Regional Specialty Contractors See Upswing in 2013
Specialty contractors across the Mountain States are more upbeat than in recent years about the overall health of the industry and the regional outlook for 2013. While many firms saw an uptick in revenue and profits in 2012, ongoing anxiety about availability of work and tighter competition is being compounded by national economic concerns.
Trade contractors that survived the recession did so by retooling their operations and keeping current customers happy while seeking out new ones, often by diversifying services. The result: expanded but leaner operations with a greater reliance on prefabrication of materials and new jobsite technologies.
"Because many small- to medium-size construction businesses have redefined their business operations and are working from a select client list, opportunities and relationships are positive," says Debra Scifo, executive director of the American Subcontractors Association of Colorado. "However, business success depends on making a profit, and tight margins and slow pay will continue to be looming challenges in 2013."
Many firms are optimistic about next year but are keeping a close watch on the political gridlock in Washington, D.C. "We anticipate cautious, calculated spending in the first six months of 2013 due to changes in Washington and the overall economic uncertainty," says Pat Wolach, executive vice president with Denver roofing and solar-panel contractor Douglass Colony Group. "However, that being said, we've noticed new construction spending trending upward, signaling that developers are starting to move forward with projects that have been on hold."
"We anticipate the Utah market will improve in 2013 and, in fact, have already seen signs of improvement over the past several months," says Davis Mullholand, president and CEO of CCI Mechanical, Salt Lake City. "But customers are demanding a more sophisticated approach to mechanical systems, and CCI is investing heavily in our people and technologies to meet those demands."
Some specialty firms may see an increased demand for their services as the single-family regional housing market rebounds. McGraw-Hill Construction expects that sector to increase 26% in Utah and 27% in Colorado next year. "Those construction companies that endured the market downturn over the last few years should begin to see light at the end of the tunnel as the housing market trends upward in 2013," says Wayne O'Brien, COO of utility contractor Garney Cos., Littleton, Colo. "This will require a demand for new and expanded water-treatment and conveyance-system projects."
McGraw-Hill Construction also forecasts growth for hospitality, light commercial and industrial projects and highways—and many specialty trades have positioned themselves to pursue that work. "Our outlook for the new year is continued improvement in several of our core markets, including pharmaceutical, manufacturing and food and beverage," says Robert Mathisen, senior vice president and general manager of Denver mechanical contractor Murphy Co. "Over the past few years, we have worked hard to become more innovative in the use of technology and modular fabrication in our business and will continue to drive new innovations that are critical to our future success."
Some firms, like Utah's SME Steel, anticipate as much as 10% to 15% growth next year. "The market has improved, and we've reduced our costs by creating efficiencies in production that have made us more competitive," says company CEO Wayne Searle.
That enthusiasm is shared by companies that saw their core markets turn around this year and that hope for more improvement next year. "Headed into 2013, we are excited and optimistic about the overall health and vitality of our industry," says Barbara Jacobs, marketing manager at Denver's RK Mechanical.
Glazing industry veterans like sales manager Marty Richardson at Denver's Metropolitan Glass note that "bidding activity is strong" in the Denver market, while Wyoming's B&W Glass sees "commercial glazing opportunities as very favorable in the coming year," according to Larry Ludtke, company president. His firm has large projects under way at Casper College in Casper, Wyo., and at the University of Wyoming in Laramie and has a hospital expansion starting in early 2013 in Cheyenne.
However, most specialty contractors temper their enthusiasm because of concerns about the health of the national economy.
"There are starting to be some positive signs in both the residential and small commercial markets," says Jim Laub, president and CEO of Cache Valley Electric in Salt Lake City. "Larger projects, both industrial and technology-related, still appear to be somewhat favorable, but in no way are we out of the woods yet."