Specialty Contractors Look Forward to Sustained Growth
After years of weakness, construction levels across the Southwest appear to have established a new baseline and are entering the beginning of an extended period of growth. Eight of the top 10 firms on this year's Top Specialty Contractors ranking had increased revenue in 2012.
ENR Southwest's Specialty Contractor of the Year, Suntec Concrete, Phoenix, saw its revenue jump 67% over the past year, to $125 million. The Las Vegas office of Helix Electric reported a $10-million increase in revenue in 2012, helping the company climb up a notch in the annual ranking.
Many other firms in the Southwest reported similar market results in 2012.
"The construction market in the Southwest has seen its bottom and is now beginning to recover," says Wayne Bell, vice president of sales and marketing with Ace Asphalt. "However, recovery looks different in various markets. For example, the Arizona market is showing signs of more new construction as well as clients pulling the trigger on deferred maintenance. But for the contractors bidding this work, it continues to be a tight-margin competitive landscape.
"In other markets we serve—New Mexico, Nevada and Texas—the opportunity and ability to perform the work when the clients need it is providing some relief from the margin pressure," Bell adds.
What might be most symbolic of the morphing construction landscape is that job types are also changing—a positive side effect of the upturn.
"Uncertainty remains in the sectors that our company typically works in," adds John Stroud, president, of J.B. Henderson Construction Co. in Albuquerque. "Funding and new projects in some sectors that were strong during the recession are starting to ease, and some sectors that have been quiet for the past few years are showing some signs of life. We're optimistic that overall 2014 will show some small growth."
Specialty contracting firms that are benefiting from the current market say recent refinements to their internal processes and client services have helped better position them for the rebound. BIM is no longer just ubiquitous, it is as vital as business cards.
"An area of innovation is in our building automation and technology division," says Dave Jones, CEO of Midstate Mechanical in Phoenix. "Clients are requesting more intelligent building control systems. Today's buildings are becoming increasingly complex. Building automation systems don't just control the basics. They regulate airflow, monitor energy use and are being called upon to integrate with security, lighting and other systems throughout the building to deliver comfort, safety and energy efficiency."
Challenges always remain, however, and for Victor Fuchs, president at Helix Electric, remaining vigilant on labor issues is crucial.
"The major threat for us is project labor agreements," Fuchs says. "For us being a nonunion contractor, it affects us. We are working very hard with political figures to make sure those things do not happen, especially on public jobs. That way it keeps a level playing field."