CEOs You Should Know Michael Childers The Shaw Group Long Interview Final

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Episode Transcript

(00:00):
Well, interestingly enough, I grewup in Bakersfield, California, grew up
in a family that was predominantly inthe oil industry, well and gas industry
in Bakersfield, spent my first Iguess eighteen years there before going off to
college. Well, I want totalk a little bit about energy, because
you know, when it comes tothe Shag group, your knee deep in

(00:22):
it, and so much has happenedeven over the last ten twenty years when
it comes to clean energy, energyin general, not only United States domestically,
but around the world. But asI was taking a look at your
fantastic and really cool resume, energyhas been a big part of your life.
And you just mentioned about Bakersfield theoil industry. My dad used to
work in that area with Ralph emParson, so I know a little bit

(00:45):
about that area and back in theseventies and the eighties when that was a
really big deal. But tell meabout all the different things before we get
to show group, about what youdid in this industry and just moving around
and learning about what you did overthe years. Fantastic I spent gosh,
coming up on forty years now inthe energy industry in and around the energy
industry, and I started my careerin the independent power side of this.

(01:08):
I started with the oil and gascompanies and we started developing independent power plants
to basically serve our needs both electricallyas well as thermal energy kind of the
Cojing industry that grew up in thenineteen eighties. Started my career then and
ended up developing power plants around theworld for probably the next thirty years,
and that grew into commodity trading aswell as pipelines and basic energy infrastructure that

(01:34):
was necessary to kind of serve theglobal markets. All right, Well,
let's talk about the Shaw Group andmaybe just to educate our listeners that will
be introduced for the first time withyou as president CEO, and I think
if I am doing my math correctly, you're coming up in a three year
anniversary here pretty soon, if you'renot already there yet. But as president
CEO, what exactly is the ShawGroup? Well, the Shaw Group is

(01:56):
a pipe and module fabrication business.So our clients are construction companies, large
engineering procurement construction companies that use ourprojects, use our materials that we fabricate
for them in the construction of everythingfrom renewable energy, petrochemical, chemical,

(02:17):
straight oil and gas, water,wastewater, pharmaceutical, food and beverage,
anything that uses pipe, Michael,So we fabricate. We fabricate that pipe
and turn it into a useful product. We buy raw pipe, we cut
it, fit it well, didbend it, add the valves, add
the other appropriate things, and makeit to the specifications that our clients are

(02:39):
looking for. Okay, now,speaking of your clients, I'd like to
talk about that. We don't haveto get in any specificity with a certain
client, but what kind of clientsare you working with in Before you answer
that, I'm not understanding. Youwere domestically and overalls in the Middle East
too, and you can expound onthat. But what kind of clients do
you work with? So we worknot only with end users. So could
be a pmceutical company, a techcompany. Couldn't be a food and beverage

(03:04):
company, or major oil and gascompany or chemical companies. We're building everything
from renewable plastics plants right now throughtraditional oil and gas facilities across the spectrum,
and our clientele predominantly are the engineering, procurement and construction firms globally.
But we do work with the endusers as well, or we work with
construction only contractors. I imagine whenit comes to international that must be growing

(03:29):
exponentially. It really is. Andwe see, you know, kind of
the global energy transition that's happening acrossthe world right now. There's been a
huge underinvestment globally in our energy infrastructurefor probably the last twenty years. And
now you couple that need to rebuildthe energy infrastructure with this energy transition to

(03:51):
bring more renewables and more clean energyavailable to the globe. That has created
a tremendous amount of demand globally.Our offices in the Middle East, in
Bahrain, in Abu Dhabi, andwe're currently expanding into Saudi Arabia. Now
there we're seeing not only traditional oiland gas type of projects, but we're
seeing a lot of green energy projects. We're seeing green hydrogen, blue hydrogen,

(04:14):
We're seeing wind solar, We're seeinga lot of clean natural gas,
a lot of other types of thingsthat are rather relatively new to that region.
You know, I want to goback to my dad again, when
he was working with Ralph and Parsonsback in the late seventies. He worked
on Jetta, Yamboo and all thoseon the Red Sea there, and they
were building brand new cities. Ofcourse, oil was big back there,
but it always amazed me that theSaudi seemed to be upfront when it came

(04:36):
to anything new and innovative. AndI guess working with you, they continue
to do that, don't they.I would absolutely say they are on the
cutting edge. They're not afraid toinvest in technology, they're not afraid to
try new things. We're seeing thatnot only in Saudi Arabia. We're seting
with ADNOC in Abu Dhabi. Thenational old Company of Abu Dhabi is ADNOC,
and they are investing in new technology, new green technology. So we're

(05:00):
really seeing a lot of evolution inthat region as well as the US and
Europe. Michael, I get achance to talk to a few people like
you from time to time, andmy curiosity always speaks about how we're doing
in the US compared to the restof the world, and sometimes they hear,
well, you know, we're doingpretty good, and sometimes we're a
little bit behind in our thinking.But the technology is there, but how
are we doing overall? When itcomes to what you do and working with
all your clients domestically and international.Where do we rank on the world stage

(05:24):
as far as what you're doing.You know, there's a huge push here.
We're seeing a tremendous amount of infrastructuregrowth. Here. The scale of
opportunity is larger. In the MiddleEast, the investment size is larger.
As a market. However, Iwould say we are one hundred percent as
active in the US. There's justas big a push the capital investment again

(05:46):
in Saudi Abu Dhabi and leather MiddleEastern regions. These are large government backed
entities as opposed to here, whereyou have more of privately held or public
companies that are making the individual investmentthemselves. So therefore the scale of each
individual investment may be smaller in theUS, but in total they're about the
same. Michael, I always liketo ask our president, CEOs and leaders

(06:10):
about to success stories and also somechallenges. We always use that adage that
it is WINDI us at the top. And with that said, what kind
of challenges is the industry presenting rightnow to you? You know, the
biggest thing we have is there's beena big shift over the last probably ten
to fifteen years where fewer and fewerpeople are going into the craft and domestically,

(06:32):
and as we look at that,that presents a challenge. We are
a big employer of craft labor andvery highly skilled craft labor. And if
you're depending on which database you lookat and which agency you know you read
and listen to, here in theUS alone, we're short somewhere between two
hundred and four hundred thousand welders currently, with that expected to grow. You

(06:57):
know, they're just not enough peoplemoving into the craft labor that can provide
a tremendous earning potential for their family, provide a lot of stable and secure
income, and we're just seeing notenough people moving into that. You know,
it's interesting that you mentioned that becauseI read an article over this past
year about how the trade school industryis going down, and this goes to
the numbers that you were presented there. I remember when I went to school

(07:19):
back in the eighties for high school, trade schools were a really big deal.
So I'm curious about how you're goingto get through this issue. Does
this mean hiring people internationally or youknow, is it education about you know,
telling people we do need these tradeschools. What are we going to
do about this, you know,I think that that is the question that

(07:40):
we face each day. We aretaking hands, taking matters into our own
hands. We're starting our own trainingprograms. We have taken one up at
our Walker, Louisiana facility and itwas implemented by the employees themselves where people
donated their time in the afternoon.Senior welders donated their time to help train
new elders and take them through theprocess. And very proudly, we just

(08:03):
graduated nine folks out of that programand all nine of them past their welding
certification on their first attempt. That'sabsolutely and it was really done. It
really is and so that's a smallpiece of what we can achieve. But
we've got to continue to grow thatand we've got to work with the local
trade schools. One of the thingswe're doing is we're going to offer a
scholarship program to our current employees andtheir families and try to get folks into

(08:26):
these technical schools and bring their technicalcompetence up learn these trades so we can
perpetrate what we do into the future. And folks, there's a recurrent team.
When we talk to presidents and CEOsit's about getting creative and that's what
Michael and his team are doing rightnow. They get those welders trained up
and ready to go. I didwant to ask you about a success story,
and I'm sure you have many thatare you're very fond of. Maybe
there's one close to your heart,Michael, But over the last maybe two

(08:48):
three years, is there a successstory where you said, you know what
the Shaw Group and we knocked thatone out of the park, that was
a real good one. Well,I think you know, the Shaw Group
is a long standing ground started inan eighty seven, grew itself and really
morphed in early two thousands into amuch larger company. My partners and I
had the pleasure of buying the businessback in two thousand and twenty and starting

(09:15):
kind of over with the rebranding ofthe Shaw Group and starting over. So
the growth that we've achieved in thelast two and a half years against approaching
three years in June, is thatis our number one? You know.
I think pride and enjoy that we'veaccomplished so far as seeing the growth,
we've grown multiples over our two thousandand twenty numbers, our two twenty one

(09:35):
numbers, our two twenty two numbersand so on. Our forecast for two
twenty three is well above everything we'vedone to date. What that's done and
what we're very proud of is hasprovided a lot of security for our employees.
We employ now over eighteen hundred people. Within the next three months,
we expect that to be closer totwenty two hundred people and with continued growth

(09:58):
beyond that, and to provide thatsecurity for our families. A lot of
the folks have worked here at ourbusiness for over thirty years. There's generationals.
There's fathers and sons and daughters andgrandfathers and grandmothers and people that have
worked in this organization and been herea long part of our group, and
to give them a future is abig, big part of what we've accomplished.

(10:20):
Very cool. Funnily enough, Ihave talked to so many president,
CEOs and leaders that they started theirtitle their company right before Covid, and
you did too when you bought backthe company. So I am curious because
I ask everybody this, was thereany pivoting that you had to do and
how how did it work out?Because we all had to change personally and
professionally and where did it take thecompany to today Over the last three years.

(10:43):
A lot of sleepless nights about youknow, we when we bought the
company, we really didn't know whatCOVID was going to mean, how long
it was going to affect the constructionindustry, and just candidly, for twenty
twenty in the vast majority of twentytwenty one, there was very little major
construction going on domestically and or internationally, to be candid with you, the

(11:03):
international markets came back a little sooner. They remobilized a lot of the projects
in the international markets, which allowedus to kind of pick up in our
Abu Dhabi, Bahrain shops. Theywere able to start picking up work a
little sooner, and eventually we've seennow the US catch up and catch up,
you know with a Feurer is cominghard and fast. In the US.
We've had to learn how to dobusiness a little differently as we have

(11:26):
more and more young people joining ourbusiness. Those of us that are i'll
say a little more senior. Ihave spent time out here, and you
know, we've done business one wayfor the last forty years. Young people
joining the business that they have adifferent mentality, a different approach to things,
and you know, bringing the bestof both of those worlds together.

(11:46):
And I think COVID I mean literallythe little things like working from home and
that type of stuff was a realadaptation for some of us. And so
we've found a happy medium in that. I've also talked to our leaders about
this that the one that did vibeit, they actually came out better and
smarter. Would you agree, Iwould absolutely say without question, we've adapted
to our marketplace and we're getting betterevery day. All right, well said,

(12:09):
I did want to ask you aboutthe future. And everybody's always warning
about what's next, whether it's yourphone, whether it's clean energy, whether
it's anewables, anything out there.And I know as a leader you're always
thinking about that and you're educating yourselfwith the smart engineers and the people that
you work with on your team.With all that said, for the laming
audience, including myself, what canwe look forward to in the next five,

(12:31):
ten, twenty years when it comesto what you do? You know,
it's interesting our business has been whatI call a bricks and mortar business
for many many years, has notlent itself to a lot of technology innovation.
Shaw has always been for the lastthirty years, has been a leader
in welding technology growth and expansion intonew things and finding ways to automate or

(12:52):
better ways to do it. Weare making a major investment in our company
this year to automate a lot ofthe processes that we do. And initially
people think, oh, automation,you're going to replace jobs. No,
just the opposite. We're going toautomate more of the mundane processes that we
do and provide let our welders dohighly skilled work. Let them do and

(13:16):
what that we anticipate this doing iscreating a tremendous more demand for what is
we do, the fabrication of pipeand modules and allowing our craft to get
more specialized and work on the veryspecific things that we cannot automate. So
we're investing heavily in automation, notonly within welding technology, but automation of

(13:37):
behind the scenes, how do weestimate better, How do we use AI
to do better jobs of estimating?How can we automate processes? How can
we transform the way we do things? So we're really we're investing heavily both
in intellectual capital as well as physicalproperties and automation within our facilities outstanding.
So the future is bread. Ididn't want to ask you a little bit,

(13:58):
Michael, about philanthropick and charity stuff. I know that you're very busy.
I know your team's very busy.But when you get a chance to
do anything charity wise, whether it'spersonally or with the Shaw Group, well
what are you into? So Iwill tell you that the Shaw Group we
have a tremendous presence in each oneof the communities we work in, and
I'm very proud to say our shopsare heavily involved in those communities, and

(14:20):
that the employees themselves get heavily involved. They do fundraisers, and they support
the local baseball teams, the fayou name it, and they get heavily
involved in that. And we tryat Shaw a match or participate in anything
that the employee base comes up with. And then corporately, we do participate
in a lot of different events.We tried as we are a major sponsor

(14:41):
of a United Way golf tournament everyyear. We participate in a lot of
our customers events. Our customers arebig, the big major world companies.
A lot of those folks they sponsorlarge events each year, and we make
sure that we have a major presenceof those and support them throughout that out,
Sandy Michaels, you wrap up ourconversation. If there was one takeaway

(15:03):
for our listeners that had just beenintroduced to the Shaw Group today as they
hear this conversation, what would thattakeaway be that you would want to leave
them with. You know, Iheard a great statistic today from our head
of estimating eighty three percent of thework we receive today is repeat customers,
and that's a big deal to us. We want to serve our customers well.
We want to continue to innovate,continue to work with our customers and

(15:26):
give them what they want. SoI think the major takeaway is we're trying
to change the way our industry hasworked for years. We're trying to change
the way our industry is perceived,and we're trying to be a great partner
with our customers. Outstanding and wellsaid Michael. If anybody wants any more
information or maybe even look at acareer or anything else and they want to
learn about the Shaw Group, howdo they do that? Well, I

(15:46):
think the number one way to dois you can make contact through our website,
which is simply the SHAWGRP dot com, or please feel free to reach
out to any of us that linkedIn's a great way to reach us.
We have a lot of ads onLinkedIn, as well as other social media
sites that I'm not familiar with,but I do know LinkedIn as one that

(16:10):
we do a lot of advertising on, and I would encourage people if you
have any desire to come and workin a business like ours. We are
hiring daily. I think we havesomething like three hundred and fifty job openings
in the US today and growing,and in the Middle East we are growing
our presence there by another couple ofhundred. Michael, I can't tell you
how much I appreciate your time inour conversation. Thank you so much for

(16:33):
joining us on CEOs you should knowand continued success. Appreciate it very much.
Thank you,