H.J. Russell & Company
H.J. Russell & Company
Sales: $303 million (2003)
NAIC: 233320 Commercial and Institutional Building Construction; 233220 Multifamily Housing Construction; 531110 Lessors of Residential Buildings and Dwellings; 531190 Lessors of Other Real Estate Property
H.J. Russell & Company is the largest African American owned real estate and construction company in the United States. Through four main divisions—Construction, Program Management, Property Management, and Real Estate—the firm provides a broad range of services including construction contracting and management, the development and construction of urban residential structures, the management of residential and commercial properties, and environmental management. The property management division manages some 12,000 apartment units, condominiums, and public housing units. H.J. Russell & Company is based in Atlanta, with project offices in Chicago, Dallas, Miami, Phoenix, St. Louis, and New York. Apart from its main businesses, a subsidiary, Russell's Concessions International Corporation, operates food and beverage concessions in major airports throughout the country, while The Russell Foundation manages founder H.J. Russell's philanthropic activities.
Great Depression Background
The history of H.J. Russell & Company is largely a history of the perseverance and vision of one man, Herman J. Russell. Russell was born in 1930 in Summerhill, an impoverished neighborhood in Atlanta. The youngest of eight children, Russell grew up during the hardships of the Great Depression, a time that exerted an early and decisive influence on his dream to have his own business. "As much as I wanted to work … there were no jobs," Russell recalled on the occasion of his company's 50th anniversary, explaining "That's one of the reasons my desire was so great to be my own boss." He became his own boss at a young age. When he was eight years old, he began doing chores for neighbors. At ten, he got a paper route. All the while as a child, he also worked for his father's small plastering company, Rodgers Russell Sr. Plastering Company, mastering the plaster trade by the time he turned 12.
Another key moment occurred when Russell was a teenager and planned to open a shoeshine parlor on a vacant lot on his street. He first needed to get city approval to use the residentially zoned land for a commercial purpose. In a 1996 interview in Nation's Business, Russell recalled, "I went before this totally white City Council, and I'll never forget, one councilman said to me, 'Nigger, why can't you just shine shoes on your front porch?' That did something to me that day. It was just like lightening striking me. I said to myself, 'I'm going to make a difference. I'm going to do something to turn that kind of attitude around'."
Though poor and with little formal education, Russell's father, in addition to the plaster trade, taught Russell to save money. By the time he was 16, Russell had saved enough money to buy a vacant lot from the city of Atlanta, where, with the help of friends, he built a duplex. The rental income from those two units was enough to pay for his college education at Tuskegee Institute where in 1952 he was granted a degree in building construction.
Launching a Company in the 1950s
That same year, Russell returned to Atlanta and founded his own company, H.J. Russell Plastering Company. With little more than an old pick-up truck and a single employee, the new company began doing small plastering and repair jobs in Atlanta. Despite the racial segregation in Atlanta's construction trades, segregation that made it nearly impossible for African Americans to bid successfully on large jobs, Russell through unrelenting determination moved on to bigger projects, purchasing and improving other pieces of land—at first in his own Summerhill neighborhood and later in other parts of the city—and building homes. By the mid-1950s the company had grown to employ a work force of 25. In 1957 Russell also inherited his father's company, valued at approximately $15,000, and renamed it H.J. Russell & Company.
The company continued to grow, concentrating on the construction of duplexes, small apartment buildings, and other rental properties for low and middle income families. Most were projects that remained in the firm's hands after completion and provided the company with an additional source of regular income. As a result of this focus, Russell established the Paradise Management Company in 1959 to manage its residential and commercial properties.
New Inroads in the 1960s
In 1962 Russell solidified its building activity with the establishment of the H.J. Russell Construction Company. By that time, Russell was doing well enough to attract the interest of the Atlanta Chamber of Commerce, and in November a letter was sent inviting Russell to join the organization. When it issued the invitation, the all-white Chamber of Commerce was unaware that Russell was African American. He accepted and became a member before the group discovered its "mistake." The story of H.J. Russell becoming the first black member of the Chamber of Commerce made front-page news in Atlanta. Almost 20 years later, in 1980, the organization had changed significantly; Russell was then voted the second black president of the Chamber of Commerce.
The company grew rapidly in the 1960s, thanks in part to the introduction of government programs intended to spur residential construction, particularly in the South. The company's construction division was one of the largest builders of HUD affordable housing during President Richard Nixon's administration. That experience led to Russell performing on lucrative contracts for large construction projects. In 1963 he was selected to do the plastering on Atlanta-Fulton County Stadium, then being built for the Atlanta Braves baseball team. Later in the decade, the company came into its own with other high profile projects in downtown Atlanta such as the construction of Citizens Trust Building in 1969 and the fireproofing and plastering for the Equitable Building in 1968, the latter being the largest contract of its kind ever awarded to a black-owned firm.
Consolidation in the 1970s
Two developments helped solidify H.J. Russell & Company's position as one of the Southeast's pre-eminent construction contractors. First, the building programs of Department of Housing and Urban Development (HUD) of the 1970s required participation of minority-owned companies in contracts. Second, the election of Atlanta's first black mayor, Maynard Jackson, provided Russell's firms with new business in the city. Jackson inaugurated affirmative action programs that required white-owned companies with city contracts to subcontract with minority-owned companies. The solid reputation for good work and dependability that H.J. Russell & Company had by then established made it a natural partner in such projects. Still, despite participation in such programs, some 75 percent of the company's work remained through private contracts in the 1970s and 1980s.
H.J. Russell & Company continued to work regularly on prestigious construction projects in and around Atlanta, including the Ashby Street MARTA station in 1972 and the Delta Air Lines headquarters. The company also began diversifying its business interests in the 1970s through purchases made by H.J. Russell. He founded the City Beverage Company, a nationwide distributor of beer and other beverages; he obtained a 50-percent interest in DDR International, Inc., which managed construction projects; he obtained a majority share in Russell-Rowe Communications, the owner of a television station in Macon, Georgia; and he established Concessions International, the operator of restaurant units at several U.S. airports. In 1972 he joined the Omni Group, which purchased two major professional sports franchises: the Atlanta Flames of the National Hockey League and the Atlanta Hawks of the National Basketball League. The investment made Russell the first African American to share ownership in a major sports franchise. In 1973 when Black Enterprise magazine published its first ranking of the top 100 companies, H.J. Russell & Company was 22 on the list, with annual sales of $6 million and about 500 employees. As of 2004, the company has appeared on the list every year since.
"Rocketing Growth" in the 1980s
By 1981 Russell was well-recognized for his success. His personal wealth was estimated at over $10 million, and he was a regular recipient of honors from various business, civic, and educational organizations. The Atlanta University School of Business inducted him into their Entrepreneurs Hall of Fame in 1982. The Georgia State University's College of Business Administration inducted him into the Business Hall of Fame in 1985. In 1986 he was the Atlanta Business League's Chief Executive Office of the Year.
H.J. Russell described the decade of the 1980s as "a time of rocketing growth" for his company. At the beginning of the decade, the company's annual sales totaled more than $50 million and its work force numbered approximately 500. During this time, the firm was selected to work on the Georgia Pacific Headquarters, slated to be the second tallest structure in Atlanta. H.J. Russell was also named one of the contractors on the Hartsfield Atlanta International Airport's main terminal complex, a job that significantly expanded the firm's reputation as one of the country's most reliable builders of transportation facilities.
Our Mission: To continue as a profitable enterprise that: is known for delivering superior services and products; enhances the quality of life of our community; earns the loyalty of its employees through demonstrated commitment to their development and reward of exemplary performance; is recognized as a national leader in the construction and real estate industries.
The company expanded geographically mid-decade when its project management division set up offices in Birmingham, Alabama. New clients there included the City of Birmingham, the Birmingham Turf Club, the Birmingham Airport Authority, and the Birmingham/Jefferson County Civic Center Authority. The H.J. Russell division responsible for residential property development saw impressive growth as well, and in 1987 H.J. Russell & Company renovated and enlarged its own corporate offices to more than 42,000 square feet.
Preparing for Russell's Retirement in the 1990s
It was a golden business opportunity for H.J. Russell & Company when in 1990 Atlanta was chosen to host the Summer 1996 Centennial Olympic Games. Moreover, the decision to locate the Olympic stadium in Summerhill provided an occasion for Russell (H. J., as he was usually called) to return to the neighborhood in which he had grown up. H.J. Russell & Company was selected to help build the stadium and other Olympic facilities which were part of an urban renewal effort in the badly deteriorated section of Atlanta. Groundbreaking for the stadium took place in May 1993.
That year H.J. Russell & Company had total sales of $152 million and was ranked fourth on the Black Enterprise list of top minority-held companies. The firm underwent a major reorganization at the beginning of its 1995 fiscal year. Its four construction and real estate companies were united within H.J. Russell & Company. Presidents of the former subsidiaries were named vice-presidents of the newly-combined firm. The consolidation was undertaken to streamline company operations—and hence maximize profits—by creating a single strategic plan for all divisions with a single financial officer. Russell's son, H. Jerome Russell, was named president and chief operating officer of H.J. Russell & Company, while youngest son Michael was named vice-president of joint venture construction. Russell's daughter and oldest child, Donata Russell Major, became vice-president of Concessions International Corporation. The reorganization was perceived as the first step in Russell's easing his way into retirement and passing control of the company into the hands of his children.
The second chapter of the changing of the guard at H.J. Russell & Company was a surprise to observers. In 1996 Russell announced that he would step aside as company CEO, and that the position would be taken over by R.K. Sehgal, who would also be named vice-chairman of the firm. The Sehgal news was startling not only because the man's flamboyant, jet-setting image was so at odds with the conservative, reserved face of H.J. Russell & Company. What was most unexpected was that an outsider—even one who had taken the Law Companies Group from $50 million to 350 million in annual revenues in a ten-year period—would be granted such an unprecedented degree of control in the Russell family business. Russell explained to the press that an important reason for the Sehgal move, in addition to bringing his experience to the company, was that Sehgal might mentor the Russell children and prepare them for the inevitable day when they would take over the reins at the firm. Sehgal had turned down offers from larger companies to accept the Russell offer. Part of the deal, reportedly, was that he was given a large ownership stake in the company, although majority ownership remained with the Russell family. Sehgal officially took over his new positions in April 1997. The Sehgal era was short-lived. He and Russell reportedly failed to agree on a vision for the firm, and by the end of 1998 Russell had returned to the CEO's office.
Annual revenues topped $172 million in 1997, and the firm employed more than 1,500 workers (including concessions personnel). H.J. Russell & Company continued to work on high-profile projects, in Atlanta and elsewhere in the United States, through the decade of the 1990s. These included the Birmingham Civil Rights Institute and the Georgia Dome in 1992, Coca Cola Company corporate headquarters in 1993, the BMWZentrum manufacturing plant in Greenville, South Carolina in 1994, Wachovia Headquarters in Winston-Salem, North Carolina in 1995, The McCormick Place expansion in Chicago in 1996, the Roswell Park Cancer Research Institute in Buffalo New York in 1998, and the St. Louis Missouri City Justice Center and Atlanta's Phillips Arena in 1999. During this time, the company sold the Macon, Georgia, television station it had owned since the 1970s.
New Leadership in the 2000s
In 2003 H.J. Russell retired as CEO a second time. This time he was succeeded by Michael, the younger of his two sons. The choice was a surprise—many had expected Jerome to get the job. The decision was reached at a family meeting at which all of the Russell children expressed what they most wanted to do for the company. Jerome wanted to concentrate on the real estate development side of the firm. Naming Michael CEO would enable Jerome to give his undivided attention to that division. Donata was interested in the nonprofit arena, including entrepreneurship, youth development and mentorship. She was named president of the Russell Foundation. The CEO position was ideal for Michael, who was most interested in growing H.J. Russell & Company and pushing it to the next level. Russell himself, who remained chairman, went into what he called semi-retirement. This, he explained, meant that he would work only nine to ten hours a day instead of the 14 to 15 hours he formerly logged.
- Herman Jerome Russell buys his first parcel of land and builds a rental duplex.
- Russell inherits a family business and renames it H.J. Russell & Company.
- The company takes on its first major project, developing 12 residential units.
- Russell becomes first African American member of Atlanta Chamber of Commerce.
- H.J. Russell & Company makes the first Black Enterprise top 100 list.
- Russell is elected president of the Atlanta Chamber of Commerce.
- Company opens a branch in Birmingham, Alabama.
- Four subsidiaries are united as divisions of H.J. Russell & Company.
- Russell is succeeded as CEO by son Michael Russell.
Philanthropy was also part of the company's legacy as it moved further into the 21st century. Throughout his business life Russell has been as dedicated to improving the community in which his companies operated as in expanding his own business opportunities. He developed his companies with an eye toward the ongoing improvement of the black community in Atlanta. This is evident in the numerous residential properties he developed and built in the city. In addition he gave his time and office to fundraising for programs for disadvantaged youth, and he donated land to black churches in Atlanta. In the 1960s he contributed money that made possible the establishment of the Atlanta Inquirer, an important organ of the civil rights movement in Georgia. He elected to locate the headquarters of his firm in a run-down area of Atlanta to encourage its rehabilitation. In 1999 he contributed a total of $4 million to the entrepreneurship programs of Clark Atlanta University, Georgia State University, Morehouse College, and his alma mater Tuskegee Institute. The Russell Foundation continued to oversee Russell's philanthropic efforts throughout the United States.
As the 2000s progressed CEO Michael Russell was expected to expand the company's work in revitalizing urban areas in and beyond its Atlanta base. It had already begun work on building apartments, condos, and a retail mall on an eleven-acre area in Newark, New Jersey.
Concessions International Corporation.
Construction; Program Management; Property Management; Real Estate.
Brasfield & Gorrie, LLC; CBL & Associates Properties, Inc. (CBL); Choate Construction Company.
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Copeland, Larry, "He Altered Atlanta in More Ways Than One," USA Today, December 3, 2003, p. 8B.
"Georgia Builder Finding Road to Growth," New York Times, March 5, 1981, p. D1.
Harte, Susan, "Jerome Russell: COO of Family Empire Not Angling for Top Spot," Atlanta Journal-Constitution, November 18, 2001, p. 2P.
Holmes, Tamara E., "Herman J. Russell Passes Torch," Black Enterprise, January 2004, p. 19.
Holsendolph, Ernest, "Creative Move Bolsters Future of H.J. Russell," Atlanta Journal and Constitution, November 23, 1996, p. G3.
——, "Russell Learned to Save, to Give," Atlanta Journal and Constitution, November 7, 1999, p. 2H.
Mitchell, Cynthia, "Focus on R.K. Sehgal," Atlanta Journal and Constitution, December 1, 1996, p. R4.
Poole, Sheila M., "H. J. Russell: Atlanta Patriarch," Atlanta Journal-Constitution, January 21, 2002, p. 1B.
——, "H. J. Russell President Resigning to Start Firm," Atlanta Journal and Constitution, November 12, 1992, p. 3.
Saporta, Maria, "Builder H.J. Russell Puts Outsider at Helm," Atlanta Journal and Constitution, November 21, 1996, p. D1.
——, "Construction Icon Gives Up CEO Job," Atlanta Journal-Constitution, October 7, 2003 p. 1D.
——, "Reorganization Sets Stage for Succession at H.J. Russell & Co.," Atlanta Journal and Constitution, June 21, 1994, p. C1.
White, Paula M., "Changing the Guard: Herman Russell Steps Down as Company CEO," Black Enterprise, April 1, 1997, p. 16.
—Gerald E. Brennan