A&A Paving Invests in its First Mill for Mega-Growth
BY AsphaltPro Staff
Editor’s Note: For 2024, AsphaltPro Magazine allows experts in the industry to share how to expand your operations to the next phase of business. Are you ready to take the plunge and add more services to your arsenal? Let’s turn to some professionals who have equipment, services, software and tenure to help you expand to bigger, broader, more lucrative projects. This month’s paving installment looks specifically at milling technologies and applications for different sized projects.
When Todd Eichholz first joined the asphalt industry, it wasn’t an obvious decision. He was a commercial real estate developer with no ties to asphalt when Bob Olson approached him about buying into A&A Paving, Roselle, Illinois, 10 years ago.
“A&A was my paving supplier,” Eichholz said. Olson was 72, without an exit strategy for his company. “His kids didn’t want to take it over and he knew if he sold it to a large national company that they’d likely fire [Olson’s] employees. He wanted to find somebody who would take over the company, keep his employees, and grow the business into something even better.”
After a few more milling jobs with A&A’s new machine, Eichholz decided the machine was too important for only two employees to know how to operate it. “We started training additional employees with each milling job from that point forward,” he said.
That person turned out to be Eichholz, then 32. “We had a deal within three weeks of him approaching me,” Eichholz said. Although it was a risk to take on a new venture, it was the type of risk that paid off. “We started scaling the company very quickly from the moment I joined.” Five years later, Eichholz bought the remaining half of the company and decided it was time to take another calculated risk. In 2020, he bought the company’s first milling machine.
“A lot of smaller contractors struggle with the idea of buying a milling machine,” Eichholz said. “It’s the most expensive piece of equipment they’ve ever bought, plus there’s the issue of the additional needs for a semi, lowboy, water truck, etc.”
Although those factors tend to scare smaller contractors away from taking that risk, Eichholz said the decision has been key to scaling A&A to where it is today. “We’ve doubled our production by bringing milling in-house,” he said. “By investing in that machine, training our crew, and dialing up our production, we’re doing jobs I never thought possible.”
Biggest Small Company to Smallest Big Company
Located in the suburbs of Chicago, A&A is in a somewhat unique position. “In our area, there are non-union, smaller contractors in one sandbox and there are large union companies in the other sandbox,” Eichholz said. “We had one foot in both sandboxes, because we were smaller size-wise but we were union competing against non-union companies for smaller jobs. And when we tried to compete in the bigger sandbox, we didn’t have the production capabilities they had. We realized we had to figure out which sandbox we wanted to play in, and it was pretty obvious we should be playing in the bigger sandbox.”
The key to playing in the bigger sandbox? “We had to invest in our own milling machine,” Eichholz said.
Prior to 2020, A&A had very little trouble subcontracting milling services. “I could usually have our milling sub on a parking lot within 48 hours,” Eichholz said. “I felt that as long as I got good service from my milling subs that there was no need to buy a milling machine of my own.”
Then, at the end of 2019, their larger milling sub companies began gearing toward municipal work. “They started needing two weeks’ notice, and if it rained on that day, we’d go to the back of the line,” Eichholz said. “We were at the mercy of their schedule and production rates. That’s when we started investigating what it would cost to buy a milling machine and its ancillary pieces, so we could control our own schedule.”
Investing in its own mill gave A&A control over more than its schedule; the decision gave them control over material and yields. “Sometimes our subs wouldn’t mill at a consistent depth,” Eichholz said. “Say it was a 2-inch mill, they might mill 2 ½ here or 2 ¼ there, which meant we’d have to put back more material than we bid, making it hard to make our margins. Once we started doing the milling ourselves, we noticed we were never going over on tonnage. We were also able to control the grades better so we’re leaving our customers with a better product while also improving our margins.”
After running the math with help from NPE instructor Tom Eosso from Eosso Brothers Paving, Eichholz decided investing in the milling machine of his dreams was a no-brainer. He purchased a Wirtgen W 150 mill in May 2020.
The Math to Mill
It was in 2020 that Eichholz finally decided to buy his first milling machine. “I took a class at the National Pavement Expo (NPE) in 2019 that was all about learning how to buy your first milling machine,” Eichholz said. He became good friends with the instructor, Tom Eosso from Eosso Brothers Paving. “I told him how I was scared to death to buy a mill, that if it didn’t work out such a decision would sink us for years.”
Eichholz had run the numbers and nearly purchased a milling machine three times in the past, but was afraid of the ‘unknown unknowns’—costs he wouldn’t be able to anticipate without expertise in milling. “No matter how much due diligence I put into budgeting out that machine, I was always afraid my math wasn’t accurate,” he said. “That’s the beauty of events like NPE—building relationships with people you can ask these sorts of questions.”
“I’m not sure I’d own a milling machine today if I hadn’t been able to ask those questions to someone who knows,” Eichholz said. “I think I’d still be too scared about spending half a million on a single machine, plus $150,000 on the rig, $80,000 on the trailer and $80,000 on the water truck to support it.”
Eosso helped assuage these fears by sitting down with Eichholz over dinner to break down the costs of the milling machine into simple math. Together, they calculated the cost of continuing to subcontract milling operations compared to purchasing a machine of one’s own. They factored in the monthly payment of the machine, the cost to own (both when the machine was and was not in use), as well as the ancillary equipment required. They even calculated how many months the machine could sit dormant (six to 12) without a single day of work before becoming a financial risk—all done on the back of a napkin at the restaurant.
“Once we’d calculated everything, the math spoke for itself,” Eichholz said, concluding the machine would pay for itself if A&A used it at least four days a month—a number the company could easily achieve. “Running the math proved that it was a calculated risk rather than a drastic risk.”
In fact, Eichholz felt so confident about purchasing his own milling machine that he went through with the purchase in May of 2020—during the most tumultuous period of the Covid-19 pandemic. He was no longer afraid, even if there was less work available than usual. This confidence enabled him to get the machine he had long had his eye on—the Wirtgen W 150—at a 15% “Covid-19 discount.”
A&A has been growing ever since investing in its first mill. The W 150 has been such a benefit to his company that Eichholz is now running the math to invest in a second mill
Eichholz also had a partner in his equipment dealership, Roland Machinery, and manufacturer, Wirtgen America. “We had John Kroger [from Roland] and a rep from Wirtgen walk us through what we could expect—the good, the bad and the ugly—as well as the process to transition into performing our own milling,” Eichholz said.
Kroger also helped guide A&A to the right machine for their particular needs. “I was between the Wirtgen W 120 and W 150—the primary difference being the size of the drum,” Eichholz said. “He wasn’t trying to upsell us or anything, he really made sure the machine we bought was the best fit for us.”
The 150 was a better fit not only because the wider drum enabled 20% more production per pass, but also because the location of the cutter drum in the middle of the machine offered a better turn radius—particularly important for parking lot islands and light poles on many of A&A’s jobs.
Eichholz has no regrets about his choice. “It’s the most amazing machine I’ve ever owned,” he said. “It has completely changed the face of our company. We grew 30% in 2020—despite Covid-19—because of that machine.”
If the ancillary equipment required for a milling machine is a concern to contractors, Eichholz recommends buying the minimal required equipment or contracting out those services until feeling confident to buy one’s own. For example, he bought a 500-gallon water tank with a pull-cord pump for the back of A&A’s box truck instead of a water truck and hired out transport of the milling machine at first. “As we made money with the mill, we invested in the semi and a used lowboy. Then, as we saved more money, we bought a new lowboy and eventually a water truck,” he said. “You don’t have to go all in, all at once. All you need to do is figure out a way to move and maintain the machine as you go along.”
Learning Curve
Purchasing the machine was only half the equation; once A&A received the Wirtgen W 150, the crews had to learn how to use it. A Wirtgen trainer was on the first milling job A&A took its 150 out on, training several of A&A’s employees on the job.
“I was nervous about learning on an actual job, but it turned out perfect and went exactly as planned,” Eichholz said. By learning on an actual job, the training the crew received was very real to the types of situations they’d face on future jobs. For example, there were many manholes on that particular job. “The trainer was like, ‘Hey, you didn’t spray the manholes,’ and we didn’t even know what he meant,” Eichholz said. “He talked us through that, through walking the site, marking the site, all that prep work.”
“One of the most important steps that has to be taken prior to starting a milling project, is to walk the entire site to locate and spray paint any manholes, clean outs or buffalo boxes,” Eichholz said. “This step will help alert your milling operator of when to stop milling and where to pick back up without damaging the teeth on your drum or your customers’property.”
Eichholz also learned the importance of having a ground operator for each mill. “I know a lot of contractors don’t do that, but we think the ground guy is just as important as the mill operator because he’s the one watching the grades, marking things out, stopping issues before they arise.”
Eichholz also learned the importance of having a ground operator for each mill. “I know a lot of contractors don’t do that, but we think the ground guy is just as important as the mill operator because he’s the one watching the grades, marking things out, stopping issues before they arise.”
Ultimately, the two A&A employees who would be operating the mill picked it up quickly. “Hugo and Octavio are both phenomenal operators,” Eichholz said. “They’ve used other types of machinery, they understand depth and pitch, etc., so even though they had never used a milling machine, they had it down right away.”
After a few more milling jobs with A&A’s new machine, Eichholz decided the machine was too important for only two employees to know how to operate it. “We started training additional employees with each milling job from that point forward,” he said. “It took a bit off the margin of the job, but cross training others on the mill was our insurance policy if ever someone else needs to jump on that machine to keep the job going.”
To keep the job going, Eichholz also had to be prepared in terms of maintaining the milling machine. “The mill is unlike any other piece of equipment in that it’s almost self-imploding because of the type of job it performs,” he said. “It is guaranteed to go down on occasion, so you have to have a backup plan.”
A&A’s plan is to immediately call the service department at Roland, keep the client informed, and keep the skid steers moving on the tight areas the 150 can’t mill so the job site is as ready as possible once the mill is operational again. “Roland’s mobile service truck is out there almost immediately to get it back up and running,” Eichholz said.
It was also important for Eichholz to educate the sales department about the new machine. “Instead of just stumbling across milling jobs, we needed to target those types of jobs and keep that machine busy,” he said. This turned out to be an easy task. “We very quickly went from being fearful about keeping the machine busy to using it 20 times a month, minimum.”
New Machine, New Markets
Since buying its own milling machine, roughly 60% of A&A’s work has been commercial, the other 40% residential—primarily for homeowners’ associations. Even before purchasing its own milling machine, the company had begun to aim for larger commercial projects, and focusing on private roads within HOA communities.
Since investing in its own mill, private roads have become quite a niche for A&A. “The guys in the big sandbox don’t want to deal with 150 homeowners, and the smaller guys don’t have the equipment for such a job,” Eichholz said. “We’ve really tried to illustrate that we have both the production capabilities of a large company and the ‘white glove’ service of a small company.”
That mentality served A&A well with its homeowners’ association and private road customers, but it has also been a game-changer for the company’s commercial clients as well. For example, in 2022 A&A was able to win a large 2-inch mill-and-fill project on the Bass Pro parking lots at one of the largest malls in the Chicago suburbs—a job Eichholz said would never have been possible without a mill of its own.
“The size of the job caught my eye,” Eichholz said. “Plus, I’m a hunter and spend a lot of money at Bass Pro, so I thought it might be nice if I went there and they actually paid me instead,” he joked.
The project was also a shining opportunity to show what A&A could do with its new mill. First, the client owns many similar properties and could become a repeat customer if A&A did a good job. Second, the mall itself is a high profile property in A&A’s community. “It’s one of the busiest shopping centers in our area,” Eichholz said. “It was something to beat our chest about, to share on social media that we could handle jobs that large.”
Eichholz said the decision to invest in a milling machine has been key to scaling A&A to where it is today, adding that the company has doubled its production by bringing milling in-house.
At the time of that project, A&A had its mill for roughly 1.5 years, so the company was very confident in its capabilities in terms of both production rates and customer service.
The project was complex because entrances couldn’t be shut down and A&A had to strive to ensure shoppers weren’t inconvenienced. “We also had to shave off a day for an event Bass Pro was having in the parking lot called Camper Days,” Eichholz said. They achieve this by adding a couple extra hours to each of the other days they were on the job to achieve 60,000 square feet per day. “Doing that showed them we were willing to do whatever they needed. I think that’s why they chose us for the project at that mall the following year in front of Macy’s.”
“With our milling machine, we can do a much larger square footage with a much tighter turn around, and we’re able to work around scheduling conflicts like we never could before,” Eichholz said. “If we were still subcontracting milling, we never would have the capability to meet their schedule. If we couldn’t commit to the type of turnaround time we did, we wouldn’t have been awarded that project (or many others like it). We wouldn’t even be playing in that sandbox without our mill.”
The ability to control the milling schedule has been key to any work A&A has done, both residential and commercial. “Our customer experience has improved because we don’t have to delay projects by a couple weeks anytime it rains,” Eichholz said. “We’re trying to be the most relational paving company in our market and we can’t do that if we’re rescheduling jobs non-stop. Once we had control of our equipment, we had control of our schedule. And once we had control of our schedule, we realized how much more we could be doing.”
At the beginning, Eichholz estimated they’d be able to mill 20,000-25,000 square feet a day because that’s often what the milling subs could achieve. Furthermore, a project of that size would require two days—one for milling and one for paving. Once the company got its milling machine, Eichholz realized they could mill and repave up to 50,000-60,000 square feet in a single day.
“As we figured that out, our margins went way up,” Eichholz said. “It seemed like every month, we were breaking a new production record.”
Another lesson Eichholz learned is the permitting required to move such a heavy piece of machinery in Illinois. “I didn’t know how many permits I’d need to move this machine every single day,” Eichholz said, adding that the fine to cross a bridge over weight is $5,000. “That was a bit of an unknown unknown I wish I’d learned sooner.”
Mill and Grow
A&A has been growing ever since investing in its first mill. “The mill put us firmly into the big contractor sandbox,” Eichholz said, adding that the company now competes with companies with $40-60 million in revenue. “We went from the biggest of the small guys to the smallest of the big guys.”
The W 150 has been such a benefit to his company that Eichholz is now running the math to invest in a second mill—potentially the W 120 so he can have the ability to back up to buildings and curbs and because it’s lighter and will require fewer permits to transport.
“When I bought the first one, I was told the big changes really start to happen when you buy your second and third mills,” Eichholz said. “I have so much respect for the companies running five, six, 10 milling machines. I’d love to see what that could do for A&A.”
Despite the many benefits the mill has brought to A&A, Eichholz said the company’s white glove approach to customer service has been equally important to its success. “I can do the same production as the big guys, I’ve got the same equipment, but my sales team and our company is more relational,” Eichholz said. “We always try to put ourselves in the customer’s shoes.”
Perhaps this is easier for him, since he spent so many years as an A&A customer before investing in the company. Regardless of the reason, Eichholz said this mentality is as key to the company’s growth as its new milling machine. “If you can wow the customer on every single job—if you can make white glove service your standard operating procedure—you’re going to stand out in your marketplace.”
The Bass Pro job was milled with A&A’s Wirtgen W 150 milling machine and then paved with its Leeboy 8520 paver.
Sharing the Know-How
Eichholz is now coaching and consulting asphalt companies who are trying to get from one sandbox to the next. “I’ve always had the thought process of trying to learn from somebody two stages bigger than me,” he said, attributing that as a key factor of his success in real estate and in the asphalt industry. “Because of all the things I’ve learned from the people who have coached me, my companies now run 70% without me.”
That gives Eichholz the time and space to build his consulting company and bring what he’s learned to companies one or two stages behind A&A. “I’d speak at events like NPE and I noticed people were coming up to me asking for help non-stop,” he said. “And I realized how much I enjoyed teaching them. I realized maybe coaching others is what God created me to do, more than real estate, more than asphalt.”
Since starting his consulting company in early 2023, Eichholz has coached companies in Texas, New York, Philadelphia, South Carolina and Wisconsin. “I’ve never felt so fulfilled, like I’m living God’s calling,” Eichholz said. “If anyone is ready to work through the math on milling, I’d be more than happy to help them just as others have helped me.”