Top Specialty Contractors: Southeast Construction Market Keeps Rolling
For now, at least, Southeast specialty contractors are mostly shrugging off concerns over rising materials prices, tariff impacts and the still-tight labor market as they hustle to bid and build their next projects. The breadth and depth of the 2018 construction economy—marked by numerous active subsectors across the Southeast—is even causing some contractors to consider this to be the strongest market in memory.
Count the chief executive of the Southeast’s largest steel fabricator, Steel Fab—ranked 4th overall this year—among those marveling at construction’s current state.
“I’ve been in the business for 25 years, and this is as good as I’ve ever seen it,” says Glenn Sherrill, CEO. “It’s just a really healthy mixture of market sectors.” He cites health care, office, heavy manufacturing, light industrial and power projects among the major contributors.
“Just looking at the volume of structural steel that’s being bought right now, it makes for a good market,” he says. Despite the current pace, SteelFab’s $392.27 million in 2017 Southeast revenue marks a decline compared with the $448.64 million the firm reported for last year’s Top Specialty Contractors survey.
Currently, the tariffs issue is driving up prices “considerably,” Sherrill says, noting that SteelFab is seeing raw material prices up between 30% and 50% this year.
Even so, “We’re still busy,” he says. “We have plenty to quote, and we have really strong, healthy backlogs in all [seven] of our plants.”
The pace at its plants has been relentless as the firm strives to deliver its products on schedule. Sherrill says workers have been averaging about 55 hours per week for awhile now, with any letup still months away, he estimates. And that, he says, is driving significant employee turnover, as stressed-out workers can easily find work elsewhere.
Keith Wayne, president of Davidson, N.C.-based Wayne Brothers—this year’s Specialty Contractor of the Year—offered a similar assessment, calling the current construction market “the best” he’s seen in 33 years in the industry.
“The Southeast construction market is extremely busy and holding steady,” adds Bobby Phillips, Wayne Brothers vice president. “I don’t see any slowdown over the course of the next year or two.”
‘Plenty of Work for All’
The story is much the same elsewhere across the Southeast, as noted by Vann Cleveland, vice president of business development with Atlanta-based Cleveland Electric, ranked 8th this year. The electrical contractor saw its Southeast revenue rise considerably in 2017, growing from the $174.2 million it reported for last year’s ranking to the $212.2 million on this year’s list.
Says Cleveland: “The pace in Atlanta is steady with no slowdown in sight. The next 12 to 18 months will be active and steady in all markets. There’s plenty of work for all,” even as margins increase.
Along with perennial construction hotbed Hartsfield-Jackson Atlanta International Airport, markets driving area construction include data centers, institutional, mixed-use, office, hospitality and health care, he says.
A major mover on this year’s ranking was Tampa-based wall/ceiling contractor KHS&S. The firm saw its 2017 Southeast revenue more than double, with the most recent year totaling $99.9 million, compared with the $43.55 million it reported for last year’s survey.
Michael Cannon, CEO and president, says KHS&S has “experienced strong but steady demand” in Florida for roughly the past year. Moving forward, he says, “I believe the number of new large projects has leveled off, but I’m expecting the commercial markets in general to remain fairly consistent and steady through 2019.”
The expansion of health care facilities and Florida theme parks is helping drive KHS&S’s recent surge, and that work is continuing, Cannon says.
Due to the current strong volume of new work, competition between specialty firms has declined.
“The amount of competition has been reduced, but the industry is still highly competitive,” he says. “We aren’t competing against as many companies on a project, but we still have to bring high levels of value to the table to win the job.”
The 2018 Southeast construction market may prove to be a milestone year for overall contracting activity, but this year’s Southeast Top Specialty Contractors survey, which reports 2017 revenue, shows only slight growth compared with 2016 results.
Respondents to this year’s survey—roughly 85 in all—collectively reported $7.45 billion in 2017 revenue, up slightly from the $7.3 billion reported in last year’s ranking. The Southeast region covers Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee and Puerto Rico.
On a state-by-state basis, all but two states—Alabama and North Carolina—showed increased specialty contracting revenue. Florida again registered the highest revenue total—roughly a third of this year’s overall Southeast tally—with firms reporting nearly $2.7 billion from the Sunshine State, just ahead of the $2.63 billion included on last year’s survey.
The remaining state totals, from highest to lowest, were: North Carolina, $1.83 billion, down from last year’s $2.1 billion; Georgia, $1 billion, up from $875.36 million; South Carolina, $899.2 million, up from $888.9 million; Tennessee, $586.2 million, up from $480.32 million; and Alabama, $304 million, down from $333.34 million.
As might be expected, recovery work from Hurricane Maria drove Puerto Rico’s 2017 revenue total considerably higher to approximately $136 million That amount is more than four times higher than the $30.6 million included on last year’s ranking. Of the $136 million, $127 million was reported by MasTec, the Coral Gables, Fla.-telecommunications contractor that once again tops this year’s ranking.
ENR Southeast’s Top Specialty Contractors survey lists firms’ 2017 revenue figures earned from projects located in the Southeast. In addition to revenue, the main ranking includes other information about each firm, such as top markets and largest recent contracts. Breakout lists rank firms based on state and specialty market sector revenue.