By Joe Vanden Plas
In some ways, Cleary Building Corp.’s 100,000th building is similar to the 99,999th that preceded it. The building, still under construction, will be customized with its own dimensions — 27-feet wide and 36-feet long — and stand out with custom features such as ash gray sidewalls and gallery blue wainscoting and trim.
The intended use — vehicle, equipment, and additional storage — is hardly novel, but its round-roof design is unique, and when Cleary Building announced the sale of this pre-engineered structure, it moved the family owned business into the six figures in terms of structures sold.
As Cleary Building approaches its 38th year of business, President Sean Cleary describes the milestone sale as “quite a phenomenal feat,” one that not many U.S. construction companies can match. Given that the company was launched in a dire economic period that was, to put it mildly, unkind to new construction ventures, the odds of someday reaching such a milestone were formidable.
“Yes, it’s a great feeling but it’s also a feeling of thankfulness for all the great employees and clients we’ve had,” Cleary says.
Building the builder
Those populations have helped transform a small local builder, headquartered in Verona, into one with 81 offices and three manufacturing plants nationwide. Within these facilities, Cleary Building Corp. manufactures and sells a range of buildings for suburban, agricultural, commercial, residential, and equine uses, including churches, wineries, stores, bus garages, and airplane hangars.
Tom Cleary, Sean’s father, founded the company in 1978 and it wasn’t long before a devastating recession threatened to kill it in its infancy. With double-digit interests rates approaching 20% and historically high inflation reaching 14.76% in March 1980, the business climate wasn’t exactly inviting for residential or commercial builders.
At that time, the majority of Cleary’s structures were agriculture-related, which is why the recession was particularly harmful in the Midwest. “The way that we stayed the course was just taking it one building at a time, being kind of a hand-to-mouth operation, and just being as efficient as possible,” states Sean Cleary, who is now responsible for the organization’s strategic direction and day-to-day operations.
Sean would join the business in 1985 when overall economic conditions were considerably better, although not necessarily for agriculture. Joining the firm his father established was not always the plan for Cleary, but he signed up almost immediately after graduating from UW–Madison.
“When I looked at the business, I thought there were a lot of opportunities at the company, especially as they would expand their product line, and there were a lot of opportunities for growth geographically,” he explains. “I also thought it would be kind of fun to work with my father for a while and get to know who he was.”
At first it wasn’t all fun and games. Imagine two head-strong individuals who had different ideas on how to get things done — one fresh out of college after studying accounting and economics and one having shepherded a business through what was arguably a more severe recession than the “Great Recession” of 2008–09. Ultimately, it was a great experience for the younger Cleary because he got to know how his father reacted under pressure. They would reach a point of understanding, but not before some teachable moments.
“We got a chance to start growing the business together,” Cleary recalls, “and it was really the start of us growing our relationship, not just as a father and a son, but also as two business partners.”
To finally be in sync with his father on the business side was “kind of a cool experience,” and so is Cleary Building’s debt-free status. Funding everything internally, including the construction of additional manufacturing plants and 81 total locations in 35 states that employ a combined 800 full-time employees, provides a competitive advantage that has made Cleary Building more recession-proof than most.
Cleary Building’s debt-free status is partially a lesson learned from past recessions when over-leveraged competitors went out of business due to their heavy debt loads. “We have zero debt,” Cleary declares. “We have no outstanding loans. In fact, we haven’t used our line of credit in 20-some years. Everything is financed internally through growth and profitability.”
Cleary expects profitability to continue, even though the Federal Reserve has just announced its first interest rate hike in nearly 10 years. He isn’t worried about the Fed raising rates too far, too fast because in his view the Fed should have raised rates at its September meeting. Inflation is still low, and since Ben Bernanke took over and was succeeded by Janet Yellen, the Fed has better communicated its intentions — to the point where business operators can predict what it will do.
“If rates were out of this world already, it would be a different story,” says Cleary. “I would have a different opinion, but the prime rate has been 3.25% for the past 10 years and it’s now gone up a quarter point to 3.5%. We’re fine with that.
“Obviously, [former Fed Chairman] Alan Greenspan is a very smart person, but the Federal Reserve has never been more open than it was under Ben Bernanke and now [under Janet Yellen].”