Regional Specialty Firms Face the Uncertainty of a Post-Pandemic Year
Encore Electric worked with general contractor Hensel Phelps on the expansion of Eagle County’s airport, which serves the resort towns of Vail, Beaver Creek and Avon, Colo.
PHOTO COURTESY OF HENSEL PHELPS
Specialty firms in the Mountain States face the same challenges as their colleagues nationwide—an ongoing workforce shortage, shrinking backlogs in the shadow of a pandemic year and a lingering recession.
“When the pandemic first struck down the economic expansion during the February to April time frame, construction emerged as a relative bulwark of stability,” said Anirban Basu, chief economist with the Associated Builders and Contractors. “But the protective shields that helped sustain industry performance have begun to weaken.”
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That weakness is evident in the latest ABC member survey, conducted last month, which showed that the Construction Backlog Indicator declined to 7.2 months in November, a decrease of 0.5 month from October’s level, and the contractor backlog is 1.7 months lower than in November 2019. Add to that a 14% drop in starts in 2020, with an increase of only 4% expected in 2021, according to Dodge Data & Analytics. Most firms will finish this year strong, but dire forecasts are forcing them to revise their short- and long-term thinking.
“Based on the diversity of our organization, MTech has been fortunate enough to navigate through 2020 and remain close to achieving our revenue targets set for the year,” says John Falzone, vice president, construction at MTech Mechanical. “Moving into 2021, however, market sectors that have historically been a strong book of business—office, health care, higher education—are softening with the uncertainty of the pandemic and its ongoing effects.” Still, he says his firm is “cautiously optimistic for 2021.”
That optimism is shared by Andy Gordon, chief operating officer for Encore Electric. “Going forward, we are cautiously optimistic about the markets given the uncertainty of overall economic conditions. As expected, health care and high-tech markets will be the leaders, while multifamily, resort and office projects will be a challenge,” he says.
Some leaders view this as a time of opportunity. “Our members are weathering the pandemic and looking forward to a return to a more normal work environment,” says Debra L. Scifo, executive director, American Subcontractors Association Colorado. “We have learned a lot about how to use virtual tools, manage manpower and keep morale high and employees safe. Today, specialty contractors are smarter, more efficient and better prepared, and that’s a positive thing going into 2021.”
