Q&A: Spates Construction builds up the North Country

Vermont Business Magazine, Sep 01, 2002

VBM: If you've worked with the crews, then you've heard the complaints about what works and what doesn't.

Spates: That's right. You know what tools they don't like. So it's a different generation and a different style of management. It can be tough in a family business. We went through some pretty intense family meetings during the transition. I think it's tough anytime someone has to let go the reins that they had created and pretty much held by themselves. But I think you have to at some point. If you have a younger generation coming along you have to involve them, and I think you have to involve them as a business partner early on. Giving them shares of the company or trading bonuses for shares of the company early on to get them more involved in the decision making.

It was a process my brothers sort of stayed out of because they weren't involved with the office as much as I was. They were out running jobs and I had worked closer with my dad in the office over the years. So we were trying to structure something that would be fair for all three of us and for our parents, and I think it worked out OK.

What we're doing now is we have a lease agreement with them, because the office is attached to their house. We had a fire at the shop a year or so before my dad was going to retire. He retired last year. So after the fire we said, look dad, if we don't know where the company is going to go, if it's staying on this site or not, it doesn't make any sense for you to spend the money to put up another shop, especially if you're going to be retiring. So the company put up the money to rebuild the shop and we pay him rent. We've got a five-year lease with a five-year renewable, and he's got an option to purchase the Shop from us if we move.

So it gives them an income, and we've worked out where we pay their medical insurance and share in the costs of the heat and the electrical.

VBM: How old is your dad?

Spates: He's around 70.

VBM: So he didn't retire early?

Spates: Oh, no. And I think it's been tough on him to find something to do in retirement. In the construction business your busy, and he didn't pick up the golf playing and those things earlier on when you can have that group to be with when you retire.

VBM: Does he stay involved in the company at all?

Spates: No. We had that discussion, whether he should stay on as a CEO for a year or two, but decided that it might be easier to make the transition if he didn't have to be in and out all the time. He's helped out, bringing down bids from time to time. But he's retired now and finding time to spend with the grandchildren. Still, it's been kind of tough. You're in a business all your life, and then you have to close the door. Especially when the business is still attached to the house and we're driving in here at five in the morning and back in sometimes late in the evening. But I think it worked out OK for all of us.

We worked it out over a period of time. But I think that is something that the state could definitely work on in the future - the inheritance tax. If they want family farms and family businesses to be passed on, they really need to change that whole inheritance tax setup. It's detrimental to pass things on the way it is now, and you have to be creative and do things in a lot of steps that you normally wouldn't have to do if that weren't out of there. I think farmers are in a worse position than we arc. We have equipment, but their value is in their land, and the next generation is getting killed when you try to pass that on. You have to start planning early, but with the day to day running of a business, you don't always have the time.