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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.