One potential snag in the recovery echoed by many subcontractors is the reduction in available public money coupled with the frozen private investment market.
“The reduction of government funding is going to be a huge hit,” says Kevin Yearout, president and CEO of Albuquerque-based Yearout Mechanical, which ranked second among all New Mexico firms. Dan Coppinger, vice president and division leader of Southland Industries, a mechanical contractor based in Las Vegas, agrees, adding: “We are still hearing about many projects being postponed or canceled due to the owner's inability to acquire financing.”
The state of New Mexico is also currently wrestling with how stringent its energy codes should be, which could impact subcontractors in the coming year. “Green building codes are tough to overcome because the lenders do not recognize them as adding value, so added first costs with no ability to finance them is an issue,” Yearout says.
Despite a 25% decline in revenue reported by New Mexico subcontractors between 2009 and 2010, Jack B. Henderson Construction Co., Albuquerque, saw revenue increase by more than 5% over the same period. The mechanical contractor “invested in building a robust program that meets the needs of highly demanding customers, and we've found that it's paying off as this narrows the field of competition,” says Maria Guy, vice president, operations support. “We foresee more stringent quality requirements from our customers and feel we are prepared to exceed their expectations.”
J.B. Henderson's success in 2010 earned it a spot as a finalist for ENR Southwest's Specialty Contractor of the Year award. Another finalist, Phoenix-based Midstate Mechanical, saw revenue increase 19% in 2010 by expanding into the energy and building technology/automation sectors. The firm also benefited from federally funded projects, such as the $184-million Mariposa Land Port of Entry Expansion in Nogalas, Ariz.
Paving contractor Ace Asphalt of Phoenix chose to expand into New Mexico for the first time in 2010, focusing in the education and public works sectors. “We recently secured a cooperative procurement agreement offering the lowest per-unit prices we have ever offered in order to serve our customers in these sectors in their time of budgetary need,” says Jon Baggett, director of marketing. The firm's largest project start in 2010 was a $19.5-million contract at the Volkswagen Proving Grounds in Maricopa, Ariz.
Baggett also sees potential in advances in pavement preservation techniques and technologies, especially products that could meet environmental guidelines for future green road certification programs.