A strong economy, surging real estate market and hospital activity combined for a big gain in local construction work during the past year.
The top 25 construction companies on this year’s Business Journal list posted revenue of $12 billion in the past 12 months. That’s up 9% from a year earlier.
Excluding the dominant firm in the local sector, Fluor Corp., the builders showed even faster growth. The remaining companies on this year’s list generated revenue of $4.3 billion during the past year from their Orange County offices, up 14% from a year earlier.
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The list ranks companies by annual revenue generated from OC offices, whether the projects are in the county or elsewhere.
Fluor Daniel, the construction unit of former Aliso Viejo-based Fluor, maintained its dominant position among construction companies working out of OC during the past year.
But a shift of Fluor’s headquarters to the Dallas area means the list is set to see a new face at the top next year. Fluor moved earlier this year, though the company is keeping a stable of engineers in the region.
The number of projects being worked on by the companies on the list is rising. There were 713 projects under way last year, up 7% from a year ago.
High-rise office and low-rise industrial projects are sprouting up across the county, a result of the strong real estate market during the past few years. Meanwhile, hospitals are busy expanding, a product of increased demand and state-mandated earthquake proofing requirements.
Even busier days are to come, based on the growth of the construction backlog listed by the top companies.
Backlog is work that has been awarded to a construction company, but hasn’t been done yet.
Excluding Fluor, OC’s top construction companies reported a 29% increase in the value of contracts awarded during the past year, to $8.1 billion. That follows a 28% rise in the value of contracts awarded during the prior year.
Much of that increase is likely tied to commercial development now moving forward in the county. Close to 2 million square feet of high-rise office tower space has already started or has been announced this year.
“Things are progressing well,” said Frank Martinez, vice president of business development for No. 7 Snyder Langston in Irvine. “Demand is strong, but I don’t think (developers) are overbuilding, which has happened in the past.”
Snyder Langston recorded $250 million in revenue for the 12 months through March, up 25% from a year earlier.
Overall OC employment has grown along with contract awards.
Employee rosters increased 5% to 4,380 workers during the past year. Excluding Fluor, the construction companies expanded payrolls by 12% to 3,130 workers.
Big Movers
There were several construction companies on the list that posted strong growth in the past year.
No. 2 St. Louis-based McCarthy Building Cos., which has an office in Newport Beach, showed its second straight year of 28% growth.
That pushed McCarthy’s total revenue to $560 million, pushing it up a spot from a year ago.
The company has been a big player in healthcare and education-related construction, said Carter Chappell, president of McCarthy’s Southern California division.
Recent projects included, the $129 million Hoag Memorial Hospital Presbyterian’s Women’s Pavilion in Newport Beach, the $132 million St. Joseph Health System’s new medical center in Orange and $138 million worth of work for the Newport Mesa Unified School District
The company has been looking to diversify into more commercial projects locally. McCarthy grabbed a high-profile office project, the 20-40 Pacifica office towers being built for The Irvine Company.
Despite continued escalations in construction prices into 2006, “it’s a very vibrant market now,” Chappell said. “A number of discretionary projects, which have been planned for some time, are now moving ahead. Owners have confidence in the market.
“There’s been some projects where the owners have scaled back, but most are pushing forward,” he said. “Demand is still strong.”
One factor to watch: construction costs.
Prices for materials are rising about 8% to 10% annually, with asphalt, drywall and copper costs showing some of the biggest recent spikes, Chappell said.
Steel prices have begun to moderate, but the time it takes to get steel for a big project has nearly doubled in the past six months, said Snyder Langston’s Martinez.
Construction companies need to order steel as much as seven or eight months before starting a major project, he said.
Other construction companies moving up this year included No. 9 Bomel Construction Co. in Anaheim Hills, which reported a 58% jump in revenue to $178 million. Bomel moved up four spots on the list.
Bomel has found a niche in building some of Southern California’s largest parking garages. It just broke ground on three new projects totaling $55 million.
San Francisco-based No. 10 Swinerton Builders also saw a noticeable jump, with revenue at its Irvine office increasing 33% to $173 million, versus a year earlier.
Swinerton just started construction on a 115,844-square-foot tower at St. Jude Medical Center in Fullerton. The company recently completed construction of the St. Jude Medical Plaza, a medical office building across the street from the hospital.
Another big gainer: the Santa Ana office of Bayley Construction, which is based in Seattle.
The company, whose main line of business is building shopping centers, dropped off the list last year, but pulled in $99.6 million this year, putting it at No. 18. Bayley has worked on Nordstrom’s new store at Irvine Spectrum Center and Quail Hill Village Center in Irvine.
Fluor’s Plans
Fluor Daniel, the construction unit of Fluor, again led this year’s list, with more revenue than all the other companies combined.
The engineering services provider pulled in an estimated $7.7 billion in construction revenue, up 7% from the prior year.
Fluor’s revenue is a Business Journal estimate, based on its companywide revenue gain. Fluor doesn’t break out revenue from construction. The figure excludes revenue from engineering and project management at the company.
Locally, Fluor’s big project is at the Orange County Performing Arts Center, where it is the construction manager for the center’s $200 million expansion.
The center is set to show off its 2,000-seat Ren & #233;e and Henry Segerstrom Concert Hall, 500-seat Samueli Theater and education center this fall.
Fluor also a big contractor in Iraq, where it is working to restore the country’s power grid. Besides power plants, it also has won some big oil refinery contracts around the globe.
Fluor kept about 1,200 workers,primarily engineers,in Aliso Viejo following its recent move to Dallas.
The company could still appear on the list next year, depending on whether it generates or produces work from its remaining OC facility.
