Case Studies

Gemstar Construction & Development Inc.

Diverse Construction Services in the Southwest

Gemstar Construction & Development Inc. (Gemstar) began in 1983. David Carson, president and co-owner of Gemstar, alongside longtime partner Winston J. Payne, vice president and co-owner, worked in the property insurance and construction sales fields for five years prior to founding the company.
Together, Payne and Carson decided the time was right to make a move. Carson left first, laying the foundations of the business and Payne followed soon after. The duo knew that Carson’s property insurance expertise coupled with Payne’s hands-on construction knowledge would make a formidable team. Together, they entered the specialty niche market of disaster restoration work.
“I’ve been in construction almost my whole life,” Payne recounts. “My dad was in the construction business and as a kid going to school I spent time with him and worked with him over my vacations. I didn’t plan to continue on that course, but I tried a few other things and realized I had a knack for construction, so I got back into it.”
Payne explains that he first worked for Edenwall Construction in Whitestone, N.Y., which was one of the state’s largest companies during the 1970s. “When I relocated to Texas I started working for a company out here and met David,” Payne details. “We became friends and here we are.”
Building and Rebuilding
When the business first started out, Carson’s team specialized in residential projects. Once Payne came aboard, the crew branched out into multifamily commercial housing. For a period of time, the business performed commercial work; however, shrinking margins encouraged Payne and Carson to change focus. Today the business performs new construction, restoration and reconstruction projects almost exclusively for the multifamily market.
“We specialize in catastrophe restoration, but we perform capital improvement projects, as well,” Payne elaborates. “Most of our work is with investors and management companies, restoring properties that have been affected or destroyed by fire, wind or flooding. We cater to multifamily residential and condominium clients. Though restoration is our key market, we often perform construction from the ground up. We can do whatever our clients need.”
Gemstar has been involved with a number of major projects in recent years. The business works frequently with nonprofits and local housing authorities on housing and urban development projects. “We get in there and perform $15 million to $20 million renovations, sometimes adding new buildings to the site. We are a specialized and qualified contractor and recently completed a $12 million project of that nature in San Antonio.”
An Efficient Business Structure
The team of 85 works out of a single location in Houston, Texas, although Gemstar is licensed as a contractor in five states. “We manage everything from here,” Payne explains. “We prepare bids, set up our jobs, assign a superintendent who is right for the project and utilize local subs to perform the work. Occasionally, we will have some of our strategic partners from here travel, but unless it is specialty work, we use local labor.”
Payne notes that Gemstar self-performs approximately 30 percent of its work using in-house tradesmen. “Subcontractors are our largest expense,” he details. “Though we highly value long-term relationships with our subs and suppliers, we are always looking for new partners and new ways of doing things. We have to shop around to some extent. We are always sure to do our due diligence and qualify our subs ahead of time. Getting a team together that can perform a good, quality job within a budget can be challenging.”
Of course, with Payne and Carson’s extensive background, the team is well-informed of the industry and its challenges. “Each subcontractor has different capabilities, as well as different responsibilities on each site,” Payne continues. “It is an ongoing task to qualify, because you might assume a contractor can perform just as well on a similar contract, but that is not always the case. Like anything else, we focus on the preconstruction stage, and then follow through with daily reports, making sure we are staying on schedule. We want to build relationships with the people we work for, and that means building relationships with the people who work for us.”
Adapting to a Changing Market
On top of the normal obstacles, recent economic conditions have also presented challenges to the Gemstar team. “Over the last four years or so, the market has been increasingly competitive,” Payne recounts. “We have kept our bidding and delivery process tight just to maintain an average return. More than anything else, we have to work harder and think smarter. The reward is being able to do it.”
Luckily, the duo has steered the team well. “Our relationships have kept us ahead, if nothing else,” Payne adds. “We shop the materials and labor to get the best prices. In order to keep those costs down, we have to have good relationships with our suppliers and vendors. We have to stay competitive and keep our costs down, which means we have to work harder up front. We don’t have a choice but to seek out new resources, shop more and talk to new potential partners.”
As the economy slowly recovers, Payne and his team have taken away some lessons from the harder years. “We have made changes that we will utilize going forward,” he explains. “Like anything else, we have to keep bidding. If you don’t have a bid, you don’t have a chance.” As the crew continues to press forward, Payne and Carson are looking forward to another 30 years of successful restoration and new construction work for Gemstar Construction & Development Inc.

Published on: March 13, 2014

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