2006 A Good Year for Most General Contractors
For most general contractors in California, 2006 was a good
year - and they believe this year will be rosy, too.
Although some lingering issues dealing with workforce availibility
will remain, contractors say there is plenty of work to be
The passage in November of a series of state infrastructure
bonds will spur a number of public works projects to start
this year and next, general contractors say.
those public works projects are expected to keep general contractors
busy as they deal with issues such as finding quality labor
General contractors will also watch to see how the state will
regulate emissions from heavy-duty equipment.
Santa Ana-based Sukut Construction, Inc. is watching these
issues carefully, says Michael Crawford, the firm's president
Like other general contractors, Sukut is having trouble finding
quality labor, but that is nothing unusual in California,
"When there is full employment, the quality of the labor
pool is an issue," Crawford says.
The regulation of the off-road diesel engines and heavy equipment
is a significant issue for the industry, Crawford says. The
California Air Resources Board is working on a new rule that
could render millions of dollars of in-use construction equipment
worthless unless it is fitted with emission controls or the
engine is repowered.
CARB's key proposals would require contractors to comply
with increasingly stringent particulate matter (PM) emission
reduction targets; meet CARB's fleet average emission target
by 2013 or scraping 10 percent of the company's fleet horsepower
per year or replace it with Best Available Control Technology
(BACT) until the fleet meets CARB's target; affix a label
with an identification number on each piece of construction
equipment; and report annually on every offroad diesel engine.
Crawford maintains that the changes planned for the engines
are necessary and will benefit the environment, but it will
increase costs for buying equipment and availability of equipment.
"It's going to make quite a bit of equipment in California
obsolete quickly," he says.
Sukut refocused on its commercial, industrial and public works
projects in 2006 and will again this year because the residential
market has slumped, Crawford says.
One of the challenges facing the state and general contractors
is meeting the needs of the seismic retrofit bill SB 1953,
says Martin Sisemore, president/ CEO for Redwood City-based
Rudolph and Sletten.
Both the state and general contractors are facing issues with
the bill. State officials do not have the staff to monitor
the implementation of the bill, while general contractors
can't find enough quality subcontractors to work on the multitude
of seismic projects, Sisemore says.
is a supply and demand issue," Sisemore says. He adds
that Rudolph and Sletten will follow the issue closely because
40 percent of the firm's revenue comes from health care projects.
Last year was a good one for Rudolph and Sletten and 2007
is expected to be an even better one, Sisemore says. Revenue
grew by 20 percent in 2006 and is expected to grow by another
30 percent this year, he says.
The company is expecting growth to continue in the fields
of health care, biotechnology and life sciences construction,
While prices of building materials have stabilized since late
2005 and early 2006, the construction industry is still having
trouble finding quality labor, particularly quality subcontractors
and skilled craftsmen, Sisemore says.
"The labor availability and qualified subcontractors
is going to be influencing how we look at projects in the
coming months and years," he adds.
Contractors in California >>
San Rafael-based Ghilotti Brothers had a banner year in 2006
despite losing the first four months of the year to unseasonably
wet weather, says President Mike Ghilotti. But in the final
eight months of 2006, Ghilotti completed 20 percent more work
compared with all of 2005, Ghilotti says.
adds that the biggest hurdle Ghilotti faced in 2006 was staffing
projects with enough qualified/skilled workers, he says.
"The union halls will be even more challenged to supply
the necessary workforce for the 2007 season," Ghilotti
Ghilotti is forecasting that 2007 will be as good if not better
"We believe funding from the state bond measures will
start transferring into real projects put out in the public
transit markets," he adds. "Commercial construction
should maintain a strong presence, but the housing market
we believe will continue to under perform."
Ghilotti says his firm is also watching the regulation of
heavy equipment and new stringent standards for reduced emissions,
which he adds will impact most contractors severely when they
either pay for engine modifications or new equipment purchases.
For Vacaville-based Hearn Construction, 2006 was a "fair
CEO Fred Hearn says.
of the work we had under contract early in the year just didn't
get off the ground due to various reasons -- financing, an
early and wet winter, contract negotiations and primarily
issuance of permits," he adds.
Like other contractors, Hearn is having trouble finding quality
subcontractors with qualified crafts people, Hearn says.
"The quality of the workforce is declining across the
board," he says.
But 2007 is shaping up to be a better year for Hearn.
"Hearn Construction and our sister company Nolan Construction
have more backlog in total projected revenue and as a percentage
of our business plan that ever before," he says.
"The phone continues to ring and the lack of rain in
January is going to help us get off to a good start as well.
We may have had the best January ever."
Hearn Construction recently embarked on two projects - Leisure
Town Plaza in Vacaville and the Le Rivage Hotel in Sacramento.
Leisure Town is a new 14,600-sq.-ft. upscale food and retail
center, and the Le Rivage is a 100-room boutique hotel located
off the Sacramento River.
San Francisco-based Nibbi Brothers is expected to have the
largest backlog of projects in the company's history, says
Bob Nibbi, president.
Nibbi will do about the same amount of business as 2006 because
of that backlog, he says.
Nibbi is currently working on the St. Anthony's Foundation
Medical Office Building in San Francisco.
contractors across the state should be getting a large amount
of work because of the passage of the state infrastructure
bonds in November 2006, Nibbi says.
"Over the next two years, you are going to see the impact
of the bond money," he adds.
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