Brad Radichel

Photo by Kris Kathmann

Large Shoes

Fourth-generation Mankato businessman creatively diversifies to help solve America’s growing energy demands.

Each workday, Brad Radichel is continually reminded of the family business his great-grandfather D.W. Radichel started in 1888 as North Star Concrete. It jabs like a sharp elbow to the ribs.

That’s because down the hall from his office, a boardroom brimming with nearly 125 years of company memorabilia was preserved as a reminder to him and other family members.

From humble beginnings, North Star Concrete eventually blanketed the Midwest and included subsidiaries Spancrete Midwest (prestressed building materials), Rochester Materials (other concrete building materials), Condux Pipe Systems (plastic pipe), Venstar (real estate), and Condux International (concrete duct and cable installation equipment).

The family concrete business helped construct the Metrodome, Target Center, and Mall of America. The Radichel real estate venture that became River Hills Mall transformed Mankato into a regional retail hub.

In 1998, the extended Radichel family decided to sell. This was a gut-wrenching decision for many family members, including Brad. In part, Hanson PLC purchased North Star Concrete and Brad himself acquired red-hot Condux International. Then, around 2000, “(Condux International was) doing extremely well until overnight somebody turned off the light switch,” said Radichel. The Internet and telecom industries—nearly his entire customer base—sputtered and stalled.

Condux International survived downsizing and repositioning. Then two years ago, Radichel formed a 50-50 partnership with an Italian business to enter the aerial electric transmission industry just when America was debating a new electric grid. This infant company, Condux Tesmec, will soon surpass Condux International in sales.

From the William D. Radichel Foundation boardroom—the room brimming with many black & white memories—Brad Radichel’s voice cracks and eyes moisten with emotion while discussing the family legacy. Now age 49, he can’t help being reminded of high expectations. He must fill large shoes.

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When I hear people talk about “old money” Mankato families, the Radichels often get mentioned. What was it like growing up in this family?
The positives were my parents were quite social and so it seemed we knew everyone in town. I met many movers and shakers. I had the opportunity to meet interesting people from all sides of community life. Through the luck of birth, I ended up in a family and business that would create a lot of opportunities for me.

Other aspects of being a Radichel were more challenging. When my family was looking at recapitalizing the company in the late ‘70s, one thing the bank needed to know then was which of the children would one day be running the business. So I had to make that decision in high school. I had to make an agreement. I was forced to decide.

Most teenage boys are concerned about zits, girls and making the football team. Yet you were forced to make a career decision about the rest of your life.
Yes, to a certain degree. I pondered that decision for a long time. My cousin was in the same situation before he said yes, too. My father and uncle didn’t want my sisters in the business due to safety issues. My father had lived through an era of often really tough, hard-nosed union negotiations. Several times during those negotiations my father and uncle personally received death threats. We’d also had equipment vandalized and burned.

I’m guessing your being part of a well-known Mankato family also meant you were picked on at times in school or treated differently. If so, how did you handle those situations?
I had to learn how to deal with it. I had to shrug off and ignore the comments and just accept that certain people would treat me that way.

Was there one event in particular you remember?
One comes to mind. We lived in Madison Lake and took the school bus in to Mankato. There was a group of young kids in Madison Lake then that hung out together—like a gang, but not formally organized. An article written in the Star Tribune in the ‘70s called Madison Lake “Sin City” after an arsonist burned down a hotel. Madison Lake also had an old-style boardwalk and a couple of times someone drove down it to knock over some supporting columns. Another incident involved a vandal writing words on a person’s lawn with gasoline and lighting it. These were intimidating things.

My sisters and I used to get bullied on the bus by these kids. When I was in fifth grade, they started stealing my lunch money and tried stealing my sisters’. I had to stand up to them. Some were very big. I decided to have it out with one of them to get them to leave me alone. I picked a ringleader about my size and we went out on the playground for a full-blown fistfight. (Laughter.)

Were you best friends afterward?
No, but I did beat him. After that, they started leaving me alone. I told them to leave my sisters alone, too. That was the only way I could deal with it.

Now I’d like to learn more about your career path.
I wanted to go to college out West as a way to experience another part of the United States. I applied to Southern California and Stanford. My father had gone to the University of Southern California—in the end, I just liked the feel of SC. I initially had hoped to attend Stanford, however I turned them down with the idea I could always apply there for graduate school. I did apply there for graduate school, but then they turned me down. (Laughter.)

What from your USC experience has stayed with you?
It was a major transformation leaving a small farm community to suddenly being in one of the nation’s biggest cities. USC is not in the safest area of town. Basically, it’s on the north side of Watts. The Rodney King riots were near USC. While I was there, a USC football player was shot on the practice field by a stray bullet. I had a fraternity brother struck and paralyzed by a drunk driver.

You had to be street smart.
You had to be very street smart. Los Angeles had gangs like the Crips and Bloods. Gangs spray-painted the buildings around USC to mark their territory.

You grew up in the ‘70s. Back then, some business was still done by handshake. Then you go to Los Angeles and realize much of the rest of the world couldn’t be trusted.
Growing up in Madison Lake, we never used to lock our front door. We wouldn’t lock our cars. It wasn’t until more organized gangs came into Minneapolis that we began locking everything. In LA, I had to learn to be street smart, was a long way from home, and didn’t have family nearby. But I made friends.

I was in LA during the beginning of the punk music era. A roommate into the punk scene took me to all the classic clubs, such as the Troubadour, the Roxy, the Palace. I saw X and Black Flag. I saw U2 on their first two tours of the U.S after their release of the albums Boy and October. USC had many affluent kids, and I was invited into their homes—sometimes in Hollywood, the mountains, the beach.

You returned to the family business after USC?
I began working in the plastics division in 1984. We had a plastic pipe extrusion plant in Winnebago, and I spent the summer learning the business from the ground up. Soon I was moved to Newberry, Florida, to another plant. I started as head of quality control and went through a series of life-changing experiences in Florida, too.

Such as?
Newberry was near Gainesville, home of the University of Florida. Gainesville was a large city with three major hospitals. It also was home to a number of people that could have been called “redneck.” Sometimes, some of our employees would go alligator hunting on weekends and keep tied-up gators in their pickup trucks during work on Monday. (Laughter.) It became quickly evident that plant had many problems. The general manager had a reputation for coming in drunk at night. Soon, I was the de facto general manager—thrown into a high-level management position at age 23. I was working almost all the time.

I’m guessing you were having doubts about whether you could run the company one day?
I had doubts about whether I even wanted to run it. The difficulty of running a 24-hour operation is you’re always on-call and I was getting calls at all hours from supervisors. The biggest problems concerned personnel.

One night, a supervisor called. I came out to the plant at 11:00 pm. Inside, the plant was empty, even though an operator was supposed to be at each extrusion machine. I walked out back and the employees were standing in a circle smoking marijuana. I said, “What’s going on here? You’re at work. Also, you aren’t supposed to be smoking.”

Some were big Florida farm boys. One pointed an Uzi submachine gun at me. He said, “We can do whatever we want.” I said, “Listen, you guys. I’m paying you to man your stations. I want everyone back at their stations now.” Fortunately, they disbanded and returned to work.

I’m assuming you fired Uzi guy.
He challenged the firing by filing a grievance with the National Labor Relations Board. We went through a trial. Our policy manual said I should have reprimanded him first, sent him home, and then given him a warning. Because I hadn’t followed policy and because the manual hadn’t said employees would be fired for carrying firearms on company property, he won the case. Basically, we ended up having to pay him to leave.

When you sold the concrete side of your family business in 1998, how big was the company?
We had 1,100 employees. We had sold our three plastic plants in 1990—that had another 150 employees. In 1998, we had two concrete plants in Ohio, one each in Illinois, South Dakota, and Wisconsin, and one each in Minnesota cities Winnebago, Wells, Mankato, Rochester, Kasota, Apple Valley, and Maple Grove—among others.

Why sell? Was it a family decision?
By 1998, the ownership had become fractionalized. My father had three sisters and a brother and they had passed on some ownership to their children. We all talked about selling. Some family members wanted income off their ownership, yet we had a long history of not paying dividends. The profits had always gone back into building the company. My cousin and I also understood the business would be difficult managing without our fathers around. Collectively, we decided selling was best. In 1998, the economy and our company were strong. The construction industry tends to be cyclical. A number of things were working in our favor to sell then.

That said, it was the most difficult thing I have ever had to do. (Radichel’s voice cracks with emotion.) You’re riding on the shoulders of all those guys. (Radichel points to office photos of his father, uncle, grandfather, great-uncle and great-grandfather.) I wondered what they would have said about our selling.

Do you regret selling the concrete business?
In retrospect, it was the right thing. We got out near the top. The company we sold our operations to eventually was sold and has struggled with the global economic downturn.

Our family tradition had always been to hunker down and hold on through good and bad. If the business wasn’t performing, you found ways to get it performing. That was the mantra from my father and uncle. You had to be entrepreneurial and figure out how to transform the business.

Diversification was the reason my father and uncle bought Condux in the 1950s. Condux owned the IP and made the equipment to produce Multiple Concrete Duct. It was initially produced for dense urban areas like Chicago that needed multiple pathways for cable. We made machinery and licensed production all over the world and also began making tools and equipment to pull cable through this duct. This was the evolution of the current tool and equipment line made by Condux today. It had become evident the plastic industry products would replace the smaller sizes of our Condux concrete pipe product. Instead of seeing their market share decrease, they transitioned Condux in the ‘70s and ‘80s into a plastics pipe extrusion business to ride this wave. This was quite a change for us. The concrete business was locally based because concrete is heavy and can’t be transported more than 100 miles. In the plastics industry, we were shipping pipe all over the United States.

Give me an indication of the size of Condux International today?
Our 110,000 sq. ft. Mankato facility has 60 employees. We also are 50-50 partners in another company called Condux Tesmec, which sells high-voltage electric transmission tension stringing equipment. That company has seven employees now and is growing.

Do you manufacture from scratch, assemble, or just distribute and market product?
All. With Condux International, we design, manufacture, market, and distribute most of our product from Mankato. We buy some product and resell it just to compliment our overall package, but that’s a small percentage. We have some intellectual property for our designs.
Condux International primarily operates in three markets: telephone, power utility, and commercial and industrial electrical. We make cable installation equipment for building telephone fiber networks and for electricity transmission and distribution power networks.

Tell me more about Condux Tesmec.
Tesmec is based near Milan, Italy. They were distributing our products in Europe, North Africa, and the Middle East. While going through our dramatic downturn in 2000, I realized we needed to diversify. The most opportunity I could identify with close ties to our core business was aerial electric transmission.

Tesmec was the world leader in transmission stringing equipment, but wasn’t having success in North America. The U.S. market mainly used drum-pulling technology; theirs was European dual-capstan technology. But capstan technology was more precise, reliable, and had continuous pulling forces.

Tesmec had tried entering North America twice before and wanted in. We were able to negotiate an agreement to distribute their product in the U.S. and Canada. We started having success converting these old-school operators away from the heavy, bulky, U.S. and North American equipment to ours, which was safer, a third of the weight and size, and equally powerful. At first, the operators couldn’t believe our equipment could pull at the same force.

Initially, we had only a distribution agreement with Tesmec and were susceptible to the termination clauses. I wanted to move toward a tighter cooperative structure. We negotiated a joint venture two years ago in which we became 50-50 partners. About a year ago, Tesmec went public on the Milan Stock Exchange. We now are coming under some public reporting requirements.

We’re clearly the next generation of equipment for high-voltage power transmission. Condux Tesmec now makes up 40 percent of our overall business. Potentially, it could make up much more—and we’re starting to see signs this will happen.

You’ve been involved with the Power and Communication Contractors Association. The nation’s electrical grid, for the most part, was built in the ‘50s. What are your concerns if the grid isn’t updated?
It’s at the end of its design life. It has lasted longer already than initially intended. You can read about this in many infrastructure periodicals. They have done grade sheets on the quality of our infrastructure. The nation’s electrical grid got a grade of a D+ in 2009 by the American Society of Civil Engineers.

The grid will have to be modernized. When done, that should benefit your business.
Oh, absolutely. Right now, thousands of projects are on the books. The problem is the recession has slowed this down. The U.S. isn’t spending hardly anything on infrastructure. The coming “Smart Grid” will also be a driver for fiber, as utilities drive two-way communication deeper into their networks to the consumer.

Now I’m going to give you the name of a “thing,” and I want you to explain how that “thing” has affected your business. First, the Internet.
It absolutely affects our business. Our equipment is used to build it. Our biggest years were the late ‘90s with the Telecom and Internet booms. All the long-haul fiber was being installed and our equipment made much of that happen. We were doing extremely well until overnight somebody turned off the light switch. With the Telecom and Internet busts in 2000-01, we lost a significant portion of revenue. We had to right-size. Our whole backlog of orders evaporated within a month.

Cable television.
We’re in the cable television business. Most cable television is fiber-based in the backbone with coax running the last thousand or so feet to the homes. Our equipment is used mostly to install the fiber into underground plastic duct. We have an aerial coax product line now, but a lot of legacy equipment still exists and there isn’t much demand to replace it. Most coax drop cable (last mile access) is hand-dug and direct buried, so there isn’t much use for our cable installation equipment.

Alternative energy.
We’re positioned well for that with Condux Tesmec. Alternative energy resources are generally in the rural Western U.S. The wind resource is from Canada to Texas and through the Great Plains. Solar is mostly in remote Southwest areas. Geothermal is in remote West and Southwest areas.

There is an effort going on to create Competitive Renewable Energy Zones in order to plan so excessive infrastructure isn’t built. The power industry has always had local monopolies that generated, transmitted, and distributed and billed power. Now the federal government is trying to encourage people to become either generators, transmitters, or distributors/billers. This specialization will break up the monopolies. This also gets people planning on a more regional, national, and continental basis.

The federal government can play a key role in helping manage how we go from a local/state public utility regulated business to a more continental approach. It’s a contentious situation right now because political fiefdoms are being affected.

Such as?
State public utility commissions historically have held power in this area. Now that these projects are becoming regional, national, and continental, these commissions are losing permitting control. There are politics involved in who benefits from the transmission lines and how the people not benefiting are compensated. Consumers are also fearful of the unknown and of change.

The reality of renewable energy is you can’t build it without connecting it to the Grid. Yet people don’t want the transmission lines on their property. We’re perilously close to a major blackout—it will probably happen in the near future and be required for change to occur. We had what appeared to be a major blackout in 2003 in the East, but even that wasn’t enough to convince consumers hand regulators how fragile the Grid is. Renewable energy actually complicates the situation.

Today, a majority of our U.S. baseload energy comes from coal, but it’s almost impossible politically because of the carbon and mercury issues to permit a new coal-fired plant. Most new plants are fueled on natural gas. Right now, natural gas is cheap because of recent technological progress in fracking to extract shale gas. There are way more shale resources in the world than anyone had thought. The U.S. is estimated to have more than two times the petroleum equivalent reserves of Saudi Arabia using this technology. That’s part of the reason natural gas prices are so low. Well engineered nuclear plants also need to be part of the base load mix.

Going back to what you mentioned about people not wanting electric transmission lines on their property: Its seems most transmission problems could be solved if someone developed a technology to bury lines without a loss of power. Could that happen one day?
It could, but major technological innovations would first have to occur. Right now, underground construction costs three to ten times more than aerial. The main areas of underground electric today are in dense urban areas where aesthetics are important or where you get severe icing. Also, all the long-haul fiber went underground because of the necessity for reliability, which is a consideration for power, too.

The only known way today to effectively control for underground power loss is through cryogenics and encasing the line in extremely cold, super-conductive technology. It’s very expensive. Being able to put electric cable underground inexpensively and without power loss is the Holy Grail of the industry. If someone ever found that Holy Grail, our company would benefit in a big way. In the meantime, aerial direct current (DC) using superconductive cable is a more efficient solution for long-haul transmission and is gaining traction.

You have chosen not to have your own field sales force, but instead sell products through middlemen—manufacturing representatives. What are the advantages of farming out your sales force?
We do have three direct regional sales managers supervising our 13 manufacturer’s reps in North America. We sell through 40 distributors internationally. To physically cover the world, you need lots of feet on the ground. Also, with our Condux International product line, our average sale is only a few thousand dollars and so it would be hard for a salesperson to make a sales call that could recoup the investment. On the other hand, with Condux Tesmec, we’re dealing with equipment packages that can sell for over a million dollars. So we have two different go-to-market strategies.

Your father and uncle owned the property that is now River Hills Mall. Did you understand then the gravity of their selling the land?
I definitely did. I spent a lot of time talking to my father about it. The land sale was the vision of my father and uncle. I was involved in meetings with General Growth and others, but only on a low level. I could see what had happened in Sioux Falls with its mall and understood what was about to happen. Mankato was going to be a regional center because no other larger city existed within 70-80 miles. Go through the Mall parking lot today and you can see lots of Iowa license plates.

Did your father and uncle seek out General Growth?
General Growth had come to town looking to work a deal on the existing Madison East Mall site. After several attempts, a deal couldn’t be reached. They then focused on several parcels of land my father and uncle and others had pulled together at the existing site of River Hills Mall. They had purchased the land in the ‘60s. They knew the city would eventually expand that way because they had kept up with the regional development plan.

When your family sold the concrete business in 1998, you personally bought Condux International and other family members ended up with the real estate portion of the business?

My sisters and cousin ended up with Venstar, which held the main real estate holdings. We had another company that owned real estate around the Condux International plant—Lime Valley Development, which I bought.

Your family foundation has given hundreds of thousands of dollars to MSU. Neither you nor your father attended. Why MSU?
My mother and father were actively involved in the Mankato community. My involvement on the MSU Foundation Board helped continue that tradition. The Foundation also gave a significant donation to the ISJ Heart Center. That donation hit home with our family—my father had heart issues.

You have contributed a great deal of money over the years to various politicians. What are your criteria for giving?
I like pro-growth, pro-business, and pro-employment candidates. Right now, we’re seeing a dramatic change in the policies that made America great. The United States has outperformed socialist Europe for 150 years. Our current administration is moving this country to become more like Europe. This will stifle growth. China will surpass us in the near future. The United States is past its prime as a world force unless it does something dramatic.

Innovation has been at the core of our nation’s success. I’m fearful now because the world’s best and brightest are leaving. The Chinese, Indians, Russians, Brazilians, Taiwanese—they attend our graduate schools and are going back home because home has more opportunity. I witnessed this while attending New York University’s business school. The student body was primarily Chinese and Japanese. They had strict instructions not to become part of our culture before returning home. I intentionally tried indoctrinating these students into U.S. culture to keep them here.

I don’t want to sound defeatist. We can overcome these challenges, but we have to become more innovative. People in the U.S. can’t expect to have a medium standard of living off low-skilled, low-paying jobs because we have global competitive pressures now. That’s economics—and can’t be controlled or managed by politics.

Today, you have to innovate or advance technology to have a sustainable, successful manufacturing business. You can’t just copy what someone else is doing because China can do it for a third of the cost. High-volume, mass-produced, low-cost products can no longer be produced successfully in the U.S.

Can’t some of what you make be knocked off in China?
We had a sales office in China for eight years until 2002. To cut costs, we converted that to a regional agent. At the time, I was looking at setting up a manufacturing facility there. Only a severe contraction in our core business stopped us. I had a facility identified, a business plan, and was ready to pull the trigger until 2000.

If you had an uptick in business caused by a government decision to update the electric grid, for example, would you be tempted to revisit some of those old business connections in China?
There would be a temptation. However, most of our Condux International equipment involves smaller, lot-quantity production. This is what has saved us from being knocked off. We also pride ourselves in providing after-sales service support. Our equipment needs a fair amount of operator training that can only be done from the U.S. We also invest in technology to stay ahead of the curve and the commoditization of our product.

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Getting to know you: Brad Radichel

Born: February 28, 1962.

Education: Mankato East High ‘80; University of Southern California ‘84, business administration (entrepreneurship); New York University MBA ‘89.

Family: Wife, Elizabeth; daughters, Darlene and Christina.

Organizational involvement: Power and Communication Contractors Association, associate director; International Electrical Engineering Association, member; Envision 2020 Mankato; ICLV; Phi Delta Theta fraternity; Minnesota State Mankato Foundation (investment committee), former board member; Boy Scouts of America, Eagle Scout.

Big Butte Humor

CONNECT: What’s the story behind your boat’s name, Elephant Butt?

RADICHEL: (Laughter.) Two friends helped me find a used boat. One was very knowledgeable about boats and developed a specification for the type I wanted. He found one on the Internet. The three of us did a road trip south of Albuquerque on the Rio Grande River to a place called Elephant Butte. We tested the boat on a dammed-up stretch of river. Being in Elephant Butte, we decided to name the boat Elephant Butt. My daughters were wondering about the name and I tongue-in-cheek told them the guy painting the name on the back of the boat ran out of paint before he could write the last “e.” (Laughter.)

THE ESSENTIALS: Condux International/ Condux Tesmec

• Phone: 507-387-6576
• Address: 145 Kingswood Drive, Mankato, MN 56001
• Web: condux.com