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The Honolulu Advertiser
Posted on: Tuesday, January 15, 2008

'You always want to be No. 1,' entrepreneur says

Full interview with Robert 'Bob' Dewitz

By Curtis Lum
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

CEO Bob Dewitz says one of his biggest challenges is finding enough qualified workers to expand his business.

JEFF WIDENER | The Honolulu Advertiser

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Age: 52

Title: Chief executive officer, owner

Organization: American Electric Co. LLC, HSI Electric Inc., CraneTech LLC

Born: Nottingham, N.H.

High school: Dover, N.H.

College: University of New Hampshire, B.A., economics/ business; MBA, University of Hawai'i

Breakthrough job: While working as a vice president with Pacific Marine/Honolulu Shipyard in the early '90s, I had an opportunity to buy its marine electric company, HSI Electric. By substantially growing HSI's revenues and profits, I was able to acquire American Electric Co. as well as invest in, or own, a number of other business ventures in Hawai'i, the Mainland and Guam.

Little-known fact: My first paying job, at age 13, was working on a poultry farm where my duties involved a large shovel and even larger piles of chicken manure.

Mentor: I am indebted to a great many people who have helped me along the way by sharing their wisdom and experience. However, head and shoulders above them all is John Finney, owner of Pentagram Corp. and my boss in the '80s. Being a consummate entrepreneur, he taught me how to put together a business deal to create value, and he gave me the confidence to ultimately own my own business.

Major challenge: Our business is critically dependent upon the technical skill of our tradespersons. We can't find enough good technical people to expand our business as rapidly as we would like to.

Hobbies: Running (including marathons), reading and vintage British sports cars

Books recently read: "Stalin: The Court of the Red Tsar," by Simon Sebag Montefiore; "Hirohito and the Making of Modern Japan," by Herbert P. Bix; and "Gulag: A History," by Anne Applebaum

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Q. How is the shortage of qualified workers affecting your expansion plans?

A. It makes it very, very challenging and we spend a lot of money recruiting people, bringing in people from the Mainland and training our own people. It's one of the biggest challenges to support the growth and it's requiring a huge investment on our part to sustain the quality of people we need to support the growth.

Q. Why do you think there is a shortage of qualified workers?

A. It is more a result of a lack of people entering the field in general. We sort of failed to give value to the trades people in our society so a lot of young people don't want to go into the trades, although it's a very good living. They just don't see it as being glamorous or a lifestyle career so there aren't a lot of people going into trade and perhaps not the best and the brightest.

Q. What is American Electric's position here in Hawai'i?

A. We're probably No. 2 or 3.

Q. Is that a comfortable position for you?

A. You always want to be No. 1.

Q. Do you have plans to make it No. 1?

A. Last year alone we acquired two companies. We acquired a small contractor in Kona to expand geographically there. We acquired a telecom company on O'ahu to expand into that sector of the electrical industry. So we're always looking for acquisition opportunities or other growth opportunities.

Q. Why did you purchase Volt Telecom Group?

A. Data, telecom, information systems are a huge part now of construction and it's going to grow. So that's a real growth sector within the electrical industry and it's one that not a lot of traditional electrical contractors delve into. It's a great opportunity.

Q. What other areas are you looking at?

A. We're looking to expand to Kaua'i. We're looking for an acquisition opportunity on Kaua'i. There are some of the speciality segments of the electrical industry that we'd like to get into, security systems and maybe fire alarm control systems a little bit more.

Q. Is it difficult to keep up with changes in the industry?

A. If you're always aggressively looking for the new opportunity, you're going to grow faster than your competition. We've spent the last two years developing a product and service line based around maintenance because we anticipate that when the slowdown in the construction industry occurs and it will occur we will want to have a solid revenue stream that's not going to be as volatile.

Q. How did you wind up in the electrical and construction industries?

A. In the early '90s I finished my MBA and I thought I would try and freelance a bit as a business consultant and I ended up being retained by Pacific Marine, which owned Honolulu Shipyard. After working as a consultant for them they hired me on as a vice president and through that relationship I had the opportunity to purchase Pacific Marine's marine electric division, HSI Electric, and then purchased American Electric Co., a long-established firm here that was founded in 1946. I started from scratch Crane Tech Services, which is a crane maintenance repair company. Along the way I had an opportunity to buy a few companies on the Mainland in related electrical businesses.

Q. Was it your intention to be a business owner?

A. No, it wasn't. I had an opportunity to work for John Finney in the 1980s. He was the owner of Pentagram Corp., which was a pretty prominent local company at that time. He was a real entrepreneur and kind of opened my eyes to the potential of owning your own business and what the rewards of that could be, particularly the personal freedom.

Q. But wanting to do it and actually doing it are two different things. How did you raise the capital to do this?

A. My MBA was a great tool to give me the appreciation for the analytical side of getting into business and putting together a good business plan. I had some personal savings that I put into it and went to the banks with a good business plan and a credible idea and fortunately the banks stepped forward.

Q. How did you choose contracting?

A. It was very intimidating. When I purchased HSI Electric as a marine electric company I understood that business because it fit in with my previous background as a naval officer. American Electric as a construction company was a new entity to me and I probably wouldn't have considered purchasing it except that I had a strong management team that would stay in place after the purchase. That management team is still with me and I'm very grateful to have them.

Q. So your management team has a big role in running your companies?

A. I let them run the operations and I bring to the table the financial expertise and oversight and management to make sure we don't grow too quickly, but that we grow aggressively.

Q. You're from New Hampshire and established yourself here. How did that happen?

A. After graduating from college in New Hampshire I got a commission as a naval officer and when they asked where I preferred to be stationed, Hawai'i sounded pretty good and I got stationed at Pearl Harbor. I finished my naval service here in 1981 and I moved to Florida. Hawai'i had spoiled me on the warm climate and I went back to Florida and was working in the ship repair business. That's where I started my MBA and when I made the decision to move back to Hawai'i. I finished my MBA here.

Q. Besides the employment challenges, what other challenges do you face?

A. One of the challenges for small business is working capital. With a marginal tax rate of 40 percent, even if you're a very profitable company, 40 percent of your cash that you earn every year is going to the government. If you're a growing business, even though you're very profitable, you have a very hard time generating enough cash to finance your growth. Lacking that, you end up having to go to banks and pay a lot of interest to support your growth, as opposed to a public company, which can issue stock and raise funds that way.

Reach Curtis Lum at culum@honoluluadvertiser.com.