The Southwest construction industry is surging again, according to data from ENR Southwest’s Top Contractors survey, and industry executives say leaps in innovation, stable revenue growth and solving labor issues are the keys to tomorrow’s success.

According to this year’s survey, the top 10 firms combined to produce 2017 Southwest revenue of $4.3 billion. That’s a nearly $1-billion increase from last year’s survey. Revenue from all of this year’s survey participants soared to $7.6 billion. That’s up from $6.79 billion in 2016 and $6.46 billion in 2015.

Revenue growth is expected to be maintained through 2018, says Chuck Carefoot, senior vice president, Ryan Cos. He adds that automation and technology will be among the factors sparking future regional growth.

“Going into 2019, we can expect to see an increase in automated distribution facilities, 55-and-older communities and senior-living facilities,” he says. “Technology companies will continue to expand out of California and the Pacific Northwest.”

A lack of trained workers continues to plague contractors, and Justin Newman, vice president and COO of hardison/downey, says beyond building automated facilities for other industries, the construction industry will likely become much more automated itself.
 

ENR Southwest Top Contractors 2018

“We believe the next big leap for our industry is automation,” Newman says. “With all the advancements in [artificial intelligence], coupled with the shrinking workforce in our industry, there is a big need for this to take off.”

That also might mean construction robots will help build the buildings of the future, he says.

“By the year 2020, we could see building components built in a controlled environment [through prefabrication] and then put together in the field with some sort of automation,” Newman says.

More practically, though, Newman says the industry needs to show the next generation that construction is a technological pioneer.

“A career in construction is now technology driven,” he says.

Carefoot says construction demographics are heavy within the age range of 58 and 68. Consequently, the next slowdown will likely see a significant number of employees leave the industry and will be a catalyst for change, he says.

Newman adds that integrated design delivery will witness greater success and proliferation.

“[IDD] has already taken root in California with great success, so we feel it will move east into Arizona and other states,” he says.

National issues will continue to impact operations, and Carefoot says if interest rates increase, the industry should expect “a pullback on current industry optimism” in the private sector.

“If the federal government’s initiative to raise rates possibly two additional times in 2018, and four times in 2019, does occur, it will result in the inversion of the yield curve,” he says.

Please review the ENR Southwest’s 2018 Top Contractors ranking for more information on trends in the industry. There are also tables that break out revenue according to state and market sector.