Stronger than Ever
The Rinaldi Group
The great recession of 2008 had a significant and negative impact on general contractors and the construction industry overall. Many firms had to downsize or lay off employees, and some even went under. The Rinaldi Group also suffered – yet it but did not let any of its people go.
Instead, staff took pay cuts, and the company skimped and scraped its way through. As the skies cleared, the group was ready and a business plan was in place to start anew. It has been rapidly growing since. Being non-union has its challenges, but as President and CEO Anthony Rinaldi explains, it’s now a better state to be in New York City.
The Rinaldi Group started in 2003. Up until 2001, Anthony worked within the union world, and New York is the largest union city in the country. Between 2001 and 2003, he noticed a market change in New York; prior to this, clients and owners did not dare to venture into non-union territory. The winds of change were starting, and non-union work was becoming more appealing. Still, it was limited by materials and equipment – such as cranes or personnel hoists –being controlled by union companies.
“That prevented New York from going non-union on the high-rise side, above and beyond twenty stories. Between 2001 and 2003, the industry changed. A number of union crane and hoist operators went from union to non-union, and with that came the ability for developers to go non-union.”
Anthony knew that he would be bidding against some storied construction management firms that were monsters in the industry. He also recognized that to have a niche would be beneficial in this competitive arena, granting the company opportunities. The real difference is that the company is not part of a union.
Anthony felt that the company had the technical abilities. He is a mechanical engineer, a graduate of Lehigh University in Bethlehem, Pennsylvania, which is one of the top engineering schools in the country. He brought a number of his peers with him to start the Rinaldi Group, all of whom are engineers and architects. This, and the team’s prior experience with union work, brought a level of sophistication and technical know-how that could compete in the marketplace. So the Rinaldi Group could set itself apart as a non-union high-rise construction management firm which was a new and developing market.
“It started slowly in 2005, but we landed a project working hand in hand with one of the oldest high rise construction companies in America: George A. Fuller. The project was in White Plains, New York. Known as the Ritz Carlton Hotel at Renaissance Square: a ten story hotel as a podium with two 47-story high-rise condominium towers – a $500 million job.”
In 2007 to 2008, it worked on a project for the John Catsimatidis’ real estate company Red Apple Group. John, a self-made billionaire and entrepreneur, owned a lot of real estate in New York with different business interests. Working with Rinaldi was his first property development project. The project was in downtown Brooklyn at the foot of the Manhattan Bridge, near Barclays Stadium. It was a $25 million, nine-story market-rate rental building.
Things kept going from there, and Rinaldi garnered a portfolio of business over $400 million with prestigious high-end hotel and residential projects in New York – all non-union.
Just as the Rinaldi Group was hitting its stride, the world economy nearly came to a halt in 2008. “I knew that when we came out of this recession, those of us still standing were going to become rock stars, and it would clear out the field, which it did,” says Anthony.
Work was hard to find during those lean days and banks were not lending out much money to developers. Management, including Anthony, took two pay cuts during this period. “We have been together for upwards of eighteen years, so it’s a family atmosphere. I did not lay off one person.”
The Rinaldi Group went from having $200 million of work to the bulk of that drying up. Only two projects were going, valued at $40 million. The company had to try to make do with scant resources. It cut back and learned to live with less; pay cuts were performed along with trimming in areas like health care. However, as Anthony predicted, work started picked up again in 2011 to 2012, and the company was in a good position to capture it due to the trust that developers had in it and its abilities. Through 2013, growth was rapid again due to the tremendous amount of work.
“I had a business model waiting for this, and sure enough we were ready. I asked our Director of Marketing and Business Development Lori Hinz to submit our financial statements based on this three-year period to INC Magazine to see if we qualified for their INC 5,000 fastest growing companies.”The application was submitted, and financial statements were looked over by its own certified accountants. The result was a placing of 636 out of 5,000 on the list.
Francis Santos, Rinaldi’s comptroller, then submitted statements to NJ Biz, a magazine with similar rankings to the INC 5000, but dealing with the top fifty companies in New Jersey. Rinaldi came out as number five.
Anthony touts the family feel that his company possesses. Everyone in the group has either worked for him before or come in as recommendations through valued peers in the industry, such as his architects and engineers. A head-hunters or recruiters are not used; ads are not placed in the classifieds. The same rule applies to subcontractors and vendors.
Rinaldi does not have a human resources department. Anthony goes on to explain that he is the human resources department. He interviews every hire from the receptionist to the most senior engineer. “For you to come to the table with me, you have to go through architects, engineers or consultants that we know, or through people that work for me. I don’t believe in hiring people that I don’t know. I don’t care what your business is; it’s all about relationships. You have to be cut from the same cloth that I am cut from.”
The people hired not only have to have the same ideals as Anthony, but they have the same business sense and philosophy, to go along with family, moral and ethical standards. “I want to make sure that we align. My interviews tend to be long because we get into everything from professionalism to their home life. This has contributed to our success because when you have a company of 1,000 people, built in the same way, who think in the same way and live in the same way, it makes life a lot easier.”
Currently, the company is working on a high profile project: the RIU Hotel in Times Square, a thirty story hotel for RIU Hotel & Resorts. The project is costing $105 million and is one of the few projects over $10 million being done in the city as non-union.
The Rinaldi Group won the 2012 Multi-family Residential Project of the Year for a building at 220 Water Street in Brooklyn. For the project, The Rinaldi Group worked with renowned developer Ginsburg Development Companies (GDC) another well-established family-run development company with a lot of talent.
The tricky and difficult endeavour was being estimated to cost around $30 million but had a budget of only $25 million. “Their head of construction grabbed me and said that they couldn’t find a CM (construction management company) that could do it for $25 million. I brought a lot of my key subcontractors in, and we went through it. We sharpened our pencils and got the budget down to $25,600,000. That made the project happen.”
A second aspect that made the project next to impossible was that it involved the conversion of a landmark building – a former shoe factory in Brooklyn. This resulted in a number of hurdles, including a lot of paperwork. There was a historic building tax credit in the millions of dollars that was available for the project. This tax credit, however, was attached to a schedule that required the project to be turned over by December 31, 2011.
“It was a nineteen-to-twenty month project that we started in July, 2010 – which was no fault of our own, but it meant that we had to get it done in seventeen months. Without that, we could not get a TCO (Temporary Certificate of Occupancy) on the property from the owner so that the tenants could start moving in by December 31st, 2011.” Without the TCO, the tax credit would have been lost. In the end, it not only came in under budget, but on time. The TCO was given on December 27, 2011.
The result of this great work is that, without having to bid against anyone, the Rinaldi Group is presently doing a project for GDC in Long Island City. It was hired to start the pre-construction services and is now in the design phase.
“We won a client for life. That is not to say that we don’t always have to perform, but based on what we are all about and how successful the project was by getting it done on time and under budget.”