Harbert Corporation

views updated

Harbert Corporation

P. O. Box 1297
Birmingham, Alabama 35201
(205) 987-5500
Fax: (205) 987-5568

Private Company
Incorporated: 1949 as Harbert Construction Corporation
Employees: 500
Sales: $100 million
SICs: 1311 Crude Petroleum & Natural Gas; 4939
Combination Utilities; 6531 Real Estate

After a long and successful history primarily in the construction and mining fields, Harbert Corporation has evolved into three main businesses: real estate, cogeneration, and investment management. In 1993, the company sold its construction interests to Bill Harbertthe founders brother and a key player in developing the international operations of the corporationas well as to the Engineers & Constructors division of Raytheon. Thereafter, Harbert Corporation focused on serving the market for alternative energy and cogeneration plants, as well as on its commercial real estate and investment management interests, under the leadership of the founders son Raymond Harbert.

Headquartered in the Riverchase area of Birmingham, Alabama, Harbert was founded by John Murdoch Harbert III, in 1949. After returning from service in the U.S. Army during World War II, Harbert entered Alabamas Auburn University to study engineering. Upon graduation in 1946, he started his own construction business. In the postwar economic boom, construction was a highly competitive business. At that time, according to a company publication, 58,600 other new contractors also entered the business in the United States. The same year, nearly 47,000 went out of business.

Harbert purchased a few pieces of surplus Army construction equipment, which he kept in a small yard beside his one-room office. The companys first project was to build a bridge near Prattville, Alabama, which cost around $45,000 to construct. Subsequent jobs consisted primarily of small bridges and roads, the labor for which was contracted out. Harbert was soon joined by his brother Bill L. Harbert, and two other engineers, and before long the upstart company boasted a staff of between 25 and 30. In 1949, the company was incorporated in Birmingham, Alabama.

A reputation for integrity, good work, and the ability to meet contract specifications led to increased business on a grander scale. Harbert projects during the 1950s included construction of highways, dams, and bridges. By the end of the decade, the Harbert Corporation had experienced rapid growth, with a work force of 7,000 and an equipment inventory of over 3,000. During this time, Harbert accepted a contract to build a natural gas pipeline in Florida, and thus its experience and expertise diversified. In fact, the pipeline was also significant in that it represented the first transmission of natural gas to consumers in Floridas industrial and residential communities. Constructing the pipeline in Florida opened Harbert managements eyes to the potential for real estate development in that state, and Harbert soon acquired some land in Sarasota, where it built a shopping mall and residential community. This represented the companys first foray into real estate and land development.

Diversification began to center on the countrys demand for energy and natural resource exploitation. Accordingly, Harberts business interests expanded to include coal mining in Kentucky and construction contracts in Central and South America. The corporation also purchased a large limestone quarry near Paducah, Kentucky, and assumed responsibility for laying 2,000 miles of pipeline for intrastate gas use in Florida through the Five Flags Pipeline Company, which Harbert developed, owned, and operated.

During this time, the accomplishments of Harberts founder began to receive national notice. John Harbert was named Marketing Man of the Year in Alabama in 1967 and was cited by Engineering News-Record as one of the ten outstanding construction men of the year. In 1969, he was presented the first Silver Hard Hat Award by the Construction Writers Association. While his company thrived, he devoted considerable time to several projects that he felt might benefit from his experience and beliefs. He established a writing center at nearby University of Montevallo and gave generously to his alma mater, Auburn University, providing its campus a laboratory, office and instructional building for the school of engineering.

Of course, Harberts primary focus continued to be his corporation, which was expanding in a number of ways. The company established a new subsidiary, Harcon Barge Company, which oversaw a network of barge transports in the Tennessee, Ohio, and Mississippi rivers. Natural gas transmission operations in Florida also continued to grow. Furthermore, the companys emphasis on heavy equipment management skill was on the rise. A three-and-a-half-mile portion of the Tennessee Tombig-bee Waterway was constructed by Harbert in Mississippi. In 1973 Harbert redesigned a newly purchased facility, The Harri-man Coal Terminal, which was later expanded to transload barges, according to a company publication at an average rate of 400 tons per hour.

In 1981, Harbert began selling off its mining operations. Its coal mines, towing barges, and other coal-related properties were sold to Standard Oil for around $400 million. With this lucrative deal, the company began to focus instead on oil exploration, acquiring the Plumb Oil Company in Houston and forming its own Harbert Energy Corporation. Two years later, in fact, John Harbert reportedly joined Texas oil magnate T. Boone Pickens in a hostile takeover bid for Gulf Oil Co. Although the bid was unsuccessful, Harberts stockholdings were worth millions when Chevron succeeded in taking over Gulf Oil. Harbert would again team up with Pickens in an effort to take over the Diamond Shamrock Corporation in 1986. With a keen eye for such profitable opportunities, Harbert gained inclusion on the Forbes magazine list of the 400 wealthiest Americans in 1984. And, of course, his foresight and industry know-how was of benefit to Harbert Corporation.

Land development and construction continued apace, most notably perhaps on Birminghams Riverchase development, begun in 1974 and completed in the 1980s. The planned community included single and family dwellings, the Riverchase Galleria, and officesaesthetically pleasing buildings of granite and glass set beside a serene lake. The Riverchase Galleria Mall proved one of the companys most ambitious construction projects and boasted one of the largest shopping centers in the United States, parking decks, a four-star hotel, and an office building. Another such plaza, completed in 1989, was the AmSouth/Harbert Plaza in downtown Birminghams financial center, a 32-story, 630,000 square foot facility which housed retail space, a three-level underground parking garage and office space. At the same time, the company continued to build major bridge structures including two interchanges between Miami and Ft. Lauderdale, Florida, that represented the first such contract package ever awarded by the State of Florida.

In 1987, Forbes estimated Harberts annual sales at over $500 million. Such figures were bolstered by Harberts expansion into securities and investment banking, as the company formed another subsidiary, Harbert Capital Services, to serve that market. Moreover, the companys energy and waste management interests grew, engendering the formation of Harbert Cogen Inc., which operated small power plants, the acquisition of GWF Power Systems and Combustion Power Co., and the birth of Harbert Resource Recovery Inc., a joint venture with a French waste management company.

In 1990, John Harbert stepped down from his position as company president, and his son Raymond became president and CEO of Harbert Corporation. Under his leadership, the company began to refocus in three areas: energy, commercial real estate, and portfolio investment strategy. The companys prospects in the field of oil exploration had proved disappointing, and in 1992, Harbert sold its oil and gas assets. Nevertheless, the energy industry, bolstered by the passage of the Public Utility Regulation Policies Act (PURPA) back in 1978, was thriving, and Harbert was poised to take advantage of the increase in demand among the alternative energy and co-generation/independent power plant markets.

In 1993, the engineering division of Raytheon acquired the assets of Harberts construction interests for an undisclosed amount, signalling an end of an era at Harbert. Two years later, the companys founder, John Harbert, died. He had led his company for more than 45 years, and was always proud of the family atmosphere he fostered among his employees. No matter how large the corporation became, Harbert had tried to maintain a personal interest in every employee, offering educational incentives that encouraged self-improvement and personal fulfillment. He was regarded as an inspiration to the Birmingham community at large.

In the mid-1990s, Harbert Corporation was working to accelerate, according to company literature, its shift from low margin, labor-intensive businesses to focus on investment opportunities that allow it to utilize its operational and investment expertise to exploit market inefficiencies.

Principal Subsidiaries

Harbert Realty Services, Harbert Power Corporation, The Harbinger Group, Inc.

Further Reading

Air-Driven Unit Goes on Line, Engineering Record, October 7, 1991, p. 16.

Flynt, Wayne, Mine, Mill & Microchip, Northridge, Calif.: Windsor Publications, Inc., pp. 334-335.

Normington, Mick, Harbert: Wide learning, Great Energy, The Birmingham News, April 1, 1995, p. 10A.

Powers, Mary, Raytheon Puts Harbert in Its Peace Portfolio, Engineering Record, June 28, 1993, p. 12.

Business BriefRaytheon Co.: Unit Buys Assets of Business from Harbert International, Wall Street Journal, June 21, 1993, p. A2.

Loretta Cobb