Civil works contractors did most of the industry's heavy lifting in 2002. While total domestic revenue for the Top 400 contractors slipped 2.9% last year, firms in heavy and highway markets piled up double-digit increases. Despite slowdowns now apparent, firms in 2002 were able to tap strong transportation, environmental and water utility markets for $36.1 billion in reported revenue, a 16.9% increase from the previous year.
The transportation market contributed $24.4 billion in revenue for heavy contractors, a 25% increase over 2001's level. Top 400 heavy contractors also reported $2.6 billion in revenue from water utility construction, an 8.3% increase; and $3 billion in revenue from sewer and wastewater treatment work, a 7.1% increase over 2001's level. The hazardous waste market held steady last year at $6.1 billion, after jumping 29% in 2001.
Bechtel dominated the hazardous waste market, winning $2.7 billion in new revenue and topping ENR's list of heavy contractors. Peter Kiewit Sons' Inc. led all contractors in revenue from the water utility market and was second in transportation to secure the number two spot on ENR's list. APAC nailed down third place with $2.1 billion in transportation related revenue, the most of any firm ranked by ENR.
The 124-year-old APAC firm joins ENR's Top 400 list for the first time this year. It works primarily in Southeastern states, with the bulk of its jobs valued at $10 million or less. However, the firm recently signed a $50 million design-build project in South Carolina, says President Charles Potts. "We actively started pursuing design-build work four years ago and that has been a growing part of our business," he says. "And we think design-build is going to continue to grow as more states start looking at it."
TOP 50 DOMESTIC HEAVY CONTRACTORS
|2||Peter Kiewit Sons' Inc.||2255.7|
|4||Skanska (U.S.A.) Inc.||1465.0|
|5||Granite Construction Inc.||1256.2|
|6||Washington Group International Inc.||1174.9|
|7||The Walsh Group||964.4|
|8||Modern Continental Construction Co. Inc.||866.9|
|10||The Shaw Group Inc.||621.1|
|12||Balfour Beatty Inc.||569.2|
|13||The Lane Construction Corp.||520.0|
|14||Angelo Iafrate Construction Co.||512.3|
|17||The Clark Construction Group Inc.||436.0|
|18||CH2M HILL Cos. Ltd.||419.2|
|19||HBG Constructors Inc.||365.5|
|20||The Hubbard Group||357.0|
|24||Hensel Phelps Construction Co.||291.1|
|25||American Infrastructure Inc.||289.9|
|28||Edward Kraemer & Sons Inc.||275.0|
|29||Kokosing Construction Co. Inc.||273.7|
|30||Williams Brothers Construction Co. Inc.||267.8|
|31||Great Lakes Dredge & Dock Corp.||257.2|
|32||Weeks Marine Inc.||252.7|
|33||J.A. Jones Inc.||251.7|
|34||American Bridge Co.||246.4|
|35||Clyde Cos. Inc.||242.9|
|36||New Enterprise Stone & Lime Co. Inc.||240.6|
|37||Vecellio & Grogan Inc.||235.0|
|38||Clarkson Construction Co.||227.5|
|39||Zachry Construction Corp.||227.0|
|41||TIC Holdings Inc.||220.6|
|42||PCL Construction Enterprises Inc.||218.0|
|43||Fred Weber Inc.||217.8|
|44||Hunt Construction Group||216.0|
|45||Traylor Bros. Inc.||215.0|
|47||Chicago Bridge & Iron Co.||203.0|
|48||VRH Construction Corp.||202.0|
*2002 revenue in $mil. Percent of total domestic contracting revenue. Ranked by domestic revenue, including CM-at risk.
The growing design-build market coupled with strong demand and an occasional acquisition helped fuel some remarkable revenue growth for several heavy contractors. The Shaw Group tapped all three elements as it boosted its heavy construction revenue from $113 million in 2001 to $621 million last year and shot up ENR's heavy contractors ranking from 80th to 10th place.
Most of this growth is tied to the firm's acquisition of The IT Group last May. IT was ranked by ENR as the nation's fifth- largest environmental firm in 2001, the last time it appeared as an independent entity. However, "if you back IT out of our numbers, we still had significant growth," says Tim Barfield, president of Shaw Environmental and Infrastructure. An earlier acquisition of Stone & Webster continues to pay dividends, he adds.
The second-largest revenue jump was by Teichert Construction, which tripled its heavy construction revenue in 2002, moving the firm from 106th to 26th place on ENR's list. The firm opened two new divisions in 2002, including a heavy highway division, says Jeff Frei, business development manager. The move paid off by generating $100 million more in transportation revenue. In addition, the firm reported revenue of $63 million in the water market and $44 million in sewer work. In the previous year, it had no revenue from these markets.
Clyde Cos. was another firm experiencing a spurt in revenue growth in 2002. Last year, it acquired Spanish Fork, Utah-based contractor H.E. Davis, adding $25 million in revenue to its books. This helped push Clyde to 35th place on ENR's heavy contractors list---up from 105 a year ago. "We think we can sustain that level of business," says Paul B. Clyde, president. "We are finding a lot of work in the public sector."
American Bridge Co. and Edward Kraemer & Sons both traveled the high- growth road in 2002 without major acquisitions. Internal growth boosted American Bridge revenue up 75% and Kraemer 56%. "We thrive on complex bridge and marine work and there has been a lot of these type of projects in the marketplace," says Mike Cegelis, American Bridge's senior vice president of marketing and development.
Several large projects added to American Bridge's revenue in 2002, including a $150-million rehab of New York City's Triborough Bridge. In addition, the company is winning work from the U.S. Navy's program to replace and upgrade several of its piers. American Bridge won the Navy's Norfolk Pier 7 job for $55 million. "Design-build is becoming big in the marine market," says Cegelis. He estimates that 40% of the firm's revenue now comes from that niche.
Design-build also plays a prominent role in Kraemer's growth strategy. The firm signed a $230-million design-build contract with the city of Rochester, Minn., to reconstruct a state highway. But its biggest plum is the $330-million design-build contract for the Legacy Parkway near Salt Lake City. The Utah job also led to another avenue for revenue growth. "When we got out there we felt the area was ripe to develop into a permanent region," says Mike Fischer, Kraemer's COO. Utah was one of two new regions the firm expanded into last year, the other being the Baltimore-Washington, D.C., corridor. Kraemer won two of three major contracts for the Woodrow Wilson Bridge across the Potomac, says Fischer.
MWH, formerly Montgomery Watson Harza, which built its industry reputation as a design firm, debuted a year ago among ENR's Top 50 Heavy Contractors. An oddity among the nation's heavy contractors, MWH is one of just two firms on ENR's heavy list that does no transportation work. Instead, MWH targeted water for $76 million in construction revenue in 2002, and $57 million each in sewer work and hazardous waste remediation.
Water and wastewater markets increasingly are seeking turnkey solutions and design-build is filling that gap nicely, says Roger Austin, MWH director of planning. "There is clearly an unmet need in that marketplace, and it is an area we are investing heavily in," he points out.
According to Austin, MWH is driving revenue growth by taking on a new role on sitethat of general contractor on design-build water and wastewater projects. "It is surprising to us to be included on that list, but our construction operation is one of the fastest-growing parts of our company," he adds. "Construction is about 20% of our portfolio and we think market demand will push that number to 40% over the next three to five years."
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