Larry Hollis is finding he is doing things he hasn’t done in years.
Hollis, the vice president of business development for San Jose-based Rosendin Electric, recently had to make a two-hour drive to drop off a bid proposal. The week before, he had to do a job walk.
These are things that Hollis now has to do for Rosendin, which like many other specialty contractors across the state has to watch its budget and is asking its employees to do jobs they normally don’t do.
“We are asked to do more,” Hollis says.
But at Rosendin, which expects to see a drop in revenue by about 30% in 2009, employees have accepted the extra work.
“Everybody is happy to be working,” Hollis says.
The recession has affected nearly every aspect of construction in California and specialty contractors are among those feeling it the most.
This year’s Top Specialty Contractor rankings reflect a solid 2008 but the picture for 2009 will be murkier as specialty contractors try to weather the recession, and cope with increased competition even as the number of projects dry up.
For some companies like Rosendin, the recession has spurred them to move into more alternative energy markets.
“We’re getting big into the solar power world,” Hollis says. “We think that’s going to a big market.”
Western Air Limbach, which has offices in Los Angeles and Palm Springs, is also investing into sustainable markets and high-efficiency mechanical systems, says Craig Montgomery, executive vice president of Limbach facility services.
But sustainable practices are not the only measure Western Air is taking to weather the economic environment.
The company is increasing its service capabilities, believing that people will choose to maintain their current systems and will need service, Montgomery says.
Western Air is also focusing on its core customers and meeting their needs, but the result isn’t always equivalent to the effort, he says.
“We have to work twice as hard to get half as much,” Montgomery says.
Specialty contractors interviewed for this story say they have not had to worry about filing mechanic’s liens or other payment issues – mostly because those projects with financial problems never got off the ground in the first place.
Specialty contractors are also dealing with projects that get canceled midstream, says Bing Drastrup with Pacific Coast Steel. Pacific Coast Steel was working on the ninth floor of the hotel-casino Echelon in Las Vegas when word came that project was stopped.
Specialty contractors, like general contractors, are also trying to manage increased competition and multiple bidders of varying capabilities on projects where there normally would be only a handful of qualified bidders.
“Suddenly, you have everybody in everybody’s market,” Drastrup says.
Companies like Pacific Coast Steel are beginning to look at entering other markets, he says.
Some like Rosendin are already starting to bid and do work outside of California, Hollis says.
“People who are limited to their territory are going to have a tough time,” Hollis says.
While some companies will search for different markets, Limbach plans to hold steady and not work on projects too far away from the company’s offices, Montgomery says.
At the same time, Limbach does not plan on bidding on projects at cost, like some companies who do so simply to get work, Montgomery says.
Owners who select companies that bid at or under cost will encounter more problems compared with the money they might save by working with a responsible, value-driven bidder, Montgomery says.
“I don’t think smart companies are going to start bidding at or under cost,” he says.
Opinions are mixed as to when the economy will regain solid footing. Some, like Hollis, are optimistic.
“It’s not going to get much worse. We’re already there,” Hollis says. “We’re starting to look up.”
Limbach also foresees a stable future because of its clients, Montgomery says.
“We have been very lucky – we have stuck to the same customers,” he says. “We are working for people who made provisions for this downturn.”
“It’s going to be a difficult year. Even if construction bounces back, it will be a difficult year,” says Pacific Coast Steel’s Drastrup.