Specialty Firms Struggle to Keep Pace With Surging Market
Specialty contractors around the four-state Southeast region are finding an increasing number of project opportunities. They are also dealing with mounting workforce-related challenges that increasingly look like they are here to stay.
Related Links: Southeast Specialty Contractor of the Year: Power Design
According to the results of ENR Southeast's latest Top Specialty Contractors survey, the hastened pace of construction activity is only now starting to boost bottom lines, as firms' year-over-year revenue increases were spotty, with some companies eking out minor gains and a relatively high percentage of respondents actually reporting downturns.
Looking at the 43 repeat respondents included within this year's list of the top 50 firms, for instance, shows that nine of those companies-nearly 21%-actually reported decreases in revenue during 2014, the period covered by the survey.
However, revenue for all 43 of the repeat respondents-including the firms with decreased revenue-totaled nearly $4.16 billion in 2014, a more than $600 million overall gain for the group, or a rise of 14%. In other words, some firms are making great gains in the recovering construction economy, while others continue to struggle within the new landscape.
The cumulative revenue total reported by all specialty contractors included in this year's list fell slightly. That was due, at least in part, to last year's No. 1-ranked firm, Coral Gables, Fla.-based MasTec-which reported roughly $685 million in revenue in last year's ranking-opting not to participate in this year's survey. As a result, this year's total revenue was $5 billion, down from last year's total of $5.17 billion.
Regardless of geography or market sector, business opportunities appear to be surging, to one degree or another, for Southeast specialty contractors.
According to the latest metro construction data from Dodge Data & Analytics, for instance, the Southeast's top two markets-Atlanta and Miami-showed identical 33% gains in new contract volume through the first seven months of 2015. With those gains, the Miami metro area is edging out Atlanta for the lead, with $6.1 billion in new contracts through July, compared with Atlanta's $5.5-billion tally.
Business Trends
In Orlando, Jack Olmstead, president at Tri-City Electrical, noted to ENR Southeast: "Everything is on the upsurge, but health care is booming."
The situation in Atlanta doesn't appear to be quite the same to Vann Cleveland, vice president for business development with No. 4-ranked Cleveland Electric Co. Instead, says Cleveland, the health care market is showing signs of slowing, while commercial office buildings, powerplant modifications, data centers, institutional and transit sectors appear to be exhibiting the greatest potential for increased work. Construction activity related to solar power generation could be heating up, too, he adds.
"Right now we see a great deal of activity in the building of multifamily properties, and we anticipate demand in this area to be strong for the next couple of years," says Tracy Pierce, vice president with Precision Concrete Construction, Atlanta. He adds that office construction is beginning to show "very early signs" of a comeback.
With so many markets gaining momentum, specialty contractors are struggling to maintain a workforce of sufficient size to take advantage of the increased number of contract opportunities.
While noting that "margins on bid day haven't risen as quickly as we thought due to the competition's pricing," Cleveland says some projects "are requiring more labor than we feel comfortable to provide in light of the availability of good electricians."
"Finding good quality labor continues to be a challenge," adds Precision Concrete's Pierce. "The construction market has improved greatly in our region since the Great Recession and the supply of quality labor has been exhausted. I would anticipate the labor shortage to continue in some form for a number of years as the markets adjust to current construction levels."
For awhile now, many specialty contractors have sought to gain an edge by boosting their technology investment in tablets, laptops, BIM software, smartphones and other items.
"The use of new technology has progressed at a rapid rate since we came out" of the recession, says Pierce, adding that the company recently purchased its first drone.
About the Ranking
ENR Southeast's Top Specialty Contractor ranking is based on 2014 revenue generated from work performed in the four-state region of Florida, Georgia, North Carolina and South Carolina. The main ranking represents firms' total Southeast revenue, along with information about each firm's largest projects and top three market sectors. Additionally, breakout charts rank firms by state and work category revenue.
ENR Southeast invites readers to check out this year's rankings for more market insights.
