Specialty Contracting Slowdown
Specialty contractors are feeling the pinch of less available work and greater competition in a continuing slow economy.
“It’s a different world than it was two years ago,” says Jack A. Olmstead, president of Tri-City Electrical Contractors in Altamonte Springs, Fla. “We have to dig harder. We work harder.”
The electrical contractor has seen deals fall apart at the last minute due to financing problems. It continues to work in health care, assisted living and Dept. of Veterans Affairs projects.
School jobs have dropped off with population declines, Olmstead says.
Tri-City is working on an expansion of the Seminole Hard Rock Hotel & Casino parking garage in Hollywood, the Amway Center in Orlando and some work at Eglin Air Force Base in the Florida Panhandle and at several universities.
“Things are tight, and we’re seeing extra competitiveness,” Olmstead says. “The backlog for most everyone is down, and profits follow backlog. We’re doing less revenue for less mark-up, which puts a strain on everyone.”
Olmstead adds that he does not know when activity will pick up, but he doesn’t expect that to happen until banks start lending again.
“Now is the time to build because prices are tremendously low for materials and labor,” Olmstead says. “But people cannot get the resources to do that.”
Glenn Sherrill, president of SteelFab in Charlotte, N.C., says the market has bottomed out.
“But we don’t see any significant improvement for at least 12 to 16 months,” he adds. “People are starting to get used to being in this recession. But as far as pricing, it’s pretty depressed. There is too much steel fabrication capacity for the amount of work that is getting built.”
SteelFab is doing primarily government-funded work, along with some heavy industrial manufacturing and health-care projects. In the past, 70% of the company’s market share was commercial work, but now that market does not exist, which leaves the company competing with many other fabricators for a small amount of public-sector jobs.
SteelFab has cut back capacity—the number of hours run per week—in half from summer 2008. The firm has not ventured much outside of the Southeast, and when it has, it was one of 15 or 20 bidders, Sherrill says.
The Circle Group is seeking jobs in other parts of the country, including Texas, where it opened an office in Houston, and in California.
“We’ve seen sales drop pretty drastically in the last couple years, in a gradual progression,” says Mike Dominici, vice president of the Circle Group in Alpharetta, Ga. “There are little glimmers here and there, but there are too many contractors chasing too little work.”