2008 Top Specialty Contractors

Specialty contractors in California are weathering the economic slowdown and dealing with heightened competition with enhanced long-range planning

By Joe Florkowski

In the last year, Brien Pariseau has seen some very hungry bidders enter the electrical marketplace.

And Pariseau, president of Anaheim-based Sunwest Electric, says those hungry bidders are doing more harm than good because they’re creating more competition and lowering profit margins for companies like Sunwest and other electrical contractors.

“Some guys think they can take work just to keep their guys busy,” Pariseau says. “They are bidding irresponsibly low.”

In a turbulent and slumping economy, specialty contractors throughout California are finding that competition has grown fiercer as the state’s homebuilding industry has tanked and companies that relied on residential work try to enter the commercial marketplace.

While some of those former residential builders are simply trying to find work to keep busy, that is not the best way to stay in business, say some of the state’s Top Specialty Contractors, whose revenue rankings follow this story.

Every specialty contractor has the same goal: to stay afloat in an unstable economic environment. And the specialty contractors interviewed for this story often share some of the same methods to remain in business and continue to grow – without bidding too low.

For instance, planning ahead is an important part of how ISEC is managing the current economic downturn, says Mike Polanchyck, senior vice president in the company’s Fremont office.

ISEC, which does commercial interiors, develops contingency plans by taking a look at its budgets and reviewing what would happen if the construction environment softens, Polanchyck says.

“You’re planning for a bad year,” Polanchyck says. “It happens.”

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He adds that to manage the current environment, ISEC manages its cash, stays within its core competencies and does not stretch the company’s resources.

“It’s very easy to get caught up in bidding every job,” Polanchyck says.
ISEC is also relying on a two-year backlog of work to ensure that it stays busy.

West Sacramento-based Clark Pacific is weathering the current environment by being geographically diverse, says Don Clark, business development president for the company that specializes in architectural and structural precast concrete.

While some markets, such as Sacramento and San Diego are slowing down, Clark Pacific is starting to look more to markets such as Las Vegas, he says.

Clark says that his firm can work in numerous locations because it operates three plants – two in Northern California and one in Southern California.

Los Angeles-based Giroux Glass, a glazing company, has found that despite a tough economic environment, it’s expecting higher revenues in 2008 compared with 2007, says Anne-Merelie Murrell, CEO/president.

She says the company is successful partly because most projects have a need for some sort of glass. And because 30% of Giroux’s business is service calls to repair or replace existing glass, the company can rely on a steady stream of business even if new contract work slows down.

But despite the growth, Giroux still faces some of the same issues other specialty contractors face, such as finding qualified personnel, Murrell says.

“We have to look for people who are going to be an asset,” she adds.

All of the companies interviewed for this story say they have enough work to keep them occupied throughout 2008. But the economic environment is going to force some changes, the company executives say.

In the next 12 months, Sunwest Electric is going to see a slowdown and a decrease of about 10% to 15% in volume of work despite a backlog, Pariseau says. Sunwest will compensate by becoming more aggressive with bidding and sales and marketing, he adds.

Diversified departments that focus on tenant improvements will also become an important part of the business, Pariseau says.

ISEC’s Polanchyck agrees that planning is important, and “you have to expect a downturn. You can’t turn the ship as quickly as you can when the market goes south.”

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