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“It could have been better, but overall it was not a bad year,” says Al Bargas, president of the Pelican Chapter of Associated Builders and Contractors. “Many projects were delayed due to manufacturer’s margins in the energy sector falling below expectations.” 

Bargas says that energy work remains the key economic driver in south Louisiana. “That said, the fall in the price of and demand for oil has slowed production and the development of refining capacity,” he adds. “At the same time, the reduced price in recent years of the natural gas feedstock for chemical production has improved the demand for Louisiana chemical production.”

The need for skilled craft workers in industrial maintenance and construction is still high, Bargas says. He attributes that to “the steady growth of construction demand, the continuous retirement of the Baby Boomer workforce and competitive workforce recruitment for skilled personnel from other economic sectors outside of the construction industry.” 

Bargas adds: “The steady growth overall in the energy and chemical manufacturing industries continues to provide economic support to sectors such as automotive and retail, causing continued workforce demand in those areas as well.”

Ken Naquin, CEO of Baton Rouge-based Louisiana Associated General Contractors, which represents 650 construction companies statewide, agrees that “the energy sector is very depressed. Drilling, both oil and natural gas, are at an all-time low as a result of low prices.”

There has been no recent labor migration into Louisiana. “Just the opposite,” he says. “Louisiana workers, skilled and nonskilled, are going out of state to find employment. The industrial sector has full employment in certain areas such as the southwest and Baton Rouge areas.”

While most regional subcontractors boosted their revenue last year, the annual total flattened somewhat for MMR Group Inc., based in Baton Rouge, La. The electrical contractor slipped from No. 2 on last year’s list to eighth this year.

“However, our client base moved from upstream exploration and production, midstream transportation to natural-gas-related processing,” says MMR’s Grady Saucier, senior vice president. “In other words, the upstream market collapsed, and anything related to the processing or transporting of natural gas boomed.”

MMR continues to provide services to the upstream markets on the Gulf Coast, he explains. “However, with the low prices of crude, new construction is considerably down from the past and will continue to be reduced at the present pricing. The low price of natural gas is still driving and will drive LNG plant expansions as well as any industry depending on natural gas.”

The company will complete its portion of two major fertilizer facilities for Netherlands-based OCI NV in Iowa and Louisiana this year and is about 40% done with work on the $12-billion Sasol ethylene complex in Lake Charles, La.

Texas Markets

For Garland, Texas-based OSBURN, the market remained strong in 2015 and into 2016, although the concrete subcontractor weathered increases in the cost of materials and labor and boosted its value-engineering efforts to get prospective projects back on budget during preconstruction.

“This slight pausing on a few things, however, only seems to have pushed those projects into 2017 rather than anything really being shelved,” says Tim Christle, director of business development and marketing for OSBURN.

The company has four primary business lines: two that provide concrete services and two in transportation and delivery. “Our trucking and pumping business units tapped into work in south Texas related to the energy sector in 2015 and 2016,” Christle says. “There has definitely been a decline in that sector relative to the work we’d been doing in south Texas.”

However, in north Texas, nonenergy sectors are thriving and all four of OSBURN’s business units grew. “Industrial (warehouses and distribution centers), data centers, retail, office, multifamily, health care, higher ed and K-12 all remain quite strong,” Christle says.

The company is working on The Ascent, a 23-story apartment tower in Dallas’  Victory Park. Also in Texas, OSBURN completed its portion of the Kubota Headquarters campus in Grapevine; the JJ Lemmon Industrial Center in Dallas; and the Platinum Park Office Building in Plano.

“The 2016 market has been very strong in the Texas region, with continued growth in all areas. The main concern we see is the lack of manpower in the skilled trades,” says Hattie Peterson, director of marketing and communications for TDIndustries. The Dallas-based company does mechanical and plumbing construction, operations and maintenance.

In 2015, TDIndustries completed a number of major Texas projects: Baylor McLane Stadium, Waco; Riata Vista Campus, Austin; UT Medical Building Victory Lakes, League City; Sundance Square, Fort Worth; the ExxonMobil corporate campus, Spring; and the Memorial Hermann Katy Hospital in Katy.

This year, TDIndustries completed the One Frost Corporate Campus in San Antonio; the Methodist Mansfield Medical Center in Mansfield, Texas; and a renovation at Dallas-Fort Worth International Airport’s Terminal A.

Building Toward 2017

As a result of Donald Trump’s victory, Bargas says he anticipates less federal regulation in the Gulf Coast. “It’s an opportunity to reignite manufacturing growth in Louisiana and the United States,” he says.

Bargas anticipates “steady but limited growth” in 2017 but fears that the current Louisiana state administration will continue with tax increases and add to business costs. “If so, this will dampen investment by Louisiana industry in the industrial sector and/or drive industry elsewhere,” he adds.

MMR Group’s Saucier expects next year will build on 2016’s robust boost for natural-gas processing. “With the price of crude remaining low, the exploration and production, transporting and processing will remain marginal,” he says.

TDIndustries anticipates the 2017 Texas market to flatten somewhat, Peterson says. “However, we still see strong construction growth in the technology and data center markets.”

In Texas, the company plans to finish or start work on a number of projects: the Fort Worth Arena, Fort Worth; 609 Main, Houston; Liberty Mutual Corporate Campus, Dallas; and Alamodome renovations and CyrusOne Data Center, both in San Antonio.

Most of the company’s work in the Gulf Coast focuses on the energy-related commercial market. “Before the downturn in the energy sector, the commercial market had been booming, and that backlog is just finishing up this year,” says Randee Herrin, senior vice president of Houston new construction for TDIndustries. “For 2017, TD will continue to pursue commercial work, but with the drastic downturn in that market, we will be shifting our efforts to other sectors such as the health care market.”

After the election, the ability to build confidence in the new administration is key, OSBURN’s Christle says. “Having the uncertain outcome [of the election] behind us is definitely a positive that will allow markets to conform around the new direction the government will take starting in 2017.”

Christle says that 2017 looks even more promising than 2016. “Some of the slider projects from 2016 are only going to make 2017 that much better,” he says. “With that, the general sense continues to be that by mid-2018, some elements of the market are bound to slow a bit, while others seem poised to remain strong out toward 2020.”