Discovering the Advantage of Differentiation
Rabine says that in the early 1990s the company started to understand that being different and offering something different to customers would help set the company apart from its competition. He says their first Ray-Tech infrared machine, the introduction of stamped asphalt, hiring its first pavement engineer in 1995, and expanding its service offerings all were early efforts at differentiation.
“That gave me the ability to get in front of the customer with a solution none of my competitors had,” Rabine says.
And Rabine developed its slogan, “Discover the Difference,” to highlight its differences. “It forces the customer to ask the question ‘What IS the difference?’ and gives us the opportunity to tell them. We have more options for customers than they may be aware of,” Rabine says. “With our company a customer can get concrete or asphalt. We can give them the life cycles and costs of both and we don’t care which way they go because we can provide both. That means we can provide the best match for solution to their budget.”
Creating Separate Companies
The decision to divide the company into separate, individually focused service companies came partly as a result of Rabine’s realization that he needed to differentiate. Rabine Paving became the commercial paving business, Rabine Residential had a driveway focus, and Pavement Solutions was the contractor’s pavement maintenance arm.
“As we were growing and getting more involved with different types of customers I started to realize the industries were different and that we would benefit from industry-specific leadership in each business ” he says. “I don’t believe, for example, that residential paving expertise and leadership is the same thing as commercial paving expertise and leadership.” Each leader of a Rabine Group company must be passionate about the market they serve and strive to be the industry expert in that market.
With three companies Rabine needed people to lead each one, so while he ran Rabine Paving he hired Mike Pett to lead Rabine Residential and John Butler to lead Pavement Solutions. In addition Rabine hired Mike Johnson to improve and solidify the contractor’s operations and he is now Rabine Group president. “He’s built a great group that handles operations, establishing great processes and systems for all Rabine Group companies.”
Perhaps the biggest advantage Rabine gained from creating smaller, separate companies concerned accountability of each company.
“By separating the companies it forced each one to be profitable on its own and improve in its own niche,” Rabine says. “Losses can get buried when all segments are under the same umbrella but separating the companies gave us the mind set that each company had to be the best in its sector and be profitable in its sector.”
“Weed and Feed” Creates a Sustainable Business
Around the same time Rabine split itself into various companies another major change occurred that Rabine eventually used to redefine his business: In 2002 Rabine’s paving business became a union operation. Prior to 2002 the contractor had been a non-union shop catering to clients who didn’t want to deal with unions and who wanted only low-bid contractors. But when Rabine became a union shop they could no longer compete for those types of clients.
“We had to evaluate the business to adjust for the higher cost of doing business, and we decided to focus on Rockford and Chicago areas that were accustomed to working with union labor,” Rabine says. So the contractor bought an HMA plant in Belvidere (near Rockford), limited business with customers demanding non-union labor, limited working for customers that demanded lowest-bid contracts, and started focusing on bigger properties.