Limits to the Boom
Nine of the top 10 specialty contractors on the list recorded sizable revenue increases in 2012. But there are signs that not all California trade contractors are experiencing that level of success. "Owners seem to be more cautious when partnering with smaller subcontractors, post-recession, and are trending toward selecting industry leaders," says Boris Shekhter, vice president of Helix Electric, Long Beach.
Larger firms may be better positioned to adopt design-build, BIM, value engineering and prefabrication techniques, which Shekhter says have helped Helix boost its productivity.
Outside of the Bay Area and other select markets, some specialty contractors aren't seeing a building boom—yet. "There is some optimism regarding gradual improvement, but money remains tight, and developers are reluctant to release major building projects," says Mic Patterson, vice president of strategic development at Enclos, Los Angeles.
"As a consequence," he adds, "project margins remain depressed. We will continue to target jobs very selectively and avoid those where inadequate project budgets pose excessive risk to the building team."
In addition, early signs of labor shortages are starting to pop up. Toby Cummings, executive director at Associated Builders and Contractors Northern California, says that because the need for skilled labor is expected to grow in the next year or two, his group is increasing the number of people taking part in its apprenticeship programs and adding classes, especially for electrical training.
Jason Gordon, president of Heartland Acoustics & Interiors in Carlsbad, says specialty contractors aren't competing just with each other for skilled tradespeople. "Some of our general contractors are self-performing more scopes and cutting into our business," he says. "We have been fine-tuning all of our processes to be the most efficient we can for the rebound."
Subcontractors are getting involved in all facets of the project life cycle so they can remain indispensable members of construction teams. "Most of our work is being done under some form of design-assist project delivery strategy," says Patterson of Enclos. A collaborative construction process encourages making use of a subcontractor's expertise early in a project, often during initial concept development, he adds.
Worries about capacity and worker shortages are prompting owners to select trade partners early in the design phase, rather than waiting for completion of design drawings, says Walters & Wolf's Chrisman. "Value-added services and the availability of key personnel at a moment's notice are critical to meeting [owners'] expectations," he says.
