Entrepreneur begins again
When the Toronto Argonauts and the Calgary Stampeders clash at TD Place in Sunday’s Grey Cup, Eric Sommer intends to give the spectacle a pass.
It was his company that built the distinctive wooden veil that adorns the stadium entrance.
Seeing that backdrop, even on television, would simply conjure up too many painful memories.
Spring Valley Classic Custom — the firm Sommer founded in the 1980s — declared bankruptcy during the final stages of the stadium’s construction two years ago.
Costs for the $4.6-million subcontract to build the veil had ballooned to $7.1 million after a windand-snow study commissioned by the owner, Ottawa Sports and Entertainment Group, unexpectedly concluded the veil required a significant re-design.
Such were the cost constraints on the overall Lansdowne project that Sommer could not pass along his extra expenses. And so his world changed. “I’m not fully recovered,” Sommer, 54, says today from his home in Ancaster, Ont., “but I have a plan for recovery.”
That he has survived, let alone put himself in position to rebuild a thriving business, is testament to talent, determination, hard work — and the support of family and friends.
During the peak construction phase of the Lansdowne project, Spring Valley Classic Custom employed more than 70.
Nearly all had left for other jobs by the time the firm filed for bankruptcy on Oct 28, 2015.
The first step toward recovery was to establish Spring Valley Corp., a new company 100 per cent owned by his common-law wife, Patti Overgaard. Sommer serves as CEO. The couple discovered this wasn’t the same thing as a clean slate. Sommer’s reputation as formerly bankrupt meant workers and suppliers all wanted to be paid upfront before proceeding. Spring Valley didn’t have the wherewithal to bid on significant projects, not at first.
Sommer raised about $200,000 from family and friends to provide initial capital.
Then he and his wife did something rather unusual.
“We bought an old house and renovated it,” Sommer says, “I worked like a dog.”
When the renovation was complete, Sommer took out a generous line of credit against the increased value of the house, and invested it in the business.
“Now the business must succeed,” Sommer says.
Spring Valley Corp.’s six employees operate out of the same office as before. And here, Sommer got a generous assist from his landlord, who forgave six months of rent and waited another year after that to get paid for ongoing rent.
This left the question of what sort of business Sommer wanted to pursue. He was expert in the art of using wood to transform ordinary buildings into works of art. But this was capital-intensive stuff.
The veil on TD Place incorporates 12 kilometres of Alaskan yellow cedar and 5,000 customized steel connectors — representing millions of dollars in material.
Sommer did a “pivot.” He’s still in the business of using basic material to lend shape to buildings — indeed some of his recent, smaller projects involve the use of wood. But now his raw material of choice is concrete. Over the past year Sommer developed a special brand of “high-performance” concrete.
“It lasts forever and doesn’t burn or absorb water,” he says.
“You can also pour it into any form to create shapes.”
For instance, Spring Valley is supplying intricate, light concrete panels in the shape of lotus leaves for a private home in Hawaii under a $1-million contract. This piece of business came to Sommer by way of a Toronto architect. Sommer also has contracts on the go in Manhattan and Toronto.
The inspiration for the pivot into concrete came from a cousin who had been working independently on a project involving cement panels. Sommer calculated these panels cost just $7 per square foot to make and shape compared to the final price being charged of $20 to $32 per square foot. In that price difference, he saw an opportunity to make some money.
Sommer invested significant sums to develop a unique formula for his brand of cement, then tapped a small network of sales agents to push the product.
During the past two years, Spring Valley has generated about $3 million in total revenues — still 80 per cent to 90 per cent below the sales he enjoyed during his peak years. Against this, expenses totalled some $3.7 million, reflecting in part the costs of developing his product.
But here’s the good bit: Spring Valley has a sufficient number of contracts in the pipeline that it can expect positive cash flows next year, starting with the completion of that project in Hawaii. There are others, too, in Toronto.
“Next year is going to be something to celebrate,” Sommer says.