Ellicott BCEO 2014

How 129-year-old Ellicott Dredges became the world’s oldest and most successful dredge manufacturer

By Matt Ward

Photography by Rachel Smith

Peter Bowe swung by Rome for a day. He was on his way home from a recent bicycling trek through Croatia, and there was an exhibit on a particular architectural feature — Trajan’s Column — that he wanted to see in the ancient city, as a follow-up of sorts in his hobby of studying Roman engineering.

“The Romans were very inspirational because they built infrastructure across all these cultures,” Bowe says. As president and CEO of Ellicott Dredges, a 129-year-old company that builds and exports dredging equipment, Bowe (sounds like beau-ee) has a keen appreciation of Roman feats; his own business model is about building a high-quality engineering product and being able to sell that product — across cultural divides, amidst political crises, in war zones — around the globe.

“Governments will spend money on water before they will spend money on education,” Bowe says, noting that the bedrock of an urban population, as the ancient Romans knew well, is access to water. It’s a notion echoed, again, in Ellicott’s business model — to understand what governments, including developing governments, will spend money on first. During the reconstruction in Iraq in the mid-2000s, Bowe had a few answers to that question, and he was able to secure contracts for dredges to de-silt hydroelectric dams as well as improve flood control on the Tigris and Euphrates rivers. Ellicott has sold dredges in the low-lying areas of Bangladesh, home to the world’s densest population, under threat from the effects of sea level rise resulting from global warming. In recent years, it has also sold dredges in Ukraine and West Africa.

“Most people think of those places as war zones — we think of them as markets,” Bowe says.

History hidden on Bush Street

Pigtown cobblestone peaks through the asphalt in places along Wicomico Street, the old street layer serving as a reminder of the past; mule hooves once beat down the road here, train cars lumbered along on the B&O Railroad, and trolley cars rolled past, bells ringing. In more recent years, the CSX train would drive right down the middle of the street, but that’s gone now, too. Still, the old cobblestones abide, showing in places, like a forgotten Roman road. It’s a quiet neighborhood here on a weekday afternoon, south of the stadiums and the new Horseshoe Casino.

At the corner of Wicomico and Bush — in fact, taking up a whole block, bounded by Bayard, Severn, Wicomico and Bush Streets, and extending across Bush and into the old U.S. Steel building — is Ellicott Dredges. The company went through a square-footage consolidation when it moved to this location — in 1900. Before that, Ellicott had facilities in Canton; on Smith’s Wharf, which was right about where the U.S.S. Constellation now rests; at the foot of Haines Street, now home to a Greyhound bus terminal; and in Fairfield, near the southern entrance to the Harbor Tunnel.

Today, Ellicott’s offices have the feel of an old-school Baltimore business; the doors that lead from the lobby into the offices, from a side door out into the yard — where an old brick smoke stack looks down on modern dredge shafts, laid out and waiting to be painted — and back inside again, open with good old-fashioned keys, which Bowe carries in a side pocket. Upstairs there are stacks of engineering drawings, neatly filed, depicting every dredge the company has ever built. Names like: San Pedro, 1904; Arundel, 1922; Begawan, 1952; Good Hope, 1969; Arctic Northern, 1972; Presidente Clinton, 1994; Delta Dragon, 2007.

A recent office renovation exposed the brick of what was once an exterior wall; now, with its window wells stripped down to the brickwork, the wall divides a hallway from a cubicle area. A kitchen downstairs appears unremarkable but for a little plaque on the wall outside: President Obama used the room for his office for a few hours when he toured the facility in May 2013.

“This was the situation room,” Bowe says. “For about two hours.”

Obama came here because Ellicott is a great business story. A big deal gone wrong in the late 1990s all but killed the historic business. After emerging from the ashes in 2002 and growing with acquisitions, Ellicott Dredges is now the global leader in its space, which Bowe describes as “portable dredges under $10 million.” The company has facilities in Kansas City, Minneapolis, Wisconsin, Germany and the Netherlands. It employs 250 people, half of them in Baltimore. Ellicott hires structural, mechanical, hydraulic and electrical engineers; purchasing agents, customer service representatives, salespeople, accountants, project managers, assemblers, welders, machinists and office staff. Its global posture is reflected in its staff, which includes employees born in Iraq, Lebanon, Colombia and Russia, to name a few. Asked if his people travel a lot, Bowe smiles and replies, “Everybody goes everywhere.”

And Ellicott falls into that most prized category of modern American businesses: it’s an exporter.

“Ellicott Dredges, you guys are an example of what we can do to make America a magnet for good jobs,” Obama said in his remarks delivered from a platform on the factory floor. “After all, you all know a thing or two about growing the economy — you’ve been doing it for more than a century. This company was founded in 1885. You’ve been right here on Bush Street since 1900. This company built dredging equipment that helped dig the Panama Canal. That’s impressive.

“What that means is this company, right here in Baltimore, literally helped create our global economy, because that was one of the first connectors that started to allow us to ship goods and cut the distances that integrated the world economy.”

As the president noted, those origins set Ellicott on course for a global profile. “From day one of our company, it made us export focused,” Bowe says. “It gave us a global reputation from the start.”

It’s a reputation Bowe has deployed to good effect; to date, Ellicott has sold dredges in 100 countries. And, after Obama made a quip about President Bill Clinton having had a dredge named after him — an honor paid by a Mexican contractor after Clinton signed NAFTA — one of Ellicott’s customers paid tribute to the current president. So another set of engineering drawings got added to the Ellicott library, and another plaque went on the wall downstairs, reading “President Obama, 2013.” Today, the vessel President Obama is deployed at a sand and gravel mine in New Zealand.

Local-grown leader

Bowe, 58, grew up in Annapolis, where his parents taught him and his two older brothers at a young age to sail, a passion that Bowe carries to this day. He went to Gilman School, then to Yale, where he studied African History. He did a stint on Wall Street working in the petroleum department at Morgan Guaranty Trust (which would become J.P. Morgan).

One of Bowe’s jobs on Wall Street was to clip news articles and deliver them to the higher-ups throughout the petroleum department. “I sort of absorbed that function — I’ve never really let go of it,” Bowe says. To this day, he emails news and analysis to his team. Keeping up to date on the daily whims of foreign dictators and the moods of the global marketplace is crucial to the way Ellicott operates.

Bowe left New York to get his MBA at Harvard, then, in the early 1980s, he came to Baltimore to work with his father, Richard Bowe, who was CEO at Ellicott at the time.

Peter came on board as treasurer, focusing his efforts on financing and strategic growth opportunities, and by 1985, he was general manager. The prime rate was hovering around 20 percent and inflation was high, which combined to make exports a difficult sector at the time. “[Exports were] never a piece of cake, so I was sort of getting hardened at a young age,” Bowe says.

In 1987, he orchestrated the purchase of Mud Cat, which had a unique auger dredge design. Then in 1993, after owner and majority shareholder Donald Sherwood passed away, Bowe led a leveraged buyout
of Ellicott’s assets.

Boon and bust

Not long after Bowe took over as owner of Ellicott, the company landed a $50 million contract with the government of Thailand. Ellicott was to build and deliver three large dredges. Then, in 1997, the Thai baht collapsed, precipitating the Asian financial crisis. The Thai government, bankrupt, fell apart.

Bowe recounts the Thai government essentially telling Ellicott that “we are a sovereign government — we don’t give letters of credit, we pay our bills.”

“Except,” Bowe recalls, “this time they didn’t.”

The mess of the Thai deal would wreak havoc at Ellicott for years to come. “A big job that goes bad, it sucks resources from everywhere else — it creates reverberating chaos throughout the company,” Bowe says. “It blows a hole in your balance sheet.”

The time between 1997 and 2002 was “very trying on a person’s psyche,” Bowe says. But in 2002, he liquidated the company, essentially laid himself off, bought the remaining assets back from the bank, and started all over again.

“We started with a nice name and almost no money,” Bowe recalls. All the while, he had managed to keep the production line busy with a thin backlog of orders, and to keep a core team of employees, plus vendors, customers and the bank, generally happy. Now, with a streamlined business model that focused on standardized equipment, rather than the one-off custom designs Ellicott had been known for, Bowe got going.

The work in Iraq jumpstarted the new version of Ellicott. They haven’t looked back. After a period of sustained growth, Markel Corporation, an insurance firm and holding company that makes long-term investments in the Berkshire Hathaway model, purchased a controlling share in Ellicott in 2009.

Shaping the world

“Man wants to change the shape of the world,” Bowe says. “Or, he wants to keep the shape,” as was the case in the aftermath of Superstorm Sandy. “As our parent Markel says, they like that nature is continuously undoing the work of man, and undoing its own work, even as we sleep.”

That means more work for the dredgers of the world.

A dredge, says Bowe, using a two-foot-long model as a teaching tool, is essentially a giant, floating vacuum cleaner. The dredge lowers a large arm, called a ladder, under the water. A cutter on the end of the ladder dislodges material being dredged from the bottom. Pumps suck the material up through a pipeline in the ladder and into a discharge pipeline, which shuttles the slurry to a dispersal location. The dispersal location might be dry land (for beach restoration) or a dewatering facility where water is separated from the solids.

In all, Ellicott dredges are used not just for clearing transportation lanes through waterways but also for mining, environmental cleanup, wastewater treatment, marina maintenance, harbor maintenance, hydroelectric dam maintenance and beach restoration.

Ellicott equipment has been deployed at the Panama Canal; in Iraq; at the Suez Canal, for maintenance projects in the early 1990s and with a deal in the making to sell dredges there for current expansion; at the Alberta Oil Sands, where dredges are aiding in environmental cleanup; in the Dead Sea, where both Jordan and Israel use Ellicott dredges to mine sodium chloride (used for road salt and fertilizer); at a titanium dioxide mine in Western Australia (titanium dioxide is a raw material for house paint pigments); at bauxite mines in Guyana and Brazil (bauxite is an ore used in the manufacture of aluminum oxide); at sand mines in Nigeria; in the canals of the Intracoastal Waterway in Florida; off the coast of Abu Dhabi, to build islands that are then used for real estate development; and in the recovery efforts in New Jersey and New York from Superstorm Sandy.

The dredges, which vary in size, type and function, are the components of Bowe’s plan to diversify Ellicott’s service offerings — acquisitions that are strategic fits for continuing its mission. Part of Bowe’s acquisition strategy has been to maintain separate brands for the companies he buys — a practice that isn’t always the norm, with companies integrating acquired brands into their own quiver of brand names and taglines. There’s Mud Cat auger dredges, LWT automated dredges, IMS truck-transportable, self-propelled dredges, Rohr dredges for the sand- and gravel-mining industry, and Idreco’s deep-digging electrical suction and cutter suction dredges.

And at the center of it all, Bowe deploys a management style that might have its roots in Wall Street and Harvard, but was truly refined in the years he led his company through major financial difficulties.

Heiko Osterchrist, managing director at Rohr-Idreco Dredge Systems, notes: “Like all companies, we face the challenges of keeping up with the pace of change. Peter welcomes change as an opportunity versus a disruption. Peter is good at keeping the company focused and challenging us to expand our worldwide footprint, especially in areas where other companies may be hesitant to enter.”

Ellicott COO Marty Barnes adds: “Given our markets and the volume of international business, we do have our share of difficult issues with which to deal. Peter’s problem solving approach is both analytical and unemotional. There is no screaming and no finger pointing. He encourages team members to ‘prepare, probe and propose.’ [Once], we had a difficult customer with a difficult dredging project. The problem was not the dredge itself, but rather the material that needed to be removed. A group of us met and discussed the problem. Peter kept the group focused and encouraged those close to the problem to set aside their emotions and determine what we can do to satisfy the customer. He asked us to meet the next day. When we met, there were two viable solutions and we were able to accomplish our goal, and the customer completed their project.”

A cerebral CEO

Asked what he thinks about being named SmartCEO’s CEO of the Year, Bowe replies, “I am thrilled I have survived to the point where I could even be considered.”

But in his career, Bowe has done much more than simply survive. He’s testified before Congress more than 10 times, he’s penned op-eds in the Wall Street Journal and the Baltimore Sun, he serves as a board member of the World Trade Center Institute, and he’s been winning business awards for years — all in the name of furthering Ellicott Dredges’ prospects, yes, but also in the support of American manufacturing and American exporters in general.

Bowe is, as a friend notes, a “cerebral” sort of CEO. Yes, he rides his bike through Croatia, France and Burma. But he rides it up and down the C&O canal, too. The mere mention of the long-defunct canal, with its flat towpath and sad business history sends Bowe into a mini history lesson. The C&O was built too slowly, and it was therefore never able to compete with the railroad that ran beside it, he says. Maybe if they’d had Ellicott Dredges on the job, digging out the canal along the north bank of the Potomac, they’d have stood a better chance. CEO

Matt Ward is a freelance writer based in Baltimore, MD. Contact us at editorial@smartceo.com.

CEO OF THE YEAR

Each year, SmartCEO magazine names a CEO of the Year. In selecting its CEO of the Year, SmartCEO looks for CEOs who are true leaders among their peers. More than company revenues, profits and community popularity, SmartCEO’s CEOs of the Year have proven track records of innovation and bringing value to the marketplace. They lead more than just companies; they lead industries in new directions.

Why Ellicott Dredges president Peter Bowe?

Since arriving at Ellicott Dredges in the early 1980s, Bowe has patiently and steadily led Ellicott Dredges through tough business cycles, ownership transition, foreign political unrest, crashing capital markets, and changing trends in manufacturing and dredge usage worldwide. Not only did he revive the company when it was on the brink of extinction, he rebuilt it into the dominant player in the dredge business. Today, with 250 employees, the 129-year-old company is one of the world’s oldest, largest and most successful dredge manufacturers; it proudly delivers a “Made in America” product to the world and sets the standard for the local, national and global manufacturing industry. For these impressive achievements and more, SmartCEO honors him as our 2014 Baltimore CEO of the Year.

INTERVIEW WITH MYRNA LABARRE
Ellicott Dredges Corporate Secretary

Q: When did you start with Ellicott, and what was your background before that time?

I started at Ellicott on July 10, 1961 right after high school graduation. Background before that time: I was a typical “born-in-the-country” teenager having fun!

Q: President Obama really singled you out for praise during his visit to Ellicott. What was that day like?

The day was one of excitement in having the President of the United States visit our facilities. I was a volunteer to help guide the visitors to designated areas. I had no idea the president was going to single me out and cite my recipe for success after 50 years at Ellicott. To say the least, it was an honor and I certainly felt privileged to be recognized by the president. It was a day I will never forget.

Q: What is it like working for Peter? And, how has he changed as a leader and a boss over the years?

I prefer to say I am working with Peter. There is never a dull moment — every day is different. You can plan your day at 8, and at 8:30 it can change. Peter is aggressive and a go-getter and keeps you on your toes. He knows what’s good for the company, and he works hard to make sure it gets done. He is a good leader, and is very good to his team. He encourages you to do the best you can. He gives you praise when deserved. He is very proud of Ellicott and what we have accomplished over the years. We have gone through good times and bad times together, and we have weathered the storms and come out of them a better company under Peter’s direction. He manages by the Open Book Policy. During the earlier years that I worked with Peter, Ellicott faced many challenging obstacles and Peter’s management style and leadership got us through these difficult times, which has enabled Ellicott to grow and prosper year after year, ensuring that we stay number one in the dredging industry. He is a good and honest person to work with.

THE ROOTS OF ELLICOTT DREDGES

An unpublished company history, covering the years 1885 to 1965 and written by Charles Ellis Ellicott Jr., son of founder Charles Ellis Ellicott Sr., describes the original layout at the Bush Street plant: “In 1900, a brick building had been erected to serve as a combined power house, forge shop and stable. There was a coal-fired boiler supplying a 30 horsepower horizontal engine which drove a large flat belt running into the machine shop to drive the main pulley and the smaller overhead shafting and pulleys which powered various machine tools.

“The stable was a necessary part of the establishment and deliveries, whether to the railroads, steamships or to local customers, were made by horse-drawn wagon.”

The plot was ideally situated, the historical account indicates, with access to the B&O Railroad, the waterfront and two trolley lines.

In its very early years, Ellicott operated as a general machine shop, making pulleys, line shafting couplings, bearings, flywheels and equipment for freight elevators. Then, in 1900, the company began moving into dredge work, providing machined parts for dredges used at Loch Raven Reservoir, at Arundel Sand & Gravel Company near Havre de Grace, and for dredges used by the U.S. Army Corps of Engineers. It was the Army Corps work that would lead to Ellicott’s first dredge, the San Pedro, which went to work in San Pedro Harbor, CA. Then, when the U.S. took over construction of the Panama Canal in 1904, Ellicott was there to provide new, more powerful hydraulic cutter suction dredges.

AN ODE TO MARYLAND MANUFACTURING

On May 17, 2013, President Barack Obama paid a visit to Ellicott Dredges’ Bush Street headquarters as part of his second Middle Class Jobs and Opportunity Tour. In his address to Ellicott employees, he lauded the company’s long-standing history and Peter Bowe’s steadfast commitment to the company and its employees:

“After all this time, this company still has a set of core values that’s lasted for generations. Just like the folks who came before you, you’ve got that drive to make the best machines that money can buy; to sell products all over the world; to grow not just a business, but a community, and by doing that, you’re growing our country.

“And these values have seen you through an era of enormous change. Your leaders saw the potential in developing markets like China and India and Brazil and Bangladesh. So you ramped up your focus on exports. And the federal government has worked with you as a partner to sell dredging equipment right out of this shop all over the world. You maintained your quality. You built a sales force that travels everywhere, outhustling the competition in search of new business.

“All that hard work has paid off. Today, this company, you have sold equipment to more than 100 different countries. You’ve made new investments here at home. You employ more than 200 people in Baltimore and Wisconsin and Kansas. And over the past few decades, during some of the tough times for our workers, you were able to keep building equipment stamped with those three proud words: Made in America. And you’re selling it around the world.”

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