Noteworthy

CEO Spotlight

CEO Spotlight

Steve Karlovic has been President & CEO of CDI Engineering Solutions since 2018. Under his leadership, CDI experienced a turnaround from a negative trajectory to a period of progressive growth, at least until the novel coronavirus and COVID-19 pandemic interrupted that trend – an interruption he views as a “speed bump” (albeit, a big bump). Steve is confident that CDI and our country will survive and thrive, post-pandemic, and hopefully emerge stronger and wiser.

Steve and his wife Tami are the parents of 3 grown children – a daughter and 2 sons. They live in a 100-year-old house in historic Rose Valley, a borough outside Philadelphia. He likes cycling and outdoor sports, but spends most of his free time happily involved in upkeep and improvements to the house and gardens.

Kenny Darbonne is CDI’s Vice President of Business Development. In this stressful coronavirus era, Kenny wanted to reassure CDI employees and our clients that the company is in the strongest possible management hands. He sat down with Steve Karlovic in a long and wide-ranging interview.

Your house sounds fascinating. Tell us more about it.

It was built in 1918 and is one of the very few Prairie Style houses in Pennsylvania. [The Prairie School is the first distinctively American architectural style. Its founder and most famous proponent was Frank Lloyd Wright. The house was designed by William Purcell, who was second only to Wright in the Prairie School.] It’s a Prairie-style bungalow that sits on two acres, and I spend most of my free time working on the house and gardens.

Historic architecture and a High Honors in Physics degree from Georgia Tech. Were you always a brainy kid?

[chuckle] I might’ve always been a nerd, but I wasn’t really a good student until college, when I got serious about my career and my future.

Where did you grow up?

Actually, in a lot of places. I was born in Arkansas; my father was a civil engineer for the Cotton Belt Railroad (part of the former Southern Pacific), and his career and promotions took us from Pine Bluff to Tyler and Mesquite, Texas, to Mt. Shasta, California, and then to the San Francisco Bay area. Like everyone who moves around while growing up, my family and I say the same thing: it’s disruptive, but it certainly has its advantages.

I noticed your Slavic name; are you Croatian?

I’m one-quarter Croatian. My grandfather came to the U.S. from Croatia in 1917, married a Norwegian immigrant and settled in Arkansas. We had a trip for the whole family planned for a week this summer until COVID hit. In the meantime, I have started learning the language, partly with the help of Ibro Vehabovic, one of our senior civil/structural engineers in Houston, who hails from nearby Bosnia.

Were there mentors or formative influences in your early life you would credit for getting you where you are today?

Honestly, I was lucky to have a lot of excellent teachers, particularly in science and language – I was very lucky. I’ve also had good mentors throughout my career, especially in the early days. And I came from a stable family, with great parents – all in all I know I was blessed with many advantages.

You joined the Air Force after college. What drove that decision?

Well, my original dream was to be a fighter pilot! I joined Jr. ROTC in high school, and went to college on an ROTC scholarship. I wanted to fly the F-16, the Air Force’s newest fighter. The closest I ever actually got to that was years later at Lockheed Martin, when I got to work on the F-16 program. I was in charge of Support Equipment for all of Lockheed Martin’s aircraft. Many people don’t realize that the support system for a complex, ultra-finely-tuned machine like the F-16 is immense, and costs almost as much as the plane itself. Learning the intricacies of the technology and equipment as the plane continued to advance was thrilling work.

Many people cite their military service as a very influential time in their lives. What would you say about that?

Military service was a truly great experience for me. I credit it (along with my family) for my character development and leadership abilities. I got a lot of management training, and I was fortunate to get assigned to a job in an Air Force lab (Rome Air Development Center in upstate New York), where some of today’s most important military technology was developed. What an incredible place for a young person to work!

Your career before coming to CDI in 2009 was – can I say meteoric? – and broadly inclusive. It seems tailored to make you an engineering and technology executive. How did you get here?

 It was a varied career, for sure. Certain jobs did prepare me well for CDI, but it was actually trending more towards the aerospace industry. When I left the Service, I joined a great electronics company and had the opportunity to learn a lot about business, marketing and sales. From there, I joined Lockheed Martin and learned a lot about project and program management.

I had begun working with CDI employees while I was still in the Air Force and later while I was at Lockheed Martin – our former Government Services division had a well-known group of consultants that specialized in the same technology I had been working on at RADC – avionics testing. So, I was inclined to listen when a recruiter came looking for someone to head CDI’s Government Services division back in 2009. When I joined Government Services, I got introduced to the larger part of that business – naval architecture and engineering services. I learned about the challenges of services businesses, and the criticality of piping designers (ships have a lot of piping)!

We had a lot of success in Government Services. We made moves to improve quality, project execution, and financial performance – and won some interesting new business. My favorite project was when we designed an autonomous submarine-hunting boat for DARPA that could basically sail around the world with no one aboard. In 2015 I was asked to get involved in CDI’s Infrastructure team in Ebensburg, and eventually in 2016 with the rest of what had become Energy, Chemicals & Infrastructure. Although things were not easy within EC&I back in 2015 and 2016, I was quickly impressed with the work we do for our clients in the industrial and public sectors and the technical capabilities and great attitudes of our employees. So much so that I am happy to have made the move away from Government Services, and was honored to be selected to run Engineering Solutions in mid-2018.

Would you like to say a little about CDI in the years 2018-2020?

I think things began to change for the better for Engineering Solutions in late 2016. We started making improvements in the consistency of our project performance and quality, rebuilding our customer relationships, and returning to financial stability. The acquisition of CDI by AE Industrial Partners in 2017 was a great development. In 2019, the company grew for the first time since 2016. We had reversed the decline, improved the top and the bottom line, and were looking forward to continuing the upward trend, optimistic and excited about our future.

I guess it’s time to talk about the novel coronavirus, COVID-19, and how it has impacted CDI.

Well, certainly there have been dark times. We had to pivot from success and growth in February to worrying about staying in business two months later. It’s now August and let me say, in terms of Coronavirus, it isn’t over by any stretch. Pandemic conditions are fluctuating, and we are continuing to adapt and respond.

As the pandemic and lockdowns began, our greatest fear was that our clients would cease doing projects altogether, and might not be able to pay us. We were very worried. I don’t want to minimize the negative impact we’ve seen: there have been cancelled projects and delays; clients are requesting delayed payment terms and price reductions. Our refinery clients have been especially hard hit. We’ve had to lay off some employees and reduce benefits and pay temporarily. Some competitors are offering “desperation pricing,” and clients are obviously looking to take advantage of that. We will respond by getting leaner, offering discounts, beefing up productivity and efficiency. And there are some bright spots, too. Infrastructure is back to work on an almost-normal trajectory and could end the year OK. Our construction inspection, transportation, and drilling teams are all working. Highway and bridge engineering never stopped working. In Architecture, new awards have slowed but our large projects haven’t been cut back.

The Time of the Coronavirus is a “speed bump.” It isn’t the end of our business – clients, even the worst off, are still doing projects. The forecast for the rest of 2020 is certainly less rosy, but better than that of many of our competitors. All of our alliance clients value our work. We’re continuing to invest in our growth opportunities, especially in architecture. No doubt, some opportunities will emerge as a result of Covid-19.

That’s actually very encouraging to hear. Can I ask you about your vision for CDI? Or has the coronavirus made it too difficult to predict?

CDI Engineering Solutions will become a better, larger company. Better in terms of client value and better in the way we treat our employees, larger in terms of the number of people and revenue, with stronger financial performance. After this speed bump – challenging as the stumble might be – we will resume our positive trajectory.

What is it about CDI, overall, that you’d say you are most proud of?

What we do for our clients. We are a bunch of smart people dedicated to doing a good job for our clients, delivering great solutions. I’m very proud of the milestone projects we’ve executed – some while enduring this speed bump. Projects like the H-Oil Reactor rebuild in Louisiana (a $100MM+ project engineered in 5 months from start to IFC, with the vessel back on line 8 months after its surroundings were destroyed in a fire). Projects like the Hot Pitch tank, when the client conceived a new type of process vessel/tank and our Houston office reacted in record time with a complex process design through detailed design. We reopened the Midland, Michigan, office, and our West Virginia team showed outstanding performance on projects for DuPont, SK Siltron, and others. The beautiful new headquarters building for Sheetz, Inc. I’m very proud of how our technical resourcing group responded to turnaround needs at Indorama; this project produced good revenue for the company when other projects were being slowed down. There are so many examples – these are just the first few that come to mind.

One last thing: How would you describe your leadership style?

I’m team-oriented. We have a great team of leaders in our company – they’re well-qualified, they understand our business, and they have a wealth of experience. They all have a role to play. Mine is to focus their strengths on the areas where they can make the most impact, to challenge them to do their best, and to keep us all focused on the overall objective. I seek input and take the best ideas.

That has enabled us to do better and better. It always will.