Southeast Specialty Firms grapple with a 'new normal'

As Southeast specialty contractors hold on for what seems like an ever-elusive recovery, successful firms are getting as lean as possible, watching their bottom lines and adjusting to a “new normal” with a mix of discipline and expanded services.

Photo courtesy of KHS&S Contractors

A worker with KHS&S Contractors puts the finishing touches on the Cheetah Run area at Tampas Busch Gardens.

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For now, it's all about survival, as the Southeast's market for specialty-contracting services continues to run lean and, sometimes, mean. The numbers reveal the downward slide that firms are enduring.

This year's Top Specialty Contractors ranking includes 110 firms, with collective revenue totaling just over $4.5 billion. The list number itself is the first sign of market weakness. Just two years ago, ENR Southeast's Top Specialty Contractors ranking peaked at 200, and a year ago numbered 150.

The revenue figures tell the real story, though. This year's collective total of $4.5 billion, which reflects 2010 revenue, is 47% lower than the $8.5 billion that regional firms reported two years ago. Compared with last year's ranking, when 150 firms reported $5.1 billion in revenue, the current total reflects a further decline of $600 million, or nearly 12%.

Declining revenue has become the ranking's norm. But some firms are also finding success, often by making the most of long-term relationships with contractors and owners that are busy during this downtime.

Of this year's Top 25, for instance, eight reported increased regional revenue from a year ago. Those include the perpetually top-ranked MasTec, Coral Gables, Fla., which saw its regional revenue rise to nearly $760 million, up from last year's $588 million.

Other firms that saw improving fortunes included second-ranked EMCOR Group, 11th-ranked Baker Roofing Co., 13th-ranked Wayne J. Griffin Electric, 14th-ranked D.H. Griffin Wrecking Co., 15th-ranked Southern Industrial Constructors, 17th-ranked Ivey Mechanical Co. and 23rd-ranked Garney Cos.

Emphasizing Change

Specialty firms across the region are doing what they can to adjust to a “new normal” of shrinking markets.

“We believe the economic environment we're in now will remain significantly unchanged for the foreseeable future,” says Michael Cannon, president of KHS&S Contractors, Tampa. “Specialty contractors will have to learn how to thrive in this 'new normal' economy.”

As a result, some specialty firms are aiming to boost company discipline and expand services.

Dean Gwin, president and COO of Gate Construction Materials Group, Jacksonville, Fla., says, “We're offering more products, scrutinizing all expenditures and are willing to hang in there regardless of how long the current economic conditions last.”

“Being selective in pursuing the projects that best suit our capabilities, skills and depth has been paramount to our efforts to maintain market share,” adds Bill Caldwell, president of Waldrop Mechanical, Spartanburg, S.C. “We have been able to move forward without encumbering additional, unknown risks. We have also had success in diversifying into the commercial service/maintenance and solar markets.”

Firms are right to focus on change, Cannon adds. “The most important thing is realizing you can't be successful if you continue to do business the way you did in the past,” he says. “Those days are over.”