The Top 600 Specialty Contractors | ENR: Engineering News Record |
The industry is suffering from one of the worst recessions in decades, and specialty contractors and subcontractors are among the hardest-hit industry firms. While 2008 was a record year for many, specialty backlogs do not extend out as far as general contractors and construction managers, so subcontractors are beginning to feel the pressure as they burn through existing work. This has left them scrambling to cope with a very soft market that shows few signs of firming.
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For ENR’s Top 600 Specialty Contractors, 2008 was the last gasp of the construction boom. The Top 600 garnered $87.02 billion in revenue in 2008, an increase of 13.0% over the $77.01 billion for the group in 2007.
Despite the active market in the first half of 2008, most specialty contractors have worked off a good portion of their backlog. “We are finishing a lot of good work, but clearly, the market for new projects has slowed dramatically,” says Tony Guzzi, president of EMCOR Group. He says EMCOR has weathered the storm better than many firms because it is diversified and has a strong operations and maintenance operation. “The good news for us is that we have a good cash position, which gives us options.”
Many specialty contractors believe next year will be difficult. “We think 2009 will be respectable as contractors burn off backlog, but next year will be tough,” says George Grisham, president of Hayward Baker. He believes 2010 will be a year of slow growth after a tough 2009 market. Grisham says there is work available, including some big jobs that Hayward Baker has in its sights, “so it is not all gloom and doom.”
“We just finished our national convention in Seattle on Sept. 15, and most of our members believe that 2010 will not be a very good year,” says John Grau, CEO of the National Electrical Contractors Association, Bethesda, Md. He says electrical contractors are finding opportunities in energy-efficiency upgrades and energy audits, and there is some sense of optimism, “but no one is jumping up and down about the end of the recession.”
Many specialty contractors hope the market is beginning to turn the corner. “I attended a conference on the economy, and the consensus was that the recession has bottomed out in this quarter,” says Rocky Turner, CEO of L.P.R. Construction. He says people seemed more pessimistic four months ago.
“In the first quarter of 2009, when people were working off their backlogs, I heard a lot of grumbling,” says Mike Taylor, executive director of the National Demolition Association, Doylestown, Pa. “By June, everyone I talked to had work—not a lot, but they were working.”
Many executives in the industry are not so sanguine. “Contractors are optimistic by nature. Given the risks they shoulder and the thin margins, they have to be optimistic,” says E. Colette Nelson, executive vice president of the American Subcontractors Association, Alexandria, Va. “But when you ask hard questions about the...
Congratulations to the Top 600!
