Looking ahead – The Shaw Group founder has a visionary style, and he doesn’t shy from challenges.
James M. “Jim” Bernhard Jr.
On a chilly February morning, the Shaw Group boardroom, 12 floors above Essen Lane, provides a sweeping view of Baton Rouge. Despite the rain squalls rolling in from the north, the iconic structures of the city are visible: the loom of Tiger Stadium above the LSU campus, the curves of Interstate 10, the Capitol’s thrust, the Exxon-Mobil complex steaming along.
Baton Rouge is Jim Bernhard’s home. This is where he was born. Where he built Louisiana’s only Fortune 500 company. Where he has invested his philanthropy. Where he intends to stay.
It’s two days before the biggest deal of Bernhard’s life—the $3 billion sale of The Shaw Group to CB&I, a deal shareholders approved in December. The executive suite is mostly packed, and Bernhard has little time for sentiment. As is characteristic of his nature, the founder, president and CEO of Shaw is moving forward and looking ahead to the next big thing. He is not one to dwell on the past.
It has been a notable past. What Bernhard began with two other men and $50,000 in 1986 as a pipe fabricator, expanded and acquired its way to become a global giant with 25,000 employees worldwide and $6 billion in revenues.
Bernhard had help along the way, of course, but for the most part, the growth, the acquisitions, the risks and decisions were his. Over the years, his hard-driving, aggressive and visionary style came to define Shaw and to account for its success. Those who know Bernhard say he is determined, intelligent, sometimes brash, seldom wrong.
“He’s a big-picture guy who also has an ability to focus on the details,” says developer Mike Wampold, who developed the company’s iconic office tower on Essen Lane for Bernhard and has worked with him on other real estate deals since. “He is a visionary.”
He is also fiercely committed to his hometown. Many times over the years, Shaw could have, arguably should have, moved. C-level executives commuted from the nation’s power centers every week to work in southeast Louisiana because Bernhard wanted his company’s headquarters here—and believed they should be. In some instances, it made doing business more of a logistical challenge.
But Bernhard is not one to shy away from challenges, and keeping his roots firmly planted in the marshy soil of southeast Louisiana has always been a priority. That’s something that will not change as Bernhard moves to the next phase of his career and his life.
“My priority is Louisiana. I’m Baton Rouge committed. I suspect that will continue,” he said.
When CB&I came calling last summer with an unsolicited offer to buy The Shaw Group, Bernhard was not inclined to sell. But the deal on the table amounted to a 75% premium over the then-price for Shaw stock, and Bern-hard says it was difficult to refuse, given the company’s fiduciary duty to stockholders.
But Bernhard is known for driving a hard bargain, and after looking over CB&I’s offer, he had but one reaction: The deal wasn’t good enough.
“We negotiated up,” he recalls.
In the end, the deal closed for nearly $3 billion, or $47 per share. Though investment analysts were initially tepid in their response to the proposed acquisition, by the time the deal closed they had warmed to it. Shaw has a lot to show for itself.
Its roots go back to the mid-1980s, when Bernhard was working with Sunland Services, a pipe fabrication company. Sensing the potential in the oil field services industry, he broke out on his own with two partners and $50,000 to form Shaw Industries.
Almost immediately, the company took off, thanks to Bernhard’s decision to “reverse integrate,” and move into services needed higher up the supply chain. As a practical matter, that meant Shaw began designing and constructing the plants that used its specialty pipes. From there, it moved into the operation of such plants. The upward expansion continued.
“There was a need from our [piping] clients for engineering and construction services,” he says. “From the excellence of our piping, we expanded.”
In recollecting Shaw’s growth, Bern-hard makes it sound simple. At the time, it wasn’t so easy. It was also extremely risky. But Bernhard is a risk taker with a keen sense of betting right, at least most of the time. His gamble paid off.
The company grew rapidly through the late 1980s and early 1990s, expanding into international oil fields and acquiring domestic services companies. In 1993, Shaw Industries went public, selling newly minted stock as The Shaw Group for $14.50 per share.
“He built Shaw into something with a global reach in a very crowded field. That’s impressive,” says BRAC President and CEO Adam Knapp. “His ability to innovate has also been impressive. We put entrepreneurs like that in a class by themselves.”
Shaw’s expansions and acquisitions continued through the 1990s. One milestone came in 2000, when Shaw teamed with Entergy to create EntergyShaw, a power-plant construction business. That year, Shaw also bought Stone and Webster, an acquisition that got Shaw into the nuclear power business.
“Jim made his own luck,” observes Dan Borné, who, as president of the Louisiana Chemical Association, has known Bernhard for years. “He managed tough and expected the best from those he’d chosen to be on his team.”
In the mid-2000s, Shaw created joint ventures with construction companies in Iraq, Kuwait and Saudi Arabia, and started landing Department of Defense construction contracts. In the months after Hurricane Katrina hit in August 2005, Shaw secured recovery and cleanup contracts with the federal government that totaled some $337 million.
By then, Shaw was a serious player on the global stage, and the work that resulted from Hurricane Katrina instigated an expansion into the environmental services and emergency response industries.
“That brought us international recognition,” Bernhard says. “We set up a community of 1,500 trailers in 15 days near Baker, which would normally be six months’ work. That gave us a lot more confidence. We thought we could do anything. We probably still can.”
While Shaw and Bernhard were making a mark on the Baton Rouge and Louisiana economies, they were also making a difference in the cultural and social fabric of the community. Some beneficiaries of the company’s largesse, like the Shaw Center for the Arts, were game changers for Baton Rouge. Others, like BREC’s Perkins Road Park, are less well-known. All have been important.
“The Perkins Road Park is one of the parish’s largest and most diverse sports complexes,” Bernhard says. “It’s helping thousands of kids.”
The company also touched the lives of thousands of employees in the Baton Rouge area, many of whom have gone on to start their own businesses.
“There are a lot of subcontractors who worked with us and have become big businesses in their own right,” he says. “Because of Shaw’s reach, they were able to gain access to national and international markets.”
Industry experts say Shaw played a critical role in keeping the state’s petrochemical industry highly competitive through some difficult years.
“Jim helped build and maintain our petrochemical industry in Louisiana, and he helped it stay competitive in good times and in tough times,” says Borné. “His legacy is one of a builder.”
But the story of Bernhard’s legacy isn’t finished. As he quickly points out, the sale of The Shaw Group does not mean retirement—not even close.
“You won’t see me in a rocking chair on my front porch,” he says.
Though Bernhard is reticent to discuss his future plans in much detail, he says he is not pursuing the Cabinet post of U.S. Energy secretary. Though his name has been floated as a contender for the position—speculation he fueled by confirming it to a local TV station—he says he’s not interested.
Rather, Bernhard’s post-Shaw life will see him involved in business ventures, charity work, public service and—he says—being more outspoken. He has recently acquired a 1.6-acre lot downtown on Lafayette Street with architect Trey Trahan, who has revealed plans there for a mixed-use development. Bernhard says there are endless possibilities for what he might and hopes to do. Doubtless, in characteristic fashion it will be big.
“Running a publicly traded company … is very limiting to what you can do,” he says. “Past that now, I’ll be a lot more flexible to participate in a lot more meaningful way.”
Education—especially higher education—is one arena in which he potentially hopes to become more involved. As a graduate of LSU and a loyal supporter of the university, he is an outspoken critic of funding cuts to the state’s colleges and universities.
“The long-term effects of major decreases in funding to the major universities will have a 20-year effect,” he predicts. “The deep and continuing cuts to state support for state universities will hurt Louisiana’s future.”
While Bernhard is excited about the next chapter in his life and career, he concedes he had mixed emotions as he left Shaw.
He says he will miss those with whom he worked closely over the years, and he credits them with building Shaw into the global competitor it was when CB&I acquired it.
“A lot of time I get the credit, but 99 and nine-tenths percent of the time the credit belongs to the great group of people who worked at Shaw, from the mailroom on up,” he says.
“We have a great, dedicated group of professionals. The best has no equal and they are the best. I’ll miss the enjoyment of working with all this team.”