the same time in 2008, the company converted from a three-generation family business to an employee-owned ESOP.

“And it was really at a good time,” Kelley said.

“We were in a tremendous downturn, the peak of the recession, and … it was a great thing for us. I don’t necessarily think it’s a great thing for every company, but it was a great thing for us. I give them a huge amount of credit. They could have sold it in the marketplace for a larger amount of money, but instead they gifted it to the employees and the employees all received ownership putting no dollars in. I look at it as a huge gift.”

Planning a plant

Success has put a squeeze on the capacity of Gage’s facility, however.

When it was founded, it sat near a gravel pit and farmhouse. There were cornfields between the plant and Kiwanis Avenue, which was the city limits. Interstate 29 eventually cut through the property.

Gage Brothers aerial

The facility was expanded over time without a master plan, and operations now are spread among 13 buildings, “so our processes are done partially in the building, then hauled to another building, then hauled to another building,” Kelley said. “We have no opportunity for LEAN or for efficiency. It would just be a total redo here.”

Tom Sweetman and Tom Kelley after closing the sale of industrial land in northeast Sioux Falls.

The new property at 2800 N. Bahnson Ave. is on land owned by the Sweetman family south of Benson Road and east of Interstate 229 that is being developed as an industrial park.

“It’s kind of a home to material manufacturing,” Kelley said. “We’re a heavily loaded building, and … the soil has a very high bearing capacity, much higher than anywhere else in town, and that helps keep the cost of our superstructure down.”

Gage worked with JLG Architects to plan the building, with the goal of becoming the nation’s most automated precast plant. Fiegen Construction will be the construction manager.

“I believe when they open and start production in this new facility, they will be that gold standard in the precast industry for technology integration and efficiency,” architect Dave Van Nieuwenhuyzen said. “The design of the building is just a tool to achieve that goal.”

The building – naturally – will be built entirely out of precast. It will be one large building, allowing “raw products in one end, finished products out the other end,” Kelley said. “Everybody’s under one roof.”

Almost all work will be done indoors, compared with two-thirds of the work at the current site.

There are unique design aspects to the project, centered around the equipment and industrial processes that will be housed there, Van Nieuwenhuyzen said.

“But working together as a team with the owner and the construction manager makes that process more efficient and produces a better product and outcome,” he said. “The building will have nine interior bridge cranes and a unique concrete batching and delivery process, but working with the equipment suppliers from the very start makes that a seamless integration.”

The concrete mixing and delivery system is one area of the plant getting a significant overhaul. Now, Gage uses three separate mix plants and Redi-mix trucks deliver all wet concrete.

“In the new facility that will all be automated,” Kelley said. “Concrete will be delivered in overhead flying buckets. The end user, with a wireless remote, will order the mix at a certain station at a certain time.”

It cuts the number of people needed to do the job from 10 to one and highlights another important element of the upgraded plant – the approach to using people.

“That’s a big aspect,” Kelley said. “We hired a consultant and are using transitional management, and we’re not taking that lightly. A very important aspect of it is to train people up. We’ll have a lot less brawn and more brain in this plant.”

Reinforcing steel ties, which now are bent manually, will be bent with machine-made ties and an automatic rebar bender that will cut six hours of work down to one. A new three-axis CNC machine will mold parts more accurately and efficiently.

In addition, most of the new molding systems will be hydraulically opened and closed instead of being manually placed with cranes.

The ultimate goal is to increase production by 60 percent while increasing staff by 20 percent over five to eight years. The savings from efficiency will be used to service the first significant debt Gage will take on in its history.

“It’s a big endeavor,” Kelley said, adding a low-interest loan from the state of South Dakota was key in helping the project come together.

“The fact they invested in a 100-year-old company tells me a lot,” he said. “Sometimes, somebody moves in from out of town and they roll out the red carpet and hand out the money, but 60 percent of growth in communities across the U.S. comes from people that are already there. The state of South Dakota recognized that, and they gave a good company a low-interest loan, and we surely appreciate that.”

Gage also privately raised some capital for the project, and “I couldn’t believe how many people stepped up for us and had confidence in our company,” Kelley said.

What’s next

Gage will start construction on its new facility this month but continue working in its existing one for about 18 months.

Current projects include large hospitals in Wisconsin, parking and manufacturing projects in Rapid City, the Performing Arts Center in Brookings and a recently awarded contract for a major renovation to the University of Iowa’s Kinnick Stadium.

“Pre-cast is a very strong part of a lot of sectors, and that’s helpful,” Kelley said. “We really don’t chase projects. What we do is chase relationships. Most of our clients are repeat customers. Our 10 top customers are probably 80 percent of our work every year.”

One of those longtime relationships will enter a new phase in the coming years.

Lloyd Cos. has been a Gage client for more than 40 years – essentially Lloyd’s entire history. The Sioux Falls developer is planning to buy the 35-acre original Gage site and redevelop it commercially.

“We are proud to work in partnership with them, not only as a supplier to many of our projects, but also as a partner in the redevelopment of their existing Sioux Falls site,” said Erica Beck, Lloyd’s vice president of development.

“Gage Brothers has created a visible legacy in Sioux Falls. Their service, quality of work, innovation and commitment to our community and region continues to leave a tremendous impact on our skyline.”

Both companies agree there’s a rare, prime opportunity to convert a large parcel strategically located at 12th Street and Interstate 29 into a retail development.

“There’s a better purpose for this piece of property than us,” Kelley said.

Gage plans to move into its new facility in early 2019. Lloyd’s plan is to secure new businesses for the existing property so redevelopment can start as soon as Gage moves.

While the retail economy has lagged somewhat nationally, “we are seeing interest from the food service and hospitality sector, as well as strong interest from exciting national retail tenants – including those that would be new to our Sioux Falls market,” Lloyd’s responsible broker Jake Quasney said. “With the proximity of the site to both the interstate and the Lake Lorraine development, it is well-positioned for commercial growth.”

Gage also will be positioned for growth after its move. The hope is its new facility will help recruit and retain the workers needed to meet the company’s growing demand.

“We have been probably 10 to 30 bodies short for about five years … and that’s a piece of the equation here,” Kelley said. “We believe we’ll have a much more inviting place to work. It will be lighter. It will be cleaner. It will be more environmentally controlled. We believe it will be a very inviting place.”

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Gage Brothers’ $40M project planned as nation’s most automated precast plant

Gage Brothers Concrete Products is starting work on a massive new facility that will increase its size by 50 percent, add technology and improve the work experience for its 265 employees.

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