Publisher’s profile

Virginia Business
May 2005

KBS Inc. is the largest locally owned general contractor in central Virginia. In 2004, KBS generated more than $177 million in revenue from a diverse portfolio of construction projects, from major retail centers to public education facilities. KBS is active in many regions in Virginia, from Fredericksburg, to Hampton Roads and Richmond, where the company is involved in new construction and rehabilitating existing buildings. Clients include Bon Secours, CarMax, Lowe's and Ukrop's. Virginia Business sat down to speak with the company's president and founder, Bill Paulette.

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How did you get into the business?
After graduation I worked for an engineering firm for a year and then went into the Army. When I got out of the Army, I came back to the Richmond area and went to work for the highway department for a while and then worked for Republic Steel [headquartered in Youngstown, Ohio] as its Richmond representative, calling on local contractors.
My wife and I went to visit her grandma in the town of Kenbridge [Virginia], and I met the president of Kenbridge Construction. He was interested in hiring me, and I knew that to advance at Republic Steel would mean eventually moving to Youngstown, so I took the job and opened an office here in Richmond. The company was Kenbridge Building Sys-tems, which was owned by Ken-bridge Con-struction. In 1987, I bought out the owners to start my own firm. The only stipulation was that I remove the name "Kenbridge" from our name, so we became KBS.

How did the construction industry do in 2004?
I would characterize the industry as being very good last year — not just in Virginia but all over the country. Recent low interest rates have created a lot of demand in the building market. From big-box retailers serving new housing developments to multifamily construction to meet the demand for affordable housing, there are a lot of opportunities out there. Federal and state tax incentives have also driven new building growth, especially in urban areas. We do a lot of work that qualifies for federal and state historic tax incentives.

What challenges lie ahead for the construction industry in 2005?
I would say that the biggest challenge is the gradual rise in interest rates. It takes capital to make these large construction projects happen, and as the cost of borrowing money goes up the activity tends to go down.
The other challenge our industry is facing is the tremendous rise in material costs. The prices of our inputs — cement, steel and other basic commodities — are rising as global building demands in areas like China rise. We contract to complete a project at a predetermined amount and as prices rise we have to absorb the difference.

What do you consider your greatest accomplishment?
Our greatest accomplishment is that we have been in business for 30 years. When we had our 20-year reunion [10 years ago], I found a copy of the Yellow Pages from 1987 and looked up general contractors. Very few of those firms have survived. Now, when I look at that same list 10 years later, the number is even smaller. Some firms consolidated, some sold out to bigger national companies, and many just went out of business.

I am proud of the fact that we have been able to adapt as market conditions changed. Through periods of high inflation, recessions and labor problems, we have been able to sustain growth and create opportunities for our 125 employees here in Virginia.