Contractors reported revenue growth of $2 billion in 2018 and are optimistic heading into the second half of 2019. The looming threat of a downturn, though, weighs heavy on some industry leaders’ minds as does the constant threat of workforce shortages.
A total of 110 construction companies are represented in ENR Texas & Louisiana’s Top Contractors ranking. Combined, these firms reported nearly $45 billion in regional revenue for 2018 across the five-state region of Arkansas, Louisiana, Mississippi, Oklahoma and Texas. Last year’s top 110 firms reported $42.8 billion in regional revenue, above 2016’s $41.4 billion.
Arkansas and Mississippi
The top 10 Arkansas contractors reported $578.27 million in state-wide revenue in 2018, compared with $740 million in 2017. However, commercial construction in Arkansas for the past two years has been “good,” especially in the northwest and northeast corners of the state and in central Arkansas, says Roger L. Marlin, president and CEO of Hydco Inc. and president of the board of directors at AGC Arkansas.
“Recent legalization allowing casino gambling has promoted several high-profile projects including a $250-million contract to add a new casino complex in West Memphis at Southland Park and a $100-million project in Hot Springs at Oaklawn Park [that would add] a hotel and additional casino space,” Marlin says. “There are also plans underway to construct similar projects in the Pine Bluff and Russellville.”
At the end of 2018, Marlin notes many of his firm’s private clients were confident in the economy and moved forward on projects they had been planning for several years. Recent reports expect nationwide construction growth of around 4.5% for 2019 and that number looks to hold true for Arkansas, he says. From 2010 through about 2018, Arkansas saw ample public sector and K-12 education projects, but that type of work seems to be lessening, Marlin says.
Some of the other notable projects across the state include a $142-million expansion at the Lockheed Martin facility in Camden and a $300-million project in Siloam Springs for Simmons Foods.
In Mississippi, construction has gone from moderate to above average over the last year, says Bob Wilson, executive director of AGC Mississippi. While infrastructure spending is flat, there is cautious optimism things will improve for the sector.
The top 10 Mississippi contractors on this year’s ranking reported $764 million in state-wide revenue, compared with $632 million in 2017.
“The state finished out its fiscal year with a $308-million surplus, which should equate to more spending for government/public projects during the next year,” Wilson says.
Major work across the state includes the $93-million Mississippi Aquarium and the $100-million Centennial Plaza, both in Gulfport.
Amid flat infrastructure spending, many of Mississippi’s transportation contractors are looking for work outside the state, Wilson notes.
“We are in the middle of state-wide elections which will affect agency budgets, government projects and government spending for at least 4 to 8 years,” he says.
In recent years, there have been fewer government contracts and more private projects, Wilson says. But local industry hopes there will be increased government spending and a focus on infrastructure following the election this fall, he adds.
Oklahoma and Louisiana
Looking north to Oklahoma, the market has remained steady and grown over the past several years, says Larry Rooney, president of Manhattan Construction Group.
The top 10 Oklahoma contractors posted $2.39 billion in state-wide revenue, showing solid growth over the $1.9 billion reported in 2017.
“We continue to see an influx of manufacturing and industrial projects throughout the state, while the hospitality and gaming sectors also continue to be strong,” Rooney adds. “Oklahoma City, in particular, has also continued its recent trend of urban development projects as well as improvements to the highway systems around the city.”
High-profile projects in the state include the Oklahoma Capitol interior remodel being performed by Manhattan; Chickasaw Nation Border Casino in Thackerville; and the modernization of Cox Business Center in Tulsa.
Manhattan Construction’s regional revenue rose more than $100 million to reach $1.09 billion in 2018. Meanwhile, 2019 is forecast to be even better, says Rooney, and is tracking to be the biggest year in company history.
Some of the company’s revenue growth came from multiple projects in North Texas, including the $1-billion Globe Life Field in Arlington and Village Town Center in Dallas.
“For our heavy-highway team, the kick-off of the widening project on the west end of Interstate 630 in Little Rock, Ark., contributed significantly to our revenue in 2018 and will do so again in 2019.”
While construction in Louisiana was somewhat stagnant in 2018, 2019 is looking encouraging, says Ken Naquin, CEO of Louisiana AGC.
The top 10 Louisiana contractors reported $4.67 billion in state-wide revenue in 2018, up from the $4.23 billion reported in 2017.
“There are some pockets where work was up—New Orleans, for example, had a healthy commercial market in the private sector and we are anticipating a robust end to 2019 in the road, street and underground construction with the FEMA settlement and new state funds going to that work,” he says.
The major infrastructure improvements in New Orleans will also lead to more commercial and residential developments, adds Ken Flower, president of New Orleans-based Woodward Design+Build. “We will continue to see stormwater management planning go into all major renovation and new construction projects,” which is something the city of New Orleans is heavily enforcing, especially “as our community continues to see these major and frequent rain events,” Flower says.
Meanwhile, Baton Rouge voters approved a dedicated tax for a large infrastructure program, and those projects should begin to hit later in 2019, Naquin adds.
Major projects now underway include the $470-million redevelopment of the former World Trade Center in New Orleans into a Four Seasons Hotel.
Additionally, DOTD recently awarded two design-build projects: the $75-million Barksdale Airbase/Interstate 20 access and the $125-million entrance to the new $1-billion New Orleans Airport Terminal, Naquin adds.
For Baton Rouge-based Turner Industries, steady investment over the last few years into the refining, natural gas and petrochemical businesses has kept the firm growing.
“We’ve seen a lot of work primarily around the petrochemical sector that has been driving success, not just for us, but for the entire industry. A lot of companies have seen growth really over the last probably 18 months,” says Stephen Toups, president at Turner.
The firm saw a roughly $250-million gain in regional revenue in 2018, reclaiming the top spot on this year’s ranking at $2.6 billion. Turner was part of the multibillion-dollar Sasol ethane and derivatives project in Lake Charles, and last year broke ground on the $123.5-million Gulf Coast Growth Ventures Monoethylene Glycol (MEG) Project in Gregory, Texas. Gulf Coast Growth Ventures is a joint venture of SABIC and ExxonMobil.
“We’re again optimistic for this year. There’s a lot of proposed projects on the horizon that still have yet to receive final approval,” Toups adds. “I think our responsibility is, as these companies are looking to expand what they’re doing, is we need to be able to do more with less. The industrial construction market needs to be able to make one plus one equal three.”
Among the biggest concerns for Louisiana is the failure of the Legislature to address long-term infrastructure revenue, Naquin says. “There are 13 Southern states, 12 of which have addressed their long-term infrastructure revenue. Only Louisiana has not. We have tried now twice to increase that funding, and on both occasions the Legislature has failed to act,” Naquin says. “We have already lost over $60 billion of industrial work to Texas because of our poor infrastructure system.”
Texas construction remains strong. The state’s top 10 contractors reported $11.48 billion in state-wide revenue for 2018, just outpacing the $11.46 billion reported in 2017.
North Texas construction has remained strong through the first half of the year, notes Christopher Guice, director of marketing business development at Austin Commercial. The region will continue to see developments in both the public and private sectors, in advanced technology, education, office, health care and hospitality market segments, he says.
“In the Houston market, we feel bullish about 2019-2020. We are seeing increased market activity across the board for aviation, health care, higher education and office,” Guice says. “Many clients in the Houston market are as busy now as any point over the last 5 to 7 years.”
A major expansion of the Texas Medical Center is one example. The TMC3 Collaborative Campus is estimated to have a price tag of $1.5 billion or more, and will include 1.5 million sq ft for the research campus and 250,000 sq ft of amenities on 36 acres. It’s also expected to generate at least $5.2 billion for the Houston economy and create nearly 26,000 jobs.
Two of the primary drivers for Texas construction remain the influx of businesses and population increase, Guice says. Austin Industries, parent company of Austin Commercial, saw regional revenue increase $350 million to $1.57 billion for 2018, thanks to flourishing work in Dallas-Fort Worth, Austin and Houston.
“In fact, for 2019 we are forecasting similar revenue and growth for much of the state. In the North Texas region alone, Austin became the first construction management firm in a calendar year to hit more than $1 billion in revenue for D-FW,” Guice says.
Austin is reaching the midpoint on the 650,000-sq-ft campus expansion for UT Southwestern Medical Center in Dallas. Down in Austin, the firm recently announced it will serve as construction manager for the 20,000-seat, 410,000-sq-ft Austin FC Stadium.
Webber, last year’s Contractor of the Year, saw growth throughout 2018 with projects in Texas, Oklahoma and Arkansas. During the second half of 2018, Webber won the two largest hard-bid contracts in its history within a few months of each other—the $279-million Interstate Highway 10 project in Austin County and the $341-million Interstate Highway 35 project in Waco, Texas.
Webber entered 2019 with over $1.2 billion in backlog, says Jose Carlos Esteban, president and CEO, and its central Texas regional office has expanded since opening two years ago. Competition for Texas work—especially heavy civil and commercial—is fierce, he says.
“We are seeing multiple bidders hitting within a few percentage points every time. We’ve narrowly won and lost projects by just a few thousand dollars,” Esteban says. “While these losses always sting, our backlog is strong and our clients continue to see the value proposition for getting the job done faster.”