Life after J&S: Stites looks to grow real estate off-shoot

March 24, 2015

Upper Cumberland Business Journal, Tuesday, March 24, 2015

COOKEVILLE – Johnny Stites may have stepped down as CEO of J&S Construction Co. Inc., but he hasn’t gone far. His new office is just down the hall from his old one, as a matter of fact.

Stites, the long-time CEO of the Cookeville firm, isn’t retiring (“I have no interest in that, it’s way oversold,” he says) or seemingly slowing down. But he is taking on a bigger role in XI Properties, a real estate off-shoot that he and his brother Jack founded more than 25 years ago, which maintains the same 1843 Foreman Drive address. It’s just one role he plans to foster as he begins a new phase in his professional career.

“I just moved to the other side of the building,” Stites told the UCBJ. “I’m having all kinds of fun doing my job over here. My responsibilities have changed, but not my enthusiasm.”

Stites announced last week that his interest in J&S Construction, a company that his father established in 1957, had been bought out by Jack and employee Kevin McCaleb. Those conversations started mid-October and were finalized in recent days. While stepping away at some point was always the goal – Stites’ father had done something similar when he left his post to his sons – it played out a little differently this time around.

“I had naturally thought all along that it would be good to pass the business along but my brother wanted to stay with it longer, (and) he wanted to pass it on to his own children,” Stites said.

“From the time I was in the seventh grade, I knew what I was going to do with my life,” he added. “And as sometimes happens, it doesn’t always come out the way you planned. But it’s also true that many times it turns out better, and I think that’s probably the case here.”

Company sees growth

Johnny was just 28 years old – and Jack 25 – when his father passed down the reins of J&S to him, but perhaps in a less conventional way. It was 1976. Johnny had only been working at the company five years.

“I was sitting at my desk one morning, and dad came in and asked me if I knew what we were trying to do in the construction business,” Johnny said. “I said, ‘Yes sir, but I still have a lot to learn.’ He said, ‘Good, call me if you need me.’ He walked out the door.”

Johnny and Jack did call, many times, Johnny admits laughing, but says his dad never second-guessed his sons.

“When he left, we had bankers that had really (only done business with us) because of my dad. Here I was a 28-year-old knucklehead, and my brother was 25, so you can understand why bankers wouldn’t want to bank on us; we didn’t have any track record. For a long time, my dad would sign whatever note we needed and encouraged us. But he never came back.

“We made some good decisions, but we made some bad ones, too,” he added. “He never chastised us for the dumb decisions, and I always appreciated that. And we grew as a result.”

And grow, J&S has. Initially, the company specialized in building spec houses and small commercial projects. Today, J&S offers general contracting, design-build and construction management services for commercial, health care, religious, institutional and industrial clients. When Johnny first started, J&S did $250,000 worth of work, all in Cookeville. In 2014, J&S amassed $43 million worth of work in six states.

“The company has really morphed over the years,” Johnny says. “And the thing that makes us different from most is we have a lot of processes in place to ensure a predictable result: that we can finish on time, that we can do it on budget (etc). You can’t improve what you don’t measure; I learned that pretty early in my career. We’re the only contractor in the state that’s won the Tennessee Quality (Achievement) Award four times. We’re the first contractor in the state to construct a LEED silver, LEED gold and LEED platinum building. And here we are in Cookeville, Tennessee.”

Stites’ previous role as CEO at J&S will go unfilled, for the time being. Jack will continue to lead the company as president, and McCaleb will serve as chief operating officer. McCaleb, Jack’s son-in-law, has been with J&S for more than 15 years and has led the J&S insurance and restoration team, “one of the fastest growing segments of the company,” Johnny said.

“I’m sure they’ll have a different opinions about how the business ought to be run, which is the case of every single business that’s ever been bought out,” he says. “It’s still a very strong company.”

The next step

But, still, Stites is moving onward. His biggest focus for now will be managing XI Properties, a commercial and industrial real estate development company that’s been in existence for more than 25 years and born out of J&S.

“We sat here for two decades, Jack and I did, and watched people come in from out of town and steal projects away that we knew we could do,” Johnny said. “We just got tired of that (and started XI Properties). We now have a great portfolio of income-producing properties, and we expect it will only continue to grow.”

Holdings for XI Properties include the Cookeville Mall and the Times Square shopping center on Willow, among others. Stites says he’s currently working on one project via XI that could bring a thousand-plus jobs to the Upper Cumberland region.

“We’ve never had anybody full time (managing) this, and these kinds of things take a lot of time and effort,” Stites says. “That wasn’t something either of us (Jack or I) had available when we were both tied up in the construction business. We’ll be going out in the community and looking for more opportunities to invest and develop.”

Johnny will also continue to play an active role in the community. Last February, he was appointed by Gov. Bill Haslam to represent the 6th Congressional District on the Tennessee Board of Regents. He too serves as president of Associated General Contractors (AGC) of Tennessee, the largest construction organization in the state.

Certainly no retirement by any stretch of the imagination.

“I laughed the other day, because I’m 68 years old and I’ve never had to prepare a resume,” Johnny says. “I went to work for the Navy and then I came to work with my dad. I’m looking forward to finding a niche where I can use my years of knowledge to help somebody else. Because ultimately, it’s all about the relationships you build with people. That’s what I’m really looking forward to doing.

“I’m looking forward to the future.”

View article in the Upper Cumberland Business Journal

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