On Dec. 18 of last year, Damien McInnis looked at the empty space under his family’s Christmas tree and worried. “There was nothing,” says the father of six.
McInnis owns Picasso Brothers Painting, in Missoula. He’s a big guy with gray hair, blue eyes and a tidy goatee. On a brisk Friday afternoon, he’s quick to crack a joke from behind a desk in his Inez Street office.
When he was a kid in Toledo, Ohio, McInnis wanted to be a rock guitarist. Today, he’s still serious about his guitar playing but his priorities have changed: He’s responsible for a family and up to 15 employees. He studies marketing strategies and customer service. Growth plans are charted in black ink on a wall-sized whiteboard across from his cluttered desk. The work has paid off, he says proudly. Last year, Picasso Brothers sales topped $305,000—its biggest year yet.
McInnis grew excited in 2010 when Wal-Mart and the Idaho-based general contractor Engineered Structures hired Picasso Brothers, along with 103 other subcontractors, to work on a yearlong store expansion and renovation of the retailer’s Highway 93 South Supercenter, in Missoula.
Though McInnis was still working on the project, payments to Picasso Brothers stopped in July of 2011. McInnis recalls that an Engineered Structures project manager told him that payment was just around the corner, but, says McInnis, “One week would lead into the next week would lead into the next…and it never materialized.”
In October, McInnis filed a $50,348 mechanic’s lien on Wal-Mart’s Highway 93 South property. The lien lets subcontractors such as McInnis claim a portion of a landowner’s property.
In the more than two decades McInnis has done business in Missoula, he says, he never before had to file a lien on a job.
He joined a growing club: McInnis is one of 11 subcontractors and suppliers who have filed liens against Wal-Mart in Missoula County in the last year.
McInnis says he had to file the lien; he was tens of thousands of dollars short of where he’d expected his business to be heading into winter, a time when tradespeople like him like to have some money salted away, and he couldn’t pay his employees. He turned down another job because he couldn’t afford to buy supplies, he says. “Every day that went by,” he says, “things got worse.”
On Dec. 19, Engineered Structures offered to settle with McInnis. The company said it would pay him $14,300, rather than the $50,000 McInnis says Picasso Brothers was owed.
McInnis took the money.
“They just wave it in front of your face,” he says. “Because they’re cash-strong, their position is strong. They could wait another six months to pay me…I needed to pay bills. I wanted to give a Christmas to my kids.”
McInnis’s story is similar to that of dozens and perhaps hundreds of subcontractors and suppliers across the country. Tradespeople from Missoula to Kalispell and California to New York—most of whom have worked under different general contractors—say Wal-Mart is notoriously bad about paying the people who build and renovate its stores.
“The only way to describe them is ruthless,” says Herb Lande, who owns Imperial Construction Associates in Joliet, Ill. Lande says he waited almost two years to get paid $70,000 he was owed by Wal-Mart and is still waiting for payment for another job for the giant retailer.
“I do Costco all the time, and Costcos are amazing,” he says. “They treat their employees well. And Targets are good…Everyone’s got a better track record than Wal-Mart, everybody.”
‘It’s not unusual’
A woman wearing a blue bandanna loads bottles of a red sports drink into a minivan parked in front of Wal-Mart’s Highway 93 South store on a recent sunny Saturday morning as Wal-Mart greeters stand at the front door. “Good morning!” say the women in blue vests. “Welcome to Wal-Mart!”
Inside, old men in khakis walk next to women pushing shopping carts and bleary-eyed teenagers who carry cereal boxes. Wal-Mart’s 2010 expansion enabled the retailer to add what amounts to an entire grocery store, within about 145,000 square feet. Now, just about everything one needs to sustain a modern lifestyle is here—shoes for $10; sweatshirts for $6.97; a meat aisle overflowing with pork, beef and chicken that’s just steps aways from a pharmacy.
Sam Walton launched the first Wal-Mart in 1962 in Rogers, Ark. By 1980, the company had grown to 276 stores in 11 states. Wal-Mart opened its first Sam’s Club membership warehouse in 1983. In 1988, Wal-Mart rolled out its Supercenters, adding groceries to its already formidable offerings. Today, it does more than 200 million transactions a week in more than 8,500 retail stores across 28 countries. The company had sales of $419 billion in fiscal year 2011, making it the biggest corporation in the world. According to The Economist, only the United States Department of Defense and the Chinese People’s Liberation Army have more employees.
Wal-Mart Spokesperson Delia Garcia says that it’s not unusual for payments to subcontractors to get hung up amid large and complex commercial building projects. “It’s not specific to Wal-Mart,” she says, adding, “It’s not unusual for there to be continued negotiations between the general contractor and the subcontractors.”
Also, Garcia says, most of the suppliers and contractors that worked on the Missoula project did not file liens. “There are only a handful of subcontractors where [Engineered Structures] is working to resolve payment…This is really a matter to be discussed with the general contractor and the subcontractors they hired.”
Engineered Structures, based in Meridian, Idaho, has overseen 79 Wal-Mart construction and renovation projects. According to its website, each of those contracts was worth between $5 million and $25 million. Its president, Neil Nelson, says he appreciates the work that Missoula-based tradespeople did on the Wal-Mart Supercenter. Most of the liens they filed have been released now, he says.
Given that the Missoula project only ended in October of 2011, Nelson says, it doesn’t seem to him that the tradespeople had to wait too long to be paid. “We’re still within what I consider a commercially reasonable time frame.” Nelson adds that he’s seen an increase in the number of such liens since the real estate bubble deflated. Contractors and suppliers have become more cautious, he says, which makes them more likely to seek protection by filing a lien. “Suppliers are less patient with subcontractors,” Nelson says. “Their fuse to get paid is shorter than ever.”
According to the Missoula County Clerk and Recorder’s Office, 62 mechanic’s liens were filed in the county in 1986. Filings began to increase in the mid ’90s, jumping from 46 in 1993 to 107 in 1994. In 2008, 242 mechanic’s liens were filed. That number dropped to 105 in 2011.
‘Like being bullied’
Jeff Brochheuser owns Butte Steel & Fabrication in Chico, Calif. He still has a diagram of a roof plan for a new Wal-Mart Supercenter that he worked on in Fairfield, Calif. Tennessee-based EMJ Construction worked as Wal-Mart’s general contractor on that project. EMJ contracted with Butte Steel to assemble the steel roof on the Fairfield Supercenter. Brochheuser estimated the job would take 4,500 hours to complete. Based on that estimate, his contract was for $415,000. But Brochheuser says EMJ asked him to complete tasks that went far beyond the scope of his contract. Rather than the 4,500 hours Brochheuser had estimated for the job, he says, Butte Steel logged 12,000. That translated to an additional $600,000.
“The thing about Wal-Mart, how they really get you, is their change-order projects,” Brochheuser says. “They force you to do a lot of extra work.”
Brochheuser was paid for his original contract, he says, yet was nearly forced to declare bankruptcy because EMJ and Wal-Mart refused to pay him for $600,000 of additional work. When he contacted Wal-Mart, he says, he was told it was EMJ’s responsibility. So Brochheuser sued Wal-Mart. He was able to avoid an expensive and potentially devastating legal proceeding because his contract was governed by the American Institute of Steel Construction’s code of standard practices. According to the AISC handbook, ultimate responsibility for payment falls to the property owner—in this case, Wal-Mart. Brochheuser settled for an undisclosed amount of money.
After a television station reported on Butte Steel’s dispute with Wal-Mart, Brochheuser says, he heard from others with similar experiences. “It’s not just my project, it’s rampant,” he says.
Herb Lande of Imperial Construction in Chicago concurs: Wal-Mart’s general contractors are notorious for their hard-nosed tactics, he says. “When you do extra work for them, they have you on an incredibly short leash where you can’t even break even.”
In Montana, Tom Sliter of Sliter’s Ace Lumber and Building Supply, in Somers, filed a lien against Wal-Mart in March 2010.
Sliter says his company provided $24,000 in cement, lumber and cleaning supplies for Wal-Mart’s new Hutton Ranch Plaza Supercenter in Kalispell. The project’s general contractor, the Henry Carlson Company, of South Dakota, withheld payment for months, Sliter says.
Sliter was one of 12 suppliers and subcontractors to file a lien on Wal-Mart’s Hutton Ranch Plaza property in 2010, according to the Flathead County Clerk and Recorder’s Office.
Sliter says he was forced to haggle with the Henry Carlson Company over who should pay for brooms, lumber and an $1,800 finance charge, among other things. Sliter says he thought about suing but worried he’d be outgunned. He settled for $19,000. “It’s kind of like being bullied,” he says. “I really resent it.”
‘The world’s forced into this Wal-Mart society’
Art Crum’s workshop is set atop a ramshackle property just over the Buckhouse Bridge from Wal-Mart’s Highway 93 South Supercenter, in Missoula. The owner of Crum Construction, he sits beside a wood stove in his cold workshop on a recent winter day. The shop smells like burning wood and motor oil and is decorated with posters of bronzed women in pastel-colored bikinis.
Crum is 75. His father founded the family business in 1951. Art started working for it at 16. He took time out in the late ’50s to become an airplane navigator. He went on to fly with the Air National Guard for seven years, working for Crum Construction during the week.
“We’ve never had more than what we could use,” he says. “I’ve raised my family and helped several other people raise their families.”
Despite his waning energy and the increasing aches and pains that come with age, Crum says, he pulled a couple of all-nighters working on Wal-Mart’s Highway 93 South project in Missoula last year. His company prepped the job site for the retailer’s expansion, dug foundation footings, lay concrete and installed storm sewers, he explains. His contract was for $411,000.
The company started the job in September of 2010, he says. His crew hurried to get it done as winter set in. Crum worked day and night driving the dump truck and front loader.
Change orders brought Crum’s bill for the job to $490,000, he says; Engineered Structures paid him about $440,000. The last check arrived in September of 2011. Crum says he repeatedly called Engineered Structures. “It was always either, ‘Not in the office,’ ‘Not available,’ ‘I’ll call you back in five minutes’…They wouldn’t respond to my email.”
In October of last year, Crum filed a lien for $42,583. He’s yet to see any of that money, he says. The toughest part of not getting paid, he says, is that he hasn’t been able to pay his asphalt and plumbing suppliers. “It’s tough on your credibility and your reputation.”
Crum says that since his father founded the family business, it’s only filed one other mechanic’s lien, in 1964. The difficulty of not being paid what he thinks he was entitled to has been compounded by the slowing of the building industry, he says.
According to the Missoula Public Works Department, $99.8 million was spent in commercial and private construction in 2006. That number dropped to $89.1 million in 2007 and to $54.9 million in 2010. Last year, the trend reversed, climbing back up to $87.8 million.
Gary Linton of GTL Excavating, in Missoula, is no doubt feeling some of the pain of that trend, but he also has a more tangible antagonist. Linton filed a $49,000 lien against Wal-Mart’s Highway 93 South property last October.
“We just all feel used,” he says. “They came to town. They’re big-time. We all thought, ‘Okay, we can work. We’ll get all caught up. We were all of the same mindset. And we’re all worse off now because of it.”
Linton says that now that he’s seen firsthand how the retailer’s “always low prices” affect people who work for Wal-Mart, he’s advised his family not to shop there.
“Okay,” he says, “so we’re getting everything from China. Nothing’s being made in the U.S. anymore. And everybody goes there and buys from them. The world’s forced into this Wal-Mart society—and nobody sees the veil behind the veil.”
Damien McInnis, of Missoula’s Picasso Brothers Painting, agrees up to a point. He’s still recuperating from his losses on the Wal-Mart project, he says. He’s on a budget now. But after he settled for 29 cents on the dollar of his lien claim late last year, where did he go to buy Christmas presents?
“Wal-Mart,” he says. “They do have good prices.”