Contractor says Walmart job nearly broke him

1:27 PM, May 25, 2011   |    comments
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CHICO, CA - A Chico steel contractor who felt lucky to get hired for a new Walmart Supercenter in the depths of the great recession now says the project nearly forced him into bankruptcy.

Jeff Brochheuser, the owner of Butte Steel, was awarded a $415,000 contract in 2009 to assemble the roof of the new store in Fairfield.

"In that time period, with the market the way it was, we were very excited," Brochheuser said.  Butte Steel was also happy to be starting a relationship with Walmart, the world's largest retailer.

"This whole business is about relationships and we felt having an opportunity to build a relationship with Walmart would be a great thing," said John Branch, Butte Steel's sales manager.

Trouble at the Fairfield job site

Butte Steel began assembling the roof in March 2009 and Brochheuser said his crew ran into trouble from the very beginning.

"The job was poorly coordinated," Brochheuser explained. 

Walmart insisted on a 25-day schedule to erect the roof, which Brochheuser said required his crew to work around other trades at the Fairfield site despite previous assurances the steel workers would have the space to themselves.

In addition, Brochheuser said steel components were improperly sized for the job, forcing time-consuming field modifications.  He said delays and extra work required at the job site nearly tripled his labor cost.

"A 4,500 man-hour job turned into a 12,000 hour job," Brochheuser said, claiming he went more than $600,000 in debt.

Although Butte Steel has been paid for the base contract, the company is still waiting for reimbursement for most of the extra work nearly a year after it finished the project.

Who's responsible for cost overruns?

Walmart spokeswoman Tiffany Moffatt pointed out that Butte Steel's contract was actually with Walmart's general contractor on the Fairfield project, the Tennessee-based EMJ Corporation.

"We expect our general contractors to pay their (subcontractors).  We don't have a contract with the sub," Moffatt said.

Philip Augustino, the senior vice president in EMJ's Sacramento office, did not respond to a request for comment.

Butte Steel points to the code of standard practices of the American Institute of Steel Construction, which it said governed the contract.  According to the AISC handbook, ultimate responsiblity for cost overruns lies with the project's owner, which in this case is Walmart.

Butte Steel provided News10 with field directives signed by EMJ representatives authorizing the extra work and a project log showing Walmart representatives acknowledged the changes.

"They're evasive.  They blame everyone else.  It's never Walmart," said Branch.

Moffatt, the Walmart spokeswoman, said the company was still in discussions over the change orders and was looking for documentation from Butte Steel.

In his office near the Chico airport, Brochheuser displayed a row of white binders containing claims he insisted he had already submitted to Walmart through EMJ.

"Essentially I've lent Walmart $600,000 for a period of about a year," he said.  Brochheuser said he was able stay in business only by dipping into his family's savings and working with other customers who agreed to pay in advance.

Headed for court?

Butte Steel has placed a mechanic's lien on the Walmart project and is preparing to sue EMJ to preserve the legal right to collect on the debt, something Brochheuser had been reluctant to do because the attorney costs could run into the hundreds of thousands of dollars.

by George Warren, GWarren@news10.net

News10/KXTV

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