...volume since last year. “We see no indication there is going to be a quick turnaround,” says Eberwein. “You are looking at years and not months of a slower market.”
In the pharmaceutical and biotechnology manufacturing sector, opportunities also have diminished but contractors see it as a steady, growing market. More than $20 billion of capital projects are planned through December 2010, according to Industrial Info.
One example of a recently completed project is a 203,000-sq-ft manufacturing, research and office facility for United Therapeutics Corp. in Raleigh, N.C. DPR’s Keith says his firm worked closely with UTC as the project’s design-build contractor to integrate the manufacturing facility with the office and R&D components of the facility.
Major projects continue in the steel sector. The sector has been hampered by the economic downturn, but still has more than $26 billion of projects slated to start by December 2010, says Industrial Info’s Bergen. One of the largest is a $1 billion-plus, 1.6-million-sq-ft greenfield complex and mini-mill for manufacturing pipe for oil-and-gas pipelines in Gregory, Texas, near Corpus Christi. The owner is TPCO Enterprises, Houston, a subsidiary of China’s Tianjin Pipe Group Corp. The facility will be the largest single investment to date by a Chinese company in the U.S., says a TPCO spokesman.
The auto sector has been roiled by the economic recession. The impact for contractors is less greenfield work, a lot more re-tooling of existing facilities and intense competition for available work. Events unfolded earlier this year that are leading to a fundamental change in the auto sector. In June, General Motors filed for bankruptcy protection, citing $82.3 billion of assets and $172.8 billion of debt. It emerged from bankruptcy 60 days later, but as a shell of its former self. In the process, GM has shut down plants in Michigan, Indiana, Ohio and Delaware, and plants in Tennessee and elsewhere in Michigan have been put on standby.
Chrysler filed for bankruptcy on April 30 and emerged as a new entity 31 days later with Italy’s Fiat as the new controlling owner. Fiat will have a 20% ownership stake in the new entity, called Chrysler Group, but will have effective management control going forward.
Meanwhile, in West Point, Ga., work is nearing completion on Kia Motor Corp.’s $1-billion-plus greenfield auto-assembly plant. The plant is located 80 miles southwest of Atlanta and is Kia’s first in the U.S. Construction began in 2007 and it will produce its Sorento sport utility vehicle when completed. So far, Kia has received over 43,000 applications from people seeking work in the new plant.
The world’s largest automaker, Toyota Motor Corp., has had its own set of difficulties as consumer demand shifts. It is reconfiguring its portfolio of plants in the U.S. to reflect new consumer buying habits. At this time last year, Toyota was moving forward on construction of a major facility in Blue Springs, Miss., to produce a new version of its Highlander SUV. The $1.3-billion plant was scheduled for completion in 2010. Last December, Toyota said it would retool the plant to make Prius hybrid vehicles, but demand for that vehicle has slackened. Since then, completion of the plant is on indefinite hold, awaiting an upturn in the economy.
Conversely, Toyota in July said it would spend $470 million to retool and upgrade its Princeton, Ind., plant to build its Sequoia and Highlander SUV lines. And in August, Toyota announced a $147 million expansion of its four-cylinder engine production facility in Huntsville, Ala.
The reconfiguring of plants will be the dominant trend going forward, says Walbridge’s Haller. “The auto sector is undergoing a fundamental shift in production,” he says. “There will be fewer large projects, more re-tooling and a strong sense of uncertainty. We recognize that there is still meaningful opportunity, particularly for firms that can react quickly to the automakers’ changing plans and we are actively pursuing these opportunities.”
Haller sees a 50% drop in the pipeline of auto-related projects since last year. As a result, automakers are making contractors jump through even more hoops to secure work, he says. In a recent competition for a relatively small project, Haller says one major automaker took nine firms through the entire selection process before making a decision.
The impact on top contractors working in the auto sector, as in most other manufacturing sectors, is for even more blistering competition for available work.
“It is a buyer’s market but there just are not a lot of buyers out there,” says Haller.
|5||Foster Wheeler AG|
|9||The Shaw Group Inc.|
|11||DPR Construction Inc.|
|15||Matrix Service Co.|
|16||CCC Group Inc.|
|17||Skanska USA Inc.|
|18||The Dennis Engineering Group LLC|
|19||McCarthy Holdings Inc.|
|21||Bovis Lend Lease|
|*BASED ON 2008 CONTRACTING REVENUE FROM INDUSTRIAL PROCESS AS REPORTED IN ENR’S SURVEY OF LEADING CONTRACTORS AND DESIGN FIRMS.|
|2||Barton Malow Co.|
|4||The Yates Cos. Inc.|
|6||The Turner Corp.|
|7||HK Systems Inc.|
|10||Anderson Columbia Co. Inc.|
|12||Commercial Contracting Group|
|14||Skanska USA Inc.|
|15||Devcon Construction Inc.|
|17||Aristeo Construction Co.|
|18||The Whiting-Turner Contracting Co.|
|19||Roy Anderson Holding Corp.|
|20||Facility Group Inc.|
|23||Angelo Iafrate Cos.|
|*BASED ON 2008 CONTRACTING REVENUE FROM MANUFACTURING AS REPORTED IN ENR’S SURVEY OF LEADING CONTRACTORS AND DESIGN FIRMS.|