Trade Contractors Report Strong Revenue Growth
Swelling backlogs have allowed subcontractors to become much more selective about which jobs they pursue
Specialty contractors in California extended their hot streak in 2015. Firms participating in ENR California’s annual survey reported a revenue jump of almost 10% last year. That builds on multiple year-over-year gains, including an 8% rise in 2014.
Workload appears to be consolidating toward the top, with the largest firms growing fastest. All of this year’s top 10 firms grew compared with the previous year—collectively, the top 10 firms jumped more than 17%. Top-ranked EMCOR boosted its regional revenue to more than $900 million in 2015, and the firm continues to beat its forecast for this year, according to its third-quarter results. Growing backlog “should support growth into the fourth quarter and 2017,” says Tony Guzzi, EMCOR’s president and CEO.
The workload continues to present logistical and staffing challenges, however. “Construction in California remains very robust and near full employment,” says Chris Plue, senior vice president of Webcor Concrete Group. “Resources are spread thin across the industry. More than ever, collaboration between owners, design teams and contractors will determine project success.”
As a group, revenue among electrical and utility contractors spiked by 13% in 2015, propelled by continued strength in the renewables market, a trend likely to continue. “With the ever-changing electrical demand and the role renewables will play in the future, we are extremely optimistic about the market outlook in the western U.S.,” says Jason Combs, regional vice president of operations with INTREN.
Despite continued growth, post-election uncertainty and volatility in the global markets will spur some subcontractors to focus on self-restraint. “Being hyper-vigilant and understanding every opportunity that comes our way before we even pick up a set of drawings is critical,” says John Boncher, president and CEO of Cupertino Electric, which saw revenue climb by 9% in 2015.
“Our focus is around making sure that we pick the right jobs, make good decisions and choose the right customers,” he adds. “The right opportunity for us is one that generates a healthy balance between risk and reward.”