Contractors See a Mixed Outlook in Local Markets
The impact of the recession continued to sting contractors in 2011. The unsettled market shows some contractors experiencing a rebound while others still suffer. Combined regional revenue for the Top 10 contractors fell to $8.3 billion, down from $8.6 billion in 2010 and $9.4 billion in 2009.
The makeup of this year's Top 10 offers a good snapshot of the market, as many firms with industrial, petrochemical and power work saw improvement while those focused on the traditional commercial and institutional sectors fell back. Turner Industries, Baton Rouge, remains on top with $1.78 billion in revenue, while Performance Contractors and Cajun Industries, also based there, and David E. Harvey Builders, Houston, moved into the Top 10. Houston-based Gilbane Building; Archer Western, Arlington, Texas; and Clark Construction, Tampa, Fla., dropped out of that group.
Although many industrial contractors saw improved revenue in 2011, Stephen Toups, corporate vice president at Turner Industries, says it wasn't a sure bet. Following a dramatic slowdown in refinery work, the market faced tremendous uncertainty heading into the year.
"We had to go back to basics, listen to our clients and be ready to respond to the market," he says. "Fortunately, it paid off." Turner's largest project to break ground in 2011 was a non-traditional facility—Valero's $250-million Diamond Green Diesel Biofuels project in Norco, La. Ninth-ranked Cajun Industries completed $45 million of work on that project.
Toups says that although the market remains uncertain today, he is "very optimistic about the future of [Turner's] customers in the years going forward."
While natural gas prices remain low, numerous energy companies are looking for ways to take advantage of opportunities. Several companies have announced plans to build new ethylene crackers, representing billion of dollars in potential work. "Everything is on our radar," Toups says. "It's insane to try to bet on which one won't happen. You have to be ready for any of them."
David E. Harvey Builders also saw a rebound in revenue last year thanks to the oil and gas industry, but it wasn't due to that sector's traditional projects. Nearly 90% of company revenue is in general building, including work on the new ExxonMobil campus being built north of Houston, near The Woodlands. Company revenue rose from $560 million in 2010 to $628 million in 2011.
Quoting the local saying that "as goes the oil and gas industry, so goes Houston," David Harvey, Harvey Builders chairman and CEO, sees reason for cautious optimism around the metro area. Last year, he says, office projects that had been on hold began to loosen up and move forward. Meanwhile, large leasable spaces downtown are getting scarcer, Harvey says.
However, some in the local business community remain in a holding pattern. "A lot of people are concerned about the political climate," he says. "We heard people say now is not the right time to build and they'd wait until after the [presidential] election."