Taken from the Orange County Business Journal
http://www.ocbj.com/news/2011/jun/19/construction-companies-steady-braced-challenges/
Construction Companies Steady, Braced for Challenges
Small rise in revenue beats last two years; few big tickets ahead
By Mark Mueller
Sunday, June 19, 2011
Orange County’s largest construction companies managed to stop the bleeding last year, though no one’s predicting a return to a boom any time soon.
The largest 25 construction companies on this year’s Business Journal list saw local revenue rise slightly—a gain of less than 1%—in the past year to a combined $6.2 billion.
That reversed a two-year trend of declines, when companies that made the annual list posted drops of about 13% and 7%.
Government, healthcare and educational projects that have been in the works for a few years made the difference.
The private sector remains near-dormant, industry officials said.
Not many big-ticket projects are going out to bid, which could make for a tricky year or two ahead.
“There’s not a lot of large projects in backlog right now,” said Mark Mardock, executive vice president at the Newport Beach office of St. Louis-based McCarthy Building. “2011 is really becoming a challenge.”
Still No. 1
McCarthy retained the No. 1 spot on this year’s list with $970 million in revenue reported in the past year.
The Business Journal ranks companies by annual revenue generated from local offices whether the projects are here or elsewhere.
The bulk of the companies on this year’s list didn’t see a turnaround in 2010.
Eleven reported a decline in revenue, including eight that reported more than double-digit drops.
Six saw upticks in business, including two of the top ten.
Revenue for eight companies are Business Journal estimates.
Among the larger firms that did show an increase was McCarthy, which had an 8% increase in revenue from a year ago.
The company’s local office has started work on a $450 million hospital project just south of San Clemente at Camp Pendleton, where it’s working with the Costa Mesa office of Maryland’s Clark Construc-tion Group LLC.
Clark retained the No. 3 spot on this year’s list, reporting $780 million in revenue, a drop of about 5% from a year ago.
The company is said to be one of the companies working on Walt Disney Co.’s $1.1 billion expansion of its Disney’s California Adventure theme park in Anaheim, likely the largest ongoing construction project in OC.
Clark was one spot behind Irving, Texas-based Fluor Corp., which kept the No. 2 ranking on this year’s list. Fluor’s operations in Aliso Viejo had an estimated $850 million in revenue for the 12 months through March, down an estimated 3% from the prior 12-month period.
Fluor’s local operations largely handle work for the chemical, mining and transportation industries.
In addition to the Camp Pendleton project, McCarthy also is wrapping up work on the expansion of John Wayne Airport.
The company was the general contractor on a new passenger terminal at the airport and other expansion plans, including a parking structure, central utility plant and improvements to existing terminals.
A big presence in the area’s healthcare and education industries also helped drive McCarthy’s gains last year.
McCarthy worked on a Kaiser Permanente medical center in Fontana, valued at more than $300 million, a $560 million expansion of Orange’s Children’s Hospital of Orange County and a new performing arts center for Soka University in Aliso Viejo.
The largest hospital development under way here is Kaiser Permanente’s $560 million project in Anaheim. The hospital will have 262 beds and 10-operating rooms, and is set to replace Kaiser’s aging facility on Lakeview Avenue, which was built in the mid-1970s.
The project’s general contractor is the Irvine office of Colorado-based Hensel Phelps Construction Co., No. 4 on this year’s list.
McCarthy’s Mardock said that opportunities in the healthcare and education fields appear to be slowing down.
Cuts to education budgets at the state and federal levels likely mean a slow-down in public works for the next few years.
Another hurdle for public works: local governments can’t issue bonds as quickly as they once did because of property tax declines, which also will slow down public sector work going forward, Mardock said.
Construction companies aren’t expecting a big boost in business from private developers any time soon. Developers here reported finishing about 700,000 square feet of private-sector projects last year (see story, page 26).
“The private sector is dead,” Mardock said.
DPR’s Jump
The largest revenue jump seen on this year’s list came from the Newport Beach office of Redwood City-based DPR Construction, which saw revenue increase 39% last year to $306 million.
The increase helped DPR move up three spots to No. 6.
Local projects for DPR of late include a new water system for the Irvine production plant of B. Braun Medical Inc., a new 204,000-square-foot parking structure for Irvine’s Edwards Lifesciences Corp., and a 150-unit senior housing project in Anaheim.
Among the larger companies on this year’s list, DPR also reported seeing the biggest jump in contracts awarded—deals that likely will be reflected in revenue totals over a multi-year period. DPR saw a 147% increase in new business last year, to $450 million.
All told, the dollar value of contracts issued to the local operations of companies on the list increased 12% last year, to $5.1 billion.
That followed declines of 33% and 23% the two prior years.
The company with the largest jump in new contracts awarded last year by percentage was No. 23 R.D. Olson Construction in Irvine, the construction arm of hotel developer R.D. Olson Development.
Olson Construction reported $80 million worth of contracts in the past year, a 300% increase in new business.
Projects the company’s working on include new hotels in San Juan Capistrano, Oceanside and Maui.
View list here: http://www.cbjonline.com/a1ocbj/lists/List-2011-OC_Comm-Construction.pdf
