BUILDING MOMENTUM
Hospitals, Schools Keep Construction Companies Busy Amid Real Estate Slump
By MATHEW PADILLA
The top 25 construction companies working in and from Orange County saw higher revenue in the past year with one big exception: Aliso Viejo-based Fluor Corp.
Excluding Fluor from this week’s Business Journal list, revenue at the 24 other construction companies rose 3% to $3.7 billion.
The list ranks companies by revenue from their OC offices for the most recent 12 months, most through December or March.
No. 1 Fluor, which took a hit from a decline in power plant construction, dragged the list’s total down 9% to $10.4 billion. The company’s Fluor Daniel unit had construction revenue of $6.7 billion in 2003, down from $7.8 billion the prior year.
Fluor Daniel’s total was greater than that of all the other companies on the list combined. The figure excludes revenue from engineering and project management at Fluor.
The falloff in power plant work led to a 33% decline in Fluor’s OC workforce in the past year or so to 1,500 workers. The company’s power business was heavily concentrated in Aliso Viejo, spokeswoman Lisa Boyette said.
Fluor’s contract wins and work backlog are on the upswing, Boyette said, including in Iraq. Along with more government work, Fluor is set to do design and construct more buildings for drug makers as well as oil and gas facilities.
Other construction companies saw revenue gains last year by focusing on everything except office and industrial buildings. Instead, builders worked on government projects, hospitals, schools and shopping centers.
No. 3 St. Louis-based McCarthy Building Cos., which has a Newport Beach office, jumped six spots on the list largely by working on hospitals and schools. The company’s 2003 revenue shot up 72% to $342 million from a year earlier.
“For the markets we are focused on, it was a very good year and appears to be continuing for us,” said Carter Chappell, president of McCarthy’s Southern California division.
Much of McCarthy’s hospital work last year involved bringing buildings up to current earthquake codes, Chappell said.
After the 1994 Northridge earthquake, California passed a law requiring all major acute-care hospitals to be self-sustaining for 72 hours following a big quake. State hospitals face an estimated $24 billion in costs to comply with the bill by 2030.
The legislation has been a boon to construction companies. Four companies on the list cited medical work among their notable projects.
McCarthy is the general contractor for a 309,000-square-foot women’s pavilion set to be added to Hoag Memorial Hospital Presbyterian in Newport Beach by 2005. Hospital officials have said growth needs, rather than earthquake issues, were the reason for the expansion.
No. 2 Bethesda, Md.-based Clark Construction Group Inc., which has a Costa Mesa office and held the same spot on last year’s list, grew 2003 revenue 6% to $671 million, in part by focusing on government work.
No. 4 Lake Forest-based ARB Inc. dropped a slot on the list with an 8% decline in revenue to $320 million for the 12 months through March. The construction company focuses mainly on industrial projects.
The industrial and commercial real estate markets were mixed for builders last year, sources said. Smaller buildings for sale dominated. Many of those buildings are 10,000 square feet or less.
Some construction companies were able to nab sizable built-to-suit projects. No. 16 Millie and Severson Inc., for one, is building the Roger Cleveland Golf Co. headquarters in Huntington Beach.
Rounding out the top five on the list is No. 5 Dallas-based Turner Construction Co. The company’s Irvine office rose three spots on the list with a 23% revenue increase to $240 million in 2003.
The Irvine office benefited from work outside the county, said Dave Seastrom, vice president and general manager. Turner’s Coachella Valley operation did well last year, he said.
The company focuses on a range of projects, according to Seastrom, including hospitals, drug plants and schools.
The Santa Ana office of No. 24 Seattle-based Bayley Construction dropped 11 spots on the list with a 52% fall in revenue to $45 million. Bayley’s main line of business is building shopping centers. Quail Hill Village Center in Irvine is one of its notable projects.
While demand for shopping centers was strong last year, projects were hard to come by with a tight supply of land, sources said.
Things could be better for Bayley this year: The Santa Ana office’s awarded contracts rose 12% to $168 million last year.
The list has one new entry: No. 17 Boston-based Suffolk Construction Co., which has an Irvine office. Suffolk had revenue of $88.4 million, up 42% from a year earlier. Among the company’s projects is the Marriott Newport Coast Villas
Anaheim-based Magnum Enterprises Inc. dropped off the list this year. Its $27.1 million in revenue, down 49% from the prior year, didn’t make the cut. Magnum builds stores for big retailers.
