Contractors across the five-state region of Arkansas, Louisiana, Mississippi, Oklahoma and Texas have continued to build despite the hardships that came with 2020 and the COVID-19 pandemic, with many actually growing their revenue over 2019.
The top 100 firms included in this year’s ENR Texas & Louisiana Top Contractors ranking reported a combined $45.59 billion in regional revenue for 2020, down $2.87 billion from 2019, when firms reported a combined $48.46 billion in revenue.
“As with many contractors, 2020 was a record year for revenues,” says Stephen Miller, vice president of operations at ANDRES Construction Services. “Our long-term growth has been the product of strong relationships built with our employee-owners, trade partners, clients and designers.” The Dallas-based firm reported a $227 million gain in regional revenue last year, reaching $689.2 million and jumping 13 spots to No. 24.
Webber is leading the $301-million Loop 12 project in Irving, Texas. The project consists of the reconstruction of 7.4 miles of SL 12 in Dallas, including the renovation of existing Interchanges between four major highways: State Loop 12, State Spur 482, State Highway 114 and 183.
Photo courtesy of Webber
“In 2020, about 75% of our projects were for repeat clients. We were fortunate to be able to keep our jobsites open as Texas identified construction as an essential business,” Miller says. “While the pandemic created major operational challenges, we were able to adapt and make adjustments that will make us a stronger company moving forward.”
In Texas, the pandemic presented the construction industry with several challenges, one being the long-term disruption to the flow of equipment and materials to jobsites, says Dennis Yung, executive vice president and general manager for Houston and North Texas at Skanska USA.
“Many felt the immediate impact in 2020 as factories shut down, distribution came to a halt and budgets were cut, but now the industry is experiencing additional delays due to supply chain disruption and rising material prices,” Yung says.
Palmisano served as design-build contractor on 1016 Canal Street, leading the historic renovation and construction of the five-story mixed-use building located on New Orleans’ historic Canal Street corridor. The 1016 Canal project was completed in July 2020.
Photo courtesy of Palmisano LLC
Skanska in San Antonio saw a $7-million decline during 2020 to reach $117.16 million in regional revenue, lifting the firm three spots to No. 73.
From reworking material costs on jobsites to providing clients with building alternatives at varying price points during the preconstruction process, the industry is leveraging substitute resources and approaches to save on time and budget, Yung adds.
“The pandemic has challenged businesses to rethink the physical workspace to ensure it is a place where team members can collaborate in a way that upholds health and safety considerations,” Yung says.
Since Dallas-based Rogers-O’Brien Construction only builds in Texas, the firm benefited from the state remaining open with strict COVID policies in place, says Justin McAfee, the firm’s president and CEO.
The firm reported a $128.95-million gain in regional revenue for 2020 over 2019, for a total of $707.44 million, pushing the firm up five spots to No. 22.
A strong backlog going into 2020 and 2021 kept the firm moving upward, as did the trend of corporate relocations to Texas, McAfee says.
In Louisiana, and in New Orleans in particular, the hospitality sector took a major hit from the pandemic, notes Wesley J. Palmisano, founder of Palmisano LLC, New Orleans.
“With hotels, restaurants and tourism numbers way down in 2020 due to COVID-19 restrictions, Palmisano diversified both the sectors and geographic areas it serviced,” he says. Palmisano began affordable housing projects throughout Louisiana and grew its civil division with New Orleans public works road projects.
The firm reported $80 million in regional revenue for 2020, down $35 million from 2019, pushing the firm down three spots to No. 83. But since the beginning of the pandemic, Palmisano has added 50 jobs, completed 16 major projects and was awarded $250 million in new commercial work and $44 million in new civil work.
“Like many firms, in 2020 we saw some awarded jobs and opportunities for work get delayed. The year that we planned to have didn’t happen the way we thought it would, and we couldn’t predict how long things would continue to remain unstable,” says Joe Jouvenal, southern region president at McCarthy Building Cos. The Dallas-based firm saw a $175-million decline last year, dropping the firm’s regional revenue to $679 million, ranking seven spots lower at No. 25.
“2020 can be characterized as a year of flexibility. McCarthy reevaluated our areas of focus in 2020, identifying long-term sustainable markets as a priority,” he says.
Balfour Beatty, Dallas, started out 2020 with a strong balance sheet that “strategically allocated capital and resources, positioning the company to be an active thought and building partner in every growth market during the pandemic,” says Steve Dillon, vice president and business unit leader of Balfour Beatty’s North Texas large projects group.
The firm posted $1.1 billion in regional revenue for 2020, up by $163 million and moving the firm up two spots in the ranking to No. 11.
“For our civil operations in particular, we found that many of our projects had reduced traffic on highway projects due to COVID-19,” adds John Rempe, executive vice president of Balfour Beatty’s Southwest civils operations. “This gave us the opportunity to capitalize on reduced traffic volumes to accelerate work schedules and secure more highway projects in working with our respective clients.”
Manhattan Road & Bridge Co. recently completed the $13-million Clark and Hot Springs County Bridge Replacement, near Arkadelphia, Ark. The bridges were 170 linear ft composite plate girder spans with 69-in. webs.
Photo courtesy of the Arkansas Dept. of Transportation
Employees’ “grit, adaptability and perseverance” characterized 2020 for Webber, says Jose Carlos Esteban, the firm’s president and CEO. Based in The Woodlands, Texas, the infrastructure contractor moved up six spots in the ranking to No. 8 with $1.14 billion in regional revenue, a gain of $235 million over 2019.
“One of the reasons we were able to increase production despite COVID-19 was that none of our projects closed down. We quickly put safety protocols in place, and our teams did a fantastic job keeping the projects progressing,” Esteban says.
“2020 can be characterized as a year of flexibility.”
—Joe Jouvenal, Southern Region President, McCarthy Building Cos.
Webber had multiple large heavy civil project awards in 2019 that moved into high production periods in 2020 and drove up revenue, including the I-35 project in Waco, Loop 12 in Dallas and multiple I-10 projects in Houston and San Antonio.
“In addition, our waterworks division also [was] in high production phases and [increased] its backlog significantly with projects like the Northeast Water Purification Plant Expansion in Houston,” Esteban says.
In 2020, Webber announced that it would divest its materials division and discontinue operations on its commercial division as part of parent company Ferrovial’s Horizon 2024 plan, which aims to focus on its companies’ core markets.
“Despite these changes, our core markets heavy civil and waterworks continue to grow rapidly,” Esteban says.
Investing in employees remains a critical initiative for contractors across the region.
“In 2021, ANDRES launched Endeavor, our in-house employee development program. Endeavor is a key example of ANDRES’ continued commitment to investment in our employee-owner’s personal and professional development,” Miller says.
Tulsa-based Manhattan Construction Group expanded its leadership programs in 2021 as well, launching the new Manhattan Executive Leadership Development Program (MELD). This intensive, 12-month program provides senior mid-level leaders the development opportunities needed to prepare them for executive-level positions, explains Larry Rooney, Manhattan president.
Manhattan reported $1.137 billion in regional revenue for 2020, down $442 million from 2019, dropping the firm down four spots to No. 10. That lull was expected, as the firm completed the $1.2-billion Globe Life Field in Arlington, Texas, in March 2020. The pandemic also delayed several project starts until later.
In August, McCarthy Building Cos. completed construction of the $142-million Collin College Technical Campus in Allen, Texas. The project consists of four buildings and a 450-space subterranean parking garage.
Photo courtesy of McCarthy Building Cos.
Despite 2020’s challenges, firms across the region agree that 2021 is showing signs of improvement. “Infrastructure, including transportation, marine and energy are active this year,” Jouvenal says.
“We continue to see a steady increase in civil construction projects across all market segments,” adds Earl Mott, Garver’s director of construction services.
“Increased public sector infrastructure investment has been a clear positive for the region as we are seeing more state and local governments prioritizing infrastructure funding. And with the recent federal $8 billion in economic stimulus funding for the aviation industry, it’s clear that construction projects will continue to trend upward in 2021 and beyond.”
Esteban notes that his team has “high expectations for the infrastructure funding bill. There is a need for more water capacity for Texas, especially with the droughts in the western portions of the state and flooding in the eastern and coastal areas.”
The commercial real estate market is improving, and Balfour Beatty is seeing more work for safety retrofits of office spaces, Dillon says. “Additionally, we are seeing the vertical multifamily market coming in strong with the current state of the housing market and residents wanting to live in downtown and uptown areas.”
Meanwhile, the New Orleans hotel and tourism industry is starting to come back, and Palmisano’s affordable housing sector focus is very promising, notes Palmisano. “Affordable housing projects in Shreveport, Lake Charles, Lafayette, Hammond and Donaldsonville are either scheduled to break ground, currently in progress or slated for completion in 2021,” he says. “2021 has also been fruitful for Palmisano’s civil and concrete division, with city of New Orleans-driven infrastructure work on roads throughout town.”
And while growth in suburban markets continues, high density urban infill projects are still happening and seem to be gaining momentum again, adds Miller.
Post-Pandemic Issues Remain
Labor and material shortages as well as material price volatility remain key issues for contractors across the region and the country.
“The impact of the high prices is felt throughout the supply chain and is changing the way we approach projects,” Palmisano says.
Those costs can also be a contributing factor if owners are considering delaying a project, and it adds a layer of risk to budgeting exercises, Jouvenal says.
Mott believes that material prices will trend downward in the coming months, “but I don’t anticipate that the cost of materials will return to pre-pandemic rates,” he says.
Tight labor markets also present a particular challenge when it comes to small- and minority-owned businesses, Jouvenal adds.
“McCarthy has an internal participation goal for all of our projects. It can be challenging for us to deliver on this promise to the communities where we work if the number of firms who are active in our geographies can’t keep up with demand as the economy improves and larger projects are released,” he says.