Southwest specialty contractors are recovering from a difficult pandemic year, although they continue to be plagued by rising materials costs, delivery delays and labor shortages. Many also are concerned about the spread of the delta variant.
The 30 largest firms in ENR Southwest’s 2021 Top Specialty Contractors ranking reported $2.5 billion in combined regional revenue during 2020, up slightly from $2.23 billion in 2019.
Liberty Industrial Group Inc., based in Phoenix, posted $17 million in regional revenue for 2020. The company handles commercial and industrial scaffolding, insulation, painting, general labor and other services in 40 states.
“During the first months of COVID, we had some projects delayed and canceled, but a lot of our work is maintenance related and can only be delayed for so long. So we saw a strong uptick at the tail end of 2020,” says Robert Prinz, the company’s president and CEO. “2021 has been strong across the board in all areas and all markets.”
RKS Plumbing & Mechanical reported 2020 revenue of $47 million to rank No. 17, surpassing its 2019 figure of $40 million for work completed out of two Arizona offices. Among the projects the firm completed were three in Scottsdale: the $5.5-million condos at 7180 E. Kierland, the $4.18-million Kierland Apartments and a $4.5-million renovation of Copperwynd Resort.
“Our biggest challenge is finding people and procuring material in a timely manner,” says Joe Stachel, COO at RKS. “Materials costs continue to go up—everything from start to finish on a project.” He adds that increased PPE expenses are now required to be included in bids, and competition for talent is pushing costs higher. “We now have two people with 100% of their time devoted to onboarding people,” he explains. “And due to COVID-19, we have had long-term employees retire rather than deal with the changes.”
The 35-story Circa Las Vegas was completed in 2020 at a cost of $1 billion. The luxury resort and casino has the largest sports book in Las Vegas with the biggest screen in sports book history. The project required 5,400 tons of steel.
Photos courtesy of SME Industries Inc.
Structural Steel, Masonry, Concrete
For structural steel and miscellaneous metals provider SME Industries Inc., regional revenue totaled $64.6 million, a decline from the prior year, dropping the firm to No. 15 on this year’s ranking. Still, “things continued alongside new protocols and procedures, and every job was able to continue,” says Dieter Klohn, president and CEO.
The West Jordan, Utah-based company also offers seismic protection systems and heavy haul trucking. In 2020, SME completed major contracts at SoFi Stadium in Inglewood, Calif., and Resorts World Las Vegas.
“We are enjoying an upswing in projects, and things seem to be moving consistently with 2019 and 2020 project numbers,” Klohn says. At the same time, he notes that steel pricing has almost doubled on some products and metal deck has become a long-lead item.
Revenue increased in 2020 for Phoenix-based Sun Valley Masonry, to $93.79 million from $78.4 million in 2019, moving the firm up to No. 9. Most of the company’s masonry and concrete work is done in the Southwest.
“We were very thankful to have a strong workforce and loyal clients. We were fortunate to have had very few projects that were paused for a brief time to help everyone in Arizona figure out the next steps during unprecedented times,” says David Peloke, vice president of operations.
Projects the firm completed in 2020 and 2021 include the $2.6-million ASU Durham Hall in Tempe, the $1.5-million Banner Ocotillo in Mesa and $1.3-million The Grand at Papago Park in Phoenix. The longer lead times for materials created opportunities for Sun Valley to participate with design-assist partners during planning, allowing for earlier procurement, Peloke explains.
Current projects include four in Arizona: the $2.1-million Legacy Sports Park in Mesa, $1.65-million Union on 6th in Tucson, $1.5-million Creighton University Health Science Campus in Phoenix and the $7.8-million 2nd on Filmore in Phoenix.
Opened in June, the 59-story Resorts World Las Vegas fuses three premium hotel brands. Requiring 23,472 tons of steel, the luxury casino is the most expensive resort property ever developed in the city at $4.3 billion.
Photo courtesy of SME Industries Inc.
More Growth Ahead
“We are hopeful the business will continue in an upward trend,” Peloke says. “We have good work continuing to come in, and the outlook is positive in all areas.” He notes that multifamily building continues to be robust, leading to the need for additional schools, health care facilities, entertainment districts and other facilities.
SME Industries’ Klohn foresees “a narrow uptick in the first two quarters, with increases in quarters three and four for 2022.”
Meanwhile, Stachel forecasts that RKS will reach $43 million to $45 million in regional revenue in 2021. “Fortunately, we have been able to supply labor to all our jobsites, but material keeps going up and delivery dates are doubling in many cases,” he says.
While COVID variants could change the marketplace, “as we see it now, there are many segments of the market that appear strong and moving forward with capital projects or planned maintenance outages,” says Prinz, noting that biofuels, alternative energy and semiconductor markets will comprise a large portion of the firm’s work in 2022.
Firm leaders all agree that labor remains the central issue. “We have continued to see a decline in the younger generation joining the trades, so training, employee retention and providing lasting career opportunities will be the focus for us over the foreseeable future,” Prinz says.