Gray Construction CEO Featured in The New York Times

Gray Construction CEO and Lexington, Ky. Mayor-elect, Jim Gray, recently visited Mayor Michael Bloomberg in New Your City to discuss city management strategies. The New York Times did a feature on Jim’s visit and highlighted Gray Construction’s history and customer/relationship driven mentality. Please read the article from The New York Times below.

Why C.E.O.’s Should Stop at City Hall

By Joe Nocera 

Published: December 10, 2010

This past Wednesday, Jim Gray, a wealthy construction executive from Lexington, Ky., flew to New York City for a whirlwind round of meetings. Mr. Gray, 57, is the chief executive of Gray Construction, a family-owned business that builds large industrial facilities for the likes of Toyota, Siemens, Caterpillar and other giant manufacturers. It has around $500 million in annual revenue.

In addition to running a successful company, Mr. Gray is Lexington’s new mayor-elect, and it was in that capacity that he had come to New York. Although he had filled his day with various appointments, the real reason he was here was that Michael R. Bloomberg, New York’s billionaire mayor, had agreed to grant him an audience. Thus one wealthy-businessman-turned-mayor was hoping to learn from another wealthy-businessman-turned-mayor, a little like a rookie learning from a wily veteran.

“I want to see what his org chart looks like,”  Mr. Gray told me a few hours before the meeting, using business shorthand for organizational structure. “I want to see the systems he uses for tracking performance.”  At Gray Construction, Mr. Gray and his brothers long ago instituted an “open office” concept, where everyone, from assistants to the chief executive, sat in one large, open room. That was the same model Mr. Bloomberg adopted when he got to city hall, and Mr. Gray couldn’t wait to see it. His excitement was palpable.

By happy coincidence, Wednesday was a big day for Mr. Bloomberg as well. That morning, the mayor made a major speech at the Brooklyn Navy Yard – a speech that promoted what Mr. Bloomberg described as New York’s economic successes, and contrasted those successes with the failings of the federal government to revive the country’s economy.

“The economic policies that we have pursued to drive this growth have been neither left nor right, liberal nor conservative,”  Mr. Bloomberg said. He criticized both Democrats and Republicans in Washington for putting ideological purity over pragmatism – in effect, for not acting more like him. He laid out an agenda – lower business taxes, “smarter”  regulation, immigration reform, job-training programs, promotion of innovation – that, he said, would help put people back to work. What the country needs, according to Mr. Bloomberg, is “centrist solutions to our toughest economic problems.”

It was the kind of speech that politicians often make when they are laying the groundwork for a run at higher office. Back during the early stages of the last presidential campaign, there were rumblings that Mr. Bloomberg might throw his hat in the ring. After his speech on Wednesday, there was similar talk, which Mr. Bloomberg and his top aides were quick to dampen. The reason for his speech, they insisted, was that the mayor had become frustrated at Washington’s inability to help get the country back on its feet. His immense wealth and prominence gave him a bully pulpit – and this seemed like the right time to use it.

What I wound up wondering about, though, was whether Mr. Bloomberg’s centrist, business-oriented approach could even work at the federal level. Or whether successful businessmen like him – and Mr. Gray – are, instead, ideally suited for only one job in politics. Namely, the job they have.

Mayors make miserable ideologues, and ideologues make miserable mayors. Though the story may be apocryphal, they say that during the Vietnam War, Richard J. Daley, the legendary mayor of Chicago, found himself seated at some event next to John V. Lindsay, who was then New York’s mayor. Lindsay had become increasingly critical of America’s involvement in the war. Daley leaned over to Lindsay and said, “Your job is to pick up the garbage.”

And so it is. It is also to oversee the police, fire and school departments, and to make sure the potholes are filled, the snow is removed and the budget is balanced. An energetic mayor can create jobs far more directly than the federal government – by helping lure new industry to town, or giving companies tax breaks to help them expand. He or she can push for new development – and then, with any luck, preside over the ribbon-cutting when the development is complete. It is probably the most hands-on job you can have in government, and the one where you can most easily see the fruits of your labor.

Which is also why it appeals to businessmen like Mr. Gray and Mr. Bloomberg. It is a job that lends itself to the pragmatic cast of mind that allowed them to become successful in the first place. Take Mr. Gray, for instance. He was 19 when his father, who had founded Gray Construction after World War II, died of lung cancer in 1972. The company that Mr. Gray, his brothers and his mother inherited was small, with maybe $1 million in revenue, and the Grays floundered at first. (Mr. Gray came on full time when he graduated from college.) They righted the ship and set it on a new course, by shifting gears – pragmatically – taking advantage of a new trend in business.

They saw that Japanese companies had not only begun to compete successfully with their American counterparts, but were beginning to build factories in the United States. In 1979, Gray Construction built a Toshiba factory in Tennessee, but the company’s real break came in the mid-1980s, when it was one of four companies hired by Toyota to build its first auto plant in America. Since then, Gray Construction has been one of the dominant companies in building factories for foreign automakers in the United States.

Jim Gray pushed for his company to go to an open office after he saw the concept in Japan. (“It’s a competitive advantage,” he said. “It lowers the palace intrigue and allows everyone to know what is going on.”) And in shifting the company to this new customer base, Mr. Gray and his brothers learned a great deal about the importance of giving the customer what he wants.

“Half of our work now is with foreign companies,” said Stephen Gray, Jim’s younger brother, who will become chief executive when Mr. Gray moves into Lexington’s city hall. “The last thing they want to hear is, ‘This is the way we do it here.’ You have to listen, listen and then listen some more. It requires an extreme amount of patience,” Stephen Gray added. “But they are the customer.”

The election last month was Jim Gray’s second run for mayor. The first time, a few years back, he lost. He was losing this time, too, until he hired a political consultant who turned the campaign around in part by stressing Mr. Gray’s business acumen.

“A city is a business,” said the consultant, Doc Sweitzer, who, as the co-founder of the Campaign Group, has managed a number of mayoral campaigns. “I wanted to show that Jim’s business skills and management abilities would result in better services and a better bottom line for the city.” With Lexington facing the prospect of a $25 million budget shortfall – around 8 percent of the budget  – that is precisely what voters wanted to hear. It turns out that voters are pretty nonideological when they are casting their ballots for mayor.

For his part, Mr. Bloomberg has been nothing if not a customer-focused mayor, striving for efficiencies at every turn. He has combined agencies when he thought that made sense. He put GPS systems in ambulances and in garbage trucks so that the city could track them – and figure out whether the job could be done just as well or better with fewer of them. He had managed to reduce the number of police officers without causing crime to go up. Fire fatalities are down – even though there are fewer firefighters.

And he measures everything, obsessively. He installed something called the Citywide Performance Reporting dashboard, an online database that allowed him – and everyone else in city hall – to monitor the city’s various agencies. In that open city hall bullpen where he and his top aides sit, a large flat-screen TV looms overhead, flashing statistics showing real-time performance in areas that Mr. Bloomberg tracks. “One of the key things we showed is that governments should be measured by their results and not how much they spend,” said Edward Skyler, a former deputy mayor who is now an executive at Citigroup.

People who know Mr. Bloomberg well say that his management style has changed since he moved from Bloomberg, the company he built, to the mayor’s office. He’s become more willing to delegate, and understands that it takes much longer to get anything done in government than it does in business. He’s also been lucky in that he has a weak City Council, and has largely been able to do what he wants, with little serious opposition.

Is Mr. Bloomberg’s record perfect? Of course not. Early on, he agreed to union contracts that will swell the cost of pensions. He does not accept criticism easily. And his willingness to shove the city’s term limits overboard so that he could run for a third term was nothing if not an act of hubris – a trait he shares with many successful chief executives. Still, few would argue that New York has not improved in the time he has been mayor.

What you hear, if you put your ear to the ground, is that Mr. Bloomberg really believes he would be a good president – and that the main reason he is saying he won’t run is because everyone around him keeps telling him he can’t win. They’re almost surely right: however much Americans like pragmatic, business-oriented mayors, they also want presidents with a clear-cut ideology. Senators and congressmen would not roll over like the New York City Council, especially not to a centrist who commanded no loyalty from either party. In the end, Mr. Bloomberg’s approach can fix a city much more readily than it can fix a country.

None of which bothers Jim Gray a whit. After he returned to Lexington, I called to ask how the visit had gone. Very well, he replied; they discussed a range of topics, like how to attract jobs, how to hire department heads and how instill confidence in a city. Mr. Gray had enjoyed watching Mr. Bloomberg hold sway in the city hall bullpen. “It was inspiring,” he said.

Next month, when Mr. Gray takes office, it will be the rookie’s turn to show that he’s learned the veteran’s secrets.