Documents Reveal Secret Road Builder Plan - NewsChannel5.com | Nashville News, Weather & Sports

NewsChannel 5 Investigates: High-Dollar Highways

Documents Reveal Secret Road Builder Plan

(Story created: 11/9/04)

For months, federal and state agents have been zeroing in on Tennessee's road-building industry. Now, NewsChannel 5's investigation of Tennessee's High-Dollar Highways has uncovered one company's secret plan to corner at least part of the market.

When Jim Ward opened his White County quarry four years ago, he hoped offering taxpayers rock bottom prices would be good for business.

"I'm satisfied that our pricing is as competitive as any where in the United States -- not just here," says Ward, owner of Middle Tennessee Limestone.

But it didn't turn out that way.

"We've had subcontractors and vendors both threatened," he tells NewsChannel 5's chief investigative reporter Phil Williams.

Ward says the real trouble came when he tried convince some of Tennessee's road builders to buy stone from him -- instead of his more dominant competitor.

"They just pretty much told us, we just can't use you," he says.

"Why?" Williams asks.

"They said they were in fear of retribution."

Todd Warner and Chris Brothers tried to open their own quarry in Marshall County -- and ran up against the same forces.

"The only thing holding us back is because they don't want us to," says Chris Brothers of B&W Excavating.

In both cases, the men took on the Rogers Group -- a giant quarry operator and highway contractor based in Nashville's Metro Center.

Over the years, Rogers has gained control of quarries from the Tennessee River to the west, to the Smoky Mountains in the east.

In some places, it's the lone supplier of the rock that goes into the state's highways.

"It's almost like they've got a foothold on the market. It's their price or no price," Todd Warner adds.

And it's no accident.

According to internal company documents obtained by NewsChannel 5 -- documents marked confidential -- it's all part of what the Rogers Group calls its "Big Hairy Audacious Goal."

That goal, set in 1999, aims to achieve $2 billion in annual sales by the year 2015.

To do that... the Rogers Group strategy calls for locating quarries in "markets where Rogers Group possesses both a strong commercial and political understanding, as well as relationships with potential targets that may avoid open bid situations."

State Rep. Frank Buck, D-Dowelltown, says:

"Obviously the folks want to avoid open bidding and want to avoid competition because they make more money that way."

Buck is vice chair of the House Transportation Committee. He says the problem is that the Rogers Group's plan plays with taxpayer money.

"When you avoid open bid situations with government money, that is a license to steal -- absolutely.  Now that's wrong."

And Rogers has aggressively fought to keep out competition.

In Jim Ward's case, he applied for a state grant for a railroad connection that would allow him to ship rock right into the heart of territory controlled by the Rogers Group.

But state records show the company lobbied against his request, eventually derailing the entire plan.

"It just got really complicated -- really fast," Ward says.

The confidential plan also calls for "vertical integration" -- not only supplying the rock that goes into the roads, but also getting into the business of building the roads themselves.

In Rogers' words: "controlling channels of distribution," not only "providing fortress" against competitors, but also an "offensive weapon" against them, as well.

"If this is not an admission that they are trying to eliminate competition, it's certain a double first cousin," Buck says.

Todd Warner says, "If you get one company controlling everything, they can name their price."

Warner and Brothers say they began to search for their own source of rock after realizing Rogers was increasingly becoming not only their supplier, but also a competitor.

"We feel like we're going to be squeezed out in the future if we are not able to produce our own stone," Brothers adds.
  
Then, they suddenly became the object of complaints faxed to regulators by, you guessed it:

"Rogers Group Incorporated," Brothers reads the fax header.

Phil Williams asks, "Your reaction to that was?"

"It didn't make us happy."
 
As for Jim Ward, "You feel a little bit like David against Goliath?" Williams asks.

"Yeah," Ward replies. "We've a got a rock, but we don't have a sling."

These folks say Roger's plan is about more than just rock. It's about cold, hard cash.

"We're talking about your dollars and my dollars," Ward adds.

Rogers Group officials refused to talk about what we discovered. Instead, they issued the following statement:

"Rogers Group has a history that goes back nearly 100 years. We provide a livelihood to more than 700 Tennesseans and their families. We pay over $9 million annually in state and local taxes. We provide a quality product for our customers -- both private and public.

"We operate our business legally and ethically. In fact, Rogers Group was this year's recipient of the Tennessee American Business Ethics Award.  We work hard to be good corporate citizens. We encourage our own employees to be active in their neighborhoods.

"State and local governments have rules for bidding jobs. Any vendor is welcome to submit their best bid. Neither the state nor any local government is required to accept a bid if it believes the cost is unreasonable."

As for Jim Ward's claim that suppliers have been threatened for doing business with him, the Rogers Group plan does call for finding "suppliers wishing to form alliances."

Between 1998 and 2003, Rogers Group pulled in almost $270 million dollars of your tax dollars from the Tennessee Department of Transportation alone.

That's not counting the millions spent by other road builders to buy stone from the Rogers Group.

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