Flying High
It�s no secret: 2009 was another bad year for many contractors working in the four-state Southeast region.
Numerous firms closed their doors for good. Others sold out to bigger, more prosperous contractors. Nationally, unemployment in the construction industry topped 22% at one point in 2009, only to escalate further in 2010. And unless a contractor was able to snag some stimulus work, opportunities remained relatively sparse.
In that regard, being recognized as the �Contractor of the Year� for accomplishments in 2009 could be viewed as akin to winning an award for making the best of a bad situation. And by any standard, it�s clear that Charlotte, N.C.-based BE&K Building Group did that and more.
BE&K Building Group didn�t earn the most 2009 regional revenue of any contractor working in the Southeast. In fact, it placed sixth in that regard (see Southeast Construction�s Top Contractors ranking), with approximately $686.6 million in regional revenue.
(The determination of Southeast Construction�s �Contractor of the Year� is based on numerous factors, of which business activity is only one.)
However, in an industry that still remains mostly in recession, BE&K did something that almost any other firm in the region would envy. It landed 22 new Southeast projects in 2009, together totaling an estimated $1.3 billion.
Among those was its big win�in partnership with Turner Construction of Charlotte�of the contract to build the $250-million Boeing 787 Dreamliner Final Assembly Plant in North Charleston, S.C.
That Boeing contract was a big win. The South Carolina Legislature, backed by estimates that the facility would eventually generate nearly 4,000 jobs, lavished incentives upon Boeing�incentives that have since been estimated at between $800 million and $1 billion in value. Boeing, in turn, pledged a $750 million corporate investment in its South Carolina facilities over time.
And when Boeing announced it would indeed build its second Dreamliner final assembly plant in South Carolina instead of Washington�where the first one is located�shockwaves reverberated from Columbia to Seattle.
In a sense, that Boeing deal was symbolic of 2009�s construction market in general: government funding construction, one way or another, in hopes of boosting respective economies out of the doldrums.
And BE&K�along with its construction partner Turner Construction�was right in the middle of it.
�It was a tough year, but we had some major, signature wins going into a year like 2010 that enabled us to keep our people busy,� says Luther Cochrane, CEO and chairman of BE&K Building Group, a division of KBR of Houston.
Mac Carpenter, company senior vice president and project executive for the Boeing project, adds, �We were just very fortunate and blessed by being in the right place at the right time.�
The company must have been hopping.
In addition to that Boeing job, BE&K kept busy with more than $800 million worth of health-care contracts, including the $360-million Duke University Medical Pavilion and Cancer Center project in Durham, N.C.; a $98-million patient bed tower and renovation at Carolinas Medical Center in Pineville, N.C.; $80-million School of Dentistry at the Medical College of Georgia in Augusta; $86.7-million addition to the School of Dentistry at the University of North Carolina at Chapel Hill; and several others.
While other builders were forced to the sidelines in 2009 with signed contracts that owners couldn�t obtain financing for, BE&K found its clients in the game and ready to roll.
The company estimates that about 80% of its new projects came from repeat clients.
Carpenter boiled the company�s success down to simple factors: �You work hard. You make the clients happy. You focus on market sectors that make sense. And you deliver. That brings repeat business. That brings reputation.�
Cochrane adds: �We look at ?2009-2010 as when people continued to become more aware of the quality of our people and what we could do. We�re so proud of the Southeast Construction Contractor of the Year award.�
A Recent Past Cochrane may be right. The company is only in its sixth full year of operation as BE&K Building Group.
Formed in 2004, BE&K Building Group brought together BE&K and two firms it already owned—FN Thompson of Charlotte and Suitt Construction of Greenville, S.C.—and a health-care group.
It’s been a steady rise since then.
The company first entered Southeast Construction’s annual Top Contractors ranking in 2006—which represented firms’ revenue for 2005—reporting more than $475 million in revenue for its first full year of operation.
In the magazine’s most recent Top Contractors ranking, BE&K Building Group reported more than $686 million in 2009 regional revenue, or more than 44% than it did its first year, during a still-booming market.
Also, in 2008, Houston-based KBR, purchased Birmingham, Ala.-based BE&K—including the Building Group—for $550 million in cash, ending 35 years of private ownership of BE&K.
Cochrane credits the success the firm has achieved in those few years to its focus on people�both internally and externally�and maintaining that focus even in lean times.
�Our goal is to keep their faith in us, whether they�re owners, architects, subcontractors or vendors,� Cochrane says.
Cochrane�s inclusion of subcontractors as firms BE&K is trying to keep happy isn�t just lip service.
The company anonymously surveys subcontractors at the end of a project to obtain feedback about the performance of its own management team.
BE&K considers subcontractors a customer and wants to learn from them how to do a better job. That�s important, Cochrane says. �We�re in a business where we�ve got to add value or our clients won�t stay with us.�
A Bright Present For now, BE&K Building Group is weathering the recession exceptionally well.
Duke University, which just hired BE&K Building Group for the Medical Pavilion and Cancer Center project, is an example of a repeat client. The contractor completed a renovation of Duke’s Law Commons and Library in 2008.
“BE&K provided excellent preconstruction services and value engineering to get the project scope within the budget while maintaining high quality,” Paul O. Manning, Duke’s director of project management, told Southeast Construction in a statement. “They ran a safe project. They introduced new subcontractors into the marketplace to increase competition.”
In addition to the Boeing project and those health-care contracts, BE&K’s list of 2009 new awards is diverse in size, market and geography. There’s a $24.5-million county courthouse in Lancaster, S.C.; two projects for Honda Aircraft Co., including a production facility, of undisclosed value in Greensboro, N.C.; a $12-million project for Duke Energy in Kings Mountain, N.C.; a $5.7-million Energy and Sustainability Center for Florida State University; a $44-million University of Florida research and academic center at Lake Nona in Orlando; a $15-million high school in Sanford, Fla.; and a $26.7-million regional laboratory for the Drug Enforcement Agency in Miami.
Carpenter—a 23-year veteran of Suitt Construction who was a group manager with the company before it was bought by BE&K—says he appreciates management’s common-sense approach to business.
“I give Luther (Cochrane) a lot of credit for taking Suitt Construction Co., FN Thompson and a new health-care group and meshing them all together, making us work together and be successful,” he says.
“Their (management) style is a common-sense kind of approach,” Carpenter adds. “They let us do our job. They’re not all in your business. It’s brought about great results across the entire company.”
Future: Bright? Or ‘Frightening’? The bottom-line for Cochrane seems to be one of, well, keeping it real. Contractors, like anyone, should stay true to their character, no matter the times, he says.
“You have to remember that this (recession) will pass, and how you treat people is largely going to determine how you succeed, both now and in the future,” Cochrane says. “You don’t have to take a gun and a knife to every meeting. You have to remember how you operate best.
“We know who we are, and we’re trying to be ourselves.”
Of course, what BE&K is is a highly successful contractor that’s backed by a well-funded organization. Is BE&K looking to grow via acquisition?
Cochrane says: “I would never say never. We have no current acquisition plans. But we would look at a strategic acquisition if it gave us access to people who’ve got credentials in growing market sectors or if it gave us opportunity in a geographic area that we want to be in.”?
Acquisition or not, Cochrane and Carpenter know that the construction industry, BE&K included, is still in for some rough weather in the next year or so.
“There’s just not nearly as much commercial construction work to compete for as there was two years ago,” Cochrane says. “That’s the most frightening thing that we see.
“We’ve been through competitive markets before. What we’re seeing in addition to that is a dramatic reduction in the number of opportunities to chase.
“This recession in construction is different from any one I’ve seen. It’s deeper. It’s wider. It’s going to touch more people, and it’s going to take longer for us to work through.”
Cochrane cites overbuilding in the retail, office and residential markets, and lack of future funding in many public sectors, as the causes for his concern.
Despite his own company’s relative successes, Cochrane still feels the industry’s pain.
“I hate it for the people who are going to have to live and work through it,” he says. “But, like every other industry and every other part of business in this country, we’ve probably been living off of some excesses in this country. It’s a darn shame.”
In fact, Cochrane thinks the current downturn continues to reveal itself as worse than expected, even to him.
�We now think 2010 will be the year that we once thought 2009 was going to be�the last of the worst. 2010�s going to be a tough year for winning new work. You�re going to live off your backlog.�
Carpenter adds: �It�s been a tremendous year for us. But the past is the past. What we�ve got to do now is continue to deliver. And we�ll see where this crazy market takes us.�?
A Few Words About the ‘Contractor of the Year’ Process and This Year’s Nominees:
This is the second year that Southeast Construction has named a “Contractor of the Year.” This year’s process, which resulted in the selection of BE&K Building Group of Charlotte, N.C., was modified slightly from last year.
The aim of the process was to judge the nominated firms based upon their achievements during 2009 in the four-state region of Florida, Georgia and the Carolinas. As you’ve seen from the information in this article, there were numerous reasons for the recognition of BE&K Building Group for this honor.
However, it’s important that readers know some details about the process we used. First, a list of nominees was determined based upon firms’ regional achievements during 2009. Factors considered for the nomination process included regional construction revenue, noteworthy new contracts, the volume and/or growth of new business and intangibles such as innovative business practices, industry awards or technical accomplishments.
Six firms were nominated this year: BE&K Building Group; Balfour Beatty Construction; Clark Construction; The Shaw Group; Skanska USA Building; and Turner Construction Co.
These firms were then asked to respond to our nomination form and submit detailed information regarding their activity and business actions in the Southeast during 2009. The submissions from a “short-listed” group of finalists were then sent to a group of McGraw-Hill Construction editors across the country. (Editor’s Note: Though I was involved in the nomination process, I did not vote in this final round of voting that ultimately determined the “Contractor of the Year.”)
Here’s a rundown of each of the five other nominated firms and the strengths of their 2009 achievements.
Balfour Beatty Construction made a lot of noise, both nationally and regionally, in 2009. The firm ranked second overall in Southeast Construction’s listing of Top Contractors, with regional revenue of $1.17 billion. That included a first-place finish in North Carolina with $598.9 million, and second in Florida with $444.2 million.
Balfour Beatty’s recent acquisitions were prominent, too. In February, Balfour Beatty purchased RT Dooley Construction Co. of Charlotte, N.C., and in October, the firm made even bigger news when it announced its acquisition of Parsons Brinckerhoff.
Nominee Turner Construction Co. spent 2009 working on several high-profile projects. It formed half of the partnership that landed the Boeing Dreamliner project in North Charleston. Also, it won two of this year’s “Top Project Starts:” the $224-million Duval County Courthouse in Jacksonville, Fla., and the $120-million Harrah’s Cherokee Casino and Hotel Tower III in Cherokee, N.C. Turner also worked as a construction manager for a road-building program in Osecola County, Fla.
In all, Turner ranked fourth in the Top Contractors ranking, with regional revenue of $889.52 million.
“From the sales side, in procuring work, for us, 2009 was one of our best years in Central Florida that we’ve ever had, despite the economy,” says Scott Skidelsky, vice president and general manager of Turner’s Orlando office.
Clark Construction Group of Tampa had noteworthy accomplishments during 2009. The firm, which has been landing numerous contracts in the military market, placed ninth overall in Southeast Construction’s Top Contractors ranking. Perhaps most notably, the firm was the top-rated “green” contractor in the Southeast during 2009, with more than $400 million of regional revenue associated with sustainable projects.
Skanska USA Building, with offices in Atlanta and Orlando, turned in another strong year during 2009. The contractor started work on one of the highest-profile projects in Central Florida, the $240-million Nemours Children’s Hospital in Orlando.
The contractor reported the highest volume of 2009 revenue from Florida projects of all firms included in our most recent Top Contractors ranking, with a nearly $481.8 million total.
The Shaw Group of Baton Rouge, La., made a splash in the region, and jumped into the magazine’s Top Contractors ranking for the first time with more than $1 billion in revenue and a third-place finish. The firm’s two big projects in the Carolinas contributed to these results: the $4-billion Mixed-Oxide Fuel Fabrication Facility it is constructing for the U.S. Dept. of Energy in Aiken, S.C.; and the $1.8-billion Cliffside Steam Station Modernization it is building for Duke Energy in Rutherford and Cleveland counties in North Carolina.
Additionally, one of the company’s subsidiaries, Stone & Webster Construction, has been hired to construct the two new nuclear units at Georgia Power’s Vogtle Electric Generating Plant in Waynesboro, Ga. That project–the first nuclear power plant to be approved for construction in the United States in many years–represents a $14-billion investment by the Southern Co., the parent company of Georgia Power.
In summary, the competition was stiff this year. But alas, only one firm can be named for the honor.
Southeast Construction appreciates the efforts of all of the nominees in participating in the process for this year’s “Contractor of the Year” recognition. We also invite our readers to comment on any of the nominated firms and our selection process itself.
Finally, good luck to all of the contractors out there. We look forward to recognizing another group of firms next year.
