GALLO MECHANICAL, LLC

General information

On June 1, 1945, brothers August R. Gallo, Sr. and Louis V. Gallo, pooled $800.00 to start their new company - Gallo Plumbing Company.

Louis Gallo at this time was a Licensed Master Plumber and August Gallo was a former Insurance Agent.

From the period of 1945 through 1953, the partners engaged in plumbing work for residential housing developments. During this period, after WW II, housing was a major contributor to a construction boom in the New Orleans area.

For the first six months of operations, the brothers operated from one of the partner’s home. They were very successful in stocking major inventories in a large garage that was part of the home, which enabled them to purchase "car-load" lots. Within eight months of operations, the Company found the need for manpower, and at this time Plumbers and Steamfitters Local #60 approached them to join the UNION. In February of 1946, Gallo Plumbing Company signed a Union contract and became a UNION SHOP.

From 1946 through 1952, Gallo Plumbing Company became very successful and gained many clients - "housing developer" types that constructed "track-housing" in numbers from ten to one hundred houses at a time. Also, around this time period, the Company moved to an old warehouse, approximately 3000 sq. ft. in size, including a small office area and an open area for storage. This new location afforded much larger inventories. Savings in cost from large purchasing became a major method of large profit gains during this period.

Several economic changes became evident in early 1953 when a mild recession occurred in New Orleans as a point of saturation began to occur in the housing market.

Around this same period, August Gallo, Jr., the son of August Gallo, started college at Tulane University in New Orleans. Tulane was within very short distance to the Gallo Plumbing Company's shop; consequently, August Jr. worked on a daily part-time basis during his four years at Tulane.

The period from 1953 through 1957 was not the best of times for the Company. Besides the slight recession, Louis Gallo lost his wife to cancer over a very long duration of time. Louis's attention to the Company became minimal during this period and shortly after the death of his wife, he decided to retire. August and Louis settled on a buy-out that took place in 1956.

The Company, having $200,000,00 of equity and a five-year pay out plan of $100,000.00 to Louis, began to struggle, along with the economic turn down. August Jr. completed Tulane in 1957 and served a contract term with the U.S. Navy from the Tulane Naval ROTC and completed his active duty in 1959. In May of 1959, August, Jr. reported to his father for full time employment at Gallo Plumbing Company.

Because of August Jr.'s experience with the Company during college and with the housing industry diminishing and the Union becoming non-competitive in the residential market, the dye was cast to enter into the commercial market. Between 1959 and 1962, the Company entered into and began to succeed in the commercial market. Between 1962 and 1970, the Company entered the industrial piping market and found a profit niche here.

During these years, the Company became a full Mechanical Contracting firm. August Jr. became president of the MCA of New Orleans (in which membership required full Mechanical Contracting and required all members to bid only complete "Mechanical"). In 1967, the Gallo Plumbing Company was incorporated and the name changed to Gallo Mechanical Contractors, Inc. August Jr. became President of the Corporation and began to run the Company's operations while August Sr. ran the financial end of the operations. The Company continued to prosper during the early and mid 1970's; the Company was more able to acquire financing and bonding.

In 1970, the Company acquired new property and was able to build a much larger warehouse and office. With this additional yard space, the Company was able to fabricate and enjoy a forte in the Industrial Piping Construction. Also, the Company began to perform a great deal of civil work in the Industrial Plants and become proficient in carpentry and concrete work.

August Jr. had six (6) children, very close in age, and around 1975 began to plan for the entry of some of the children into the Company. This same year, August Sr. became ill and required nearly one year of recuperation from a major operation. It was at this time that August Sr. began donation to August Jr. (an only child) of the Company and in 1975, August Jr. took the responsibilities of running all aspects of the Company.

Between 1977 and 1983, five (5) of August Jr.'s six (6) children came to work for the Company. This transition was planned by August Jr. and no Gallo employee was ever replaced by any of the Gallo children. Instead, the Company continued to expand to allow the children to start at the bottom and work their way up.

The late seventies, besides these changes above, were a time of the Open-Shop entry into the New Orleans Marketplace. Brown & Root, a large Industrial Open-Shop contractor destroyed the New Orleans Industrial Market. The local union did not respond and the Industrial Market for Gallo was being diluted tremendously by the Open-Shop Contractors.

Because of this situation, between 1976 and 1977, a "double-breasted" type company was formed and the Holding Company was named THE GALLO CORPORATION. The subsidiaries of the Holding Company were as follows:

Gallo Mechanical Contractors, Inc. - Remained a union Mechanical Contractor; August Contractors, Inc. - Became licensed as a general Contracting Company and as a Mechanical Contractor.

The Company was now prepared to go "double-breasted" in the event the market became intolerable.

Fortunately in 1981, with the full time entrance of David Gallo, the oldest of the Gallo children, the Company was able to venture more into the commercial market. During his college years, David worked as an estimator and after graduating from college he was able to re-direct the Company from a failing Industrial market into a somewhat prosperous market.

During this 80's, four (4) additional Gallo children (Janice, Janet, Stephen and Douglas) came to work and, with David estimating full time, the early eighties were good years.

In 1985, a World's Fair Project in New Orleans failed and many, many contractors filed bankruptcy. In all, 700 contractors and vendors failed because of non-payment by the World's Fair Activity. While this was happening, a World Energy Crisis affected Louisiana tremendously financially and in 1986 New Orleans and Louisiana were in a DEPRESSION of the highest magnitude. Around this same time period, 1985-1986, the Local #60 Plumbers and Pipefitters Contract was being negotiated during this depression period and negotiations took a historic twist.

The majority of the Signatory Contractors during the seventies had planned their strategies to become double breasted, if need be. The Contractors calculated the average wage was $12.00/hr for journeymen in the Open-Shop Arena and the current Union contract was $16.80/hr. The Contractors threatened to all go double-breasted unless the Union reduced wages to $12.00/hr. Because of these desperate times, the Union agreed and a WORK RECOVERY wage of $12.00 was settled on. The wage of $16.80 remained on Federal Work and the $12.00 rate was used for all other projects.

This agreement allowed the contractors to compete with the Open-Shop and lasted for several years until the $16.80 wages were reached again in 1995.

In 1990, David Gallo began as President of the firm and took over the complete operations of Gallo Mechanical Contractors, Inc., while August Gallo Jr. began property development.

This arrangement is the present arrangement. For the 8 to 9 years of the 1990's, David Gallo brought sales of Gallo Mechanical from $8 million dollars in 1987 to nearly $25 million in 1999.

In 1995 the last child, Bryan, entered the Company after college and now the six (6) Gallo children, under a plan of stock donations, are presently the stockholders of the Corporation. Stockholders of the newly formed Gallo Group, L.L.C., are: David R. Gallo, Janice Gallo Deshautreaux, Janet Gallo Betpouey, Stephen P. Gallo, Douglas B. Gallo, Bryan A. Gallo. The Board of Gallo Group, L.L.C. consists of the above six (6) stockholders as well as August R. Gallo, Jr., who serves as Chairman. Gallo Group, L.L.C. is the holding Company for Gallo Mechanical, L.L.C. and GMC Services, L.L.C.

Recent History

Gallo Mechanical continues to grow as one of the largest Mechanical Contractors in the Gulf Coast Region. The corporate headquarters has moved to the Lakeway 2 Building in Metairie. The Company continues to have a full service fabrication shop and warehouse on Agriculture Street in New Orleans, as well as a satellite office in Hammond, LA.