The Horst Group, a 118-year-old privately held company, is undergoing philosophical and management changes designed to increase its visibility in the marketplace.
Among the changes at the conservative, Lancaster County company are a new president and CEO, Richard A. "Rick" Watson Jr.
Watson, the first non-family member CEO of the company, replaces Clyde W. Horst, 60, who served as president and CEO of the Horst Group since its formation in 1979 as parent company for five Horst-owned companies.
As chairman of the board of directors, Horst will continue to oversee the company's approximately 25 affiliates. Company officials declined to name the 25 affiliates.
According to Watson, the company will focus on its core businesses, which are related to construction, and try to develop business relationships with local and regional companies beyond its traditional customer base.
Company officials indicated the reorganization has nothing to do with a recent $30 million lawsuit filed against Horst's construction firm by the owners of the Sight & Sound Christian music theater in Strasburg.
The lawsuit, filed Nov. 6, is a final attempt by Sight & Sound Ministries Inc. to recover some of the losses incurred when the theater was destroyed by fire in 1997, according to Melvin H. Hess, the Lancaster lawyer who filed the lawsuit on the theater company's behalf. The lawsuit was filed only after repeated efforts by Sight & Sound to settle the matter out of court, Hess said.
Watson noted that Horst Construction continues to work with Sight & Sound, and even built the new 2,000-plus-seat theater that opened in September.
"We have a strong, highly valued relationship with the owners of Sight & Sound Ministries," Watson said.
The Horst Group began humbly in 1880, building barns, churches and homes. The company, headquartered in Manheim Township, has grown into a local powerhouse with about 530 employees and total annual revenues of $89 million.
Although it has always been well-known in Lancaster County, the company, founded by devout Christians with roots in the local Mennonite community, never bothered to develop a high profile, said Watson.
For many years the company derived a significant amount of its business from its own accounts or those of family members and its affiliate companies, Watson said.
"I would say we didn't aggressively promote ourselves within the market-place," he said. "We're realizing that in order to grow and be successful, we need to promote ourselves. We cannot afford to be quiet."
This change in the company's basic philosophy was a gradual process that began in the early 1990s and was based on the lessons learned from the recession of the late 1980s. Up until then, Horst's leadership felt that greater and greater diversification was the way to go, Watson said.
The recession changed all that.
"It forced us to re-evaluate the business," Watson said. "We learned to stick to your basic business, what you understand best. And we concluded that what we know best is construction, real estate and insurance. They are all cyclical businesses."
In the past, the company focused internally, developing each core business individually without much communication between the separate companies, said John Rose, new senior vice president and CFO. In addition, the individual companies tended to work on each other's projects, rather than seeking new projects.
For instance, Clabell Management, the company's property management arm, was previously involved in managing the companies constructed by Horst Construction for family partnerships, said Michael R. Carper, a senior vice president for Horst and president of Clabell Management.
But recently, Carper said, Clabell has begun marketing to companies unrelated to the Horst Group.
"For example, we recently traveled to Rhode Island to meet with a hotel development prospect. It provides hotel development and hotel management opportunities for Clabell Management Co. and possibly a construction project for Horst Construction, and possibly an insurance candidate for Gingrich Stoudt Insurance (another of the Horst Group's affiliates)."
The Horst Group is now focusing on a total solution concept where it can take a project from beginning to end, Rose said.
This kind of philosophical change is healthy for any large company, said Douglas Frazer, a professor of business administration at Millersville University.
"Opening yourself to market forces at all levels of the company should be a good thing for any well-run company," Frazer said.
The realigned company is being guided by a five-member senior management team assembled in October. Watson served as company CFO for more than 22 years.
Rose, who replaces Watson as CFO, has been with the company for more than 20 years. Rose has a strong financial background, including experience working in global markets.
David Berndt, senior vice president for the Horst Group and president of its affiliate insurance company, Gingrich Stoudt Insurance, joined the company in 1982.
One of the newest members of the senior management team is Carper, who has 23 years experience in financial services, most recently with Dauphin Deposit Bank and Trust Co.
Rounding out the senior management team is Randall Horst, the fifth generation of the Horst family to become involved in the company's management. Horst, the company's third senior vice president, remains president of Horst Construction, which he has led since 1993.
The new management team brings together a broad mix of strengths, backgrounds, education and interests, Berndt said. The fact that four of the five senior managers are not related to the Horst family shows how serious they are about bringing together the talent necessary to move the company forward into the next century.
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