Overview p. 52 // Specialties Analysis p. 52 // Profi tability p. 52 // New Contracts p. 52 // Market Analysis p. 53 // Volume p. 53 Encore Electric Goes the LED Route p. 54 // Top 600 Dialogue p. 55 // Subcontractors Are Getting Lean p. 56 Top 50 Electrical Firms p. 57 // Top 50 Mechanical Firms p. 58 // Top 20 Masonry Firms p. 59 // Top 20 Concrete Firms p. 59 Top 20 Wall and Ceiling Firms p. 59 // Top 20 Utility Firms p. 59 // Top 20 Glazing and Curtain-Wall Firms p. 60 // Top 20 Painting Firms p. 60 // Top 20 Excavation and Foundation Firms p. 60 // Top 20 Roofi ng Firms p. 60 // Top 20 Demolition and Wrecking Firms p. 61 // Top 20 Asbestos-Abatement Firms p. 61 // Top 20 Sheet-Metal Firms p. 61 // Top 20 Steel Erection Firms p. 61 Top 20 Fire Protection and Sprinklers Firms p. 62 // Baker Concrete’s Band of Brothers p. 62 // How To Read the Top 600 Tables p. 62 // The ENR Top 600 Specialty Contractors List p. 65 // Where To Find the Top 600 p. 80 NUMBER 39 NUMBER PLANTING THE FLAG Enclos installed 320,000 sq ft of custom curtain wall and facade on Pacifi c Gate, a 41-story, 514,000-sq-ft luxury apartment building in San Diego. PHOTO COURTESY OF ENCLOS PHOTO COURTESY When Will the Market Top Out? The construction market is strong and continues to grow at a brisk pace. But contractors wonder how long the good times will last. By Gary J. Tulacz enr.com October 23, 2017 Ⅲ ENR Ⅲ 51 1023_Top600_Intro_1.indd 51 10/17/17 2:11 PM 29.5% THE TOP 600 SPECIALTY CONTRACTORS Electrical $33,254.59 19.4% Mechanical Specialties’ Share of Revenue $21,888.60 16.6% 4.6% Other Excavation & $18,732.43 1.7% Foundation Fire Protection $5,136.34 6.4% $1,882.63 3.5% Concrete 1.2% 1.7% Wall & Ceiling $7,228.67 0.7% 1.5% 8.6% Sheet Metal Roofing $3,914.98 Asbestos/ $1,361.18 Steel Erection $1,969.86 Utility $ Lead Abatement $1,696.33 1.9% 9,672.96 $733.21 1.3% Glazing & 0.5% 1.0% Demolition Curtain Wall $2,085.88 Masonry Painting $1,453.95 $597.08 $1,107.35 SOURCE: ENR The Top 600 Loss in profits The Top 600 2016 Specialty 13 Specialty $93,742.1 Gain in profits Contractors’ Contractors’ 2017 565 (Measured in $102,586.5 Profitability New Contracts (Measured firms reporting) in $ millions) SOURCE: ENR After eight years of growth, the market still is thriv- Chuck Goodrich, president of Gaylor Electric Inc. ing. Further, most fi rms believe it will continue to and 2017 ABC chairman. “For the fi rst time in the improve through the end of 2018 and have backlogs series’ history, every category—fi rm size, industry to prove it. But some fi rms are beginning to become and region—registered quarterly growth in CBI. wary about what 2019 will bring, both for the CBI is up by 0.4 months, or 4%, on a year-over-year market and the economy as a whole. basis,” he says. The impressive strength of the market can be “For the fi rst Many market sectors look very good. “There is seen in the results of this year’s ENR Top 600 time in the a signifi cant need to build new and maintain existing Specialty Contractors list. As a group, the Top 600 [Associated electric power and oil-and-gas infrastructure Builders and cleared revenue of $112.72 billion in 2016, up an Contractors’ throughout North America. As a result, our custom- impressive 12.2%, from $100.43 billion, in 2015. Construction ers’ multiyear capital programs and projects are Further, many Top 600 leaders think the recovery Backlog larger and more complex than they have ever been,” still has steam in it. Indicator’s] says Duke Austin, CEO of Quanta Services. Many contractors are enthusiastic about the cur- history, every The long-term prospects in energy markets seem category—fi rm rent and future market. “We are seeing tremendous size, industry strong. “Power plants are changing sources of growth year-on-year and have a record backlog,” says and region— energy, and that means the power market should be Charles Bacon, CEO of Limbach Facility Services. registered strong for the next 10 years,” says Anthony Guzzi, He says Limbach currently is tracking $3.1 billion in quarterly CEO of Emcor Group. The domestic oil market opportunities, up from $2.4 billion at this time last growth.” also should continue to grow, he predicts. year. “I don’t see a recession any time soon,” he adds. Chuck Goodrich, On the buildings side, most contractors are optimis- One good sign of the expanding market is that President, Gaylor tic. “Health care and manufacturing continue a steady Electric Inc. backlogs are growing. The Washington, D.C.-based growth. The emergence of internet-based retail sales Associated Builders and Contractors’ Construction has increased our focus on distribution and data-center Backlog Indicator, which measures the average construction,” says Goodrich. “We have seen an length of backlogs among all its contractor mem- increased demand in the mission-critical health-care bers, rose to nine months during the fi rst quarter of and transportation markets, while commercial and 2017, up 8.1% from the fourth quarter of 2016, says residential markets have held steady. Our pipeline for 52 Ⅲ ENR Ⅲ October 23, 2017 enr.com 1023_Top600_Overview.indd 52 10/17/17 2:48 PM MCKINSTRY designed a system to 47.6% transfer waste heat from data centers General Building #23 to warm the Amazon offices in Seattle $53,613.27 and return water to cool the servers. Markets’ Share of Revenue 9.5% Petroleum $10,732.39 1.5% 4.3% 8.4% Sewer / Waste Industrial 5.4% 11.2% Other $1,720.31 $4,900.81 Transportation Power $9,503.80 $6,089.41 $12,584.74 0.7% 4.1% 6.6% 0.6% Hazardous Telecom Manufacturing Water Waste $4,627.34 $7,399.75 $730.27 $813.95 SOURCE: ENR Comparing the Past $ $ $$ $ $ $ $ Decade’s Specialty 75.1 87.1 72.6 $66.3 $72.1 81.3 $88.2 93.2 100.4 112.72 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Contractor Revenue Measured in $ billions Source: ENR the next 12 to 24 months looks very healthy,” adds Brian successfully thrive and survive the inevitable changes Brobst, marketing director for Rosendin Electric. in our market place,” says Skip Mancini, president 515 of B.T. Mancini Co. Firms on the list Storm Clouds Forming? One of the difficulties in a market this strong is that that sent in a However, there are many who see storm clouds on the many contractors are tempted to expand by pursuing survey in 2016 horizon. “I am hearing more contractors talking about larger projects, which can cause problems. “We have the potential for a recession coming up in the next 12 invested heavily in training, safety and technology to 18 months,” says E. Colette Nelson, chief advocacy 69.1% because that is what customers demand,” says Guzzi. officer for the American Subcontractors Association, Firms that He says firms that chase work into high-end markets Alexandria, Va. She says many contractors don’t believe increased may run into problems coping with these demands. “It the market will drop off in the foreseeable future, but revenue in 2016 is a tough time for small and midsize contractors trying she cautions contractors should prepare just in case. from 2015 to do bigger jobs than they are used to,” he observes. Nelson is not the only one who is concerned about Guzzi says contractors have to be especially careful long-term markets. “National construction market in such a strong market. “You can’t take jobs that you forecasts predict a slowdown in 2018 due to general 29.7% can’t staff, and you have to be careful who you team concerns about a sluggish U.S. economy.” says Marc Firms that had with and how clearly defined the scope of work is,” he Paolicelli, chief customer officer at RK Mechanical Inc. lower revenue says. “Contractors that chase work just to add volume Many contractors are preparing in case of a down- in 2016 than in will be the first ones to get into trouble.” turn. “Earlier this year, we felt a need to be prepared 2015 in case markets slowed later in 2018 or into 2019,” says Mergers and Acquisitions Brad Wucherpfennig, president of Baker Concrete Mergers and acquisitions continue to have an impact Construction. “However, so far, the volume of work on the specialty-contractor market. The recent merger appears to be fairly steady.” between Brand Energy & Infrastructure and Safway Generally, contractors predict this surge will be Group was the biggest on the list, becoming the maintained through 2018 and into 2019. “[But] we $4.6-billion industrial services giant BrandSafway. believe that building a strategically intelligent back- Another major acquisition last year was Emcor log of business is paramount in the ability to Groups’ purchase of Ardent Services, a $250-million enr.com October 23, 2017 ENR 53 1023_Top600_Overview.indd 53 10/17/17 2:49 PM THE TOP 600 SPECIALTY CONTRACTORS Southland Industries is another mechanical contractor Electrical Contracting that has a dedicated design group to provide a full MEP design package to projects. Lynch says Southland always Encore Goes the LED Route is looking for potential acquisitions. But unlike Limbach, Southland is not actively pursuing electrical contracting capabilities.