Orange County’s largest construction companies took a step backward last year as the recession played out locally, although the industry appears to have been spared from an all-out freefall in business.
The largest 25 construction companies on this year’s Business Journal list saw a 7% decrease in revenue during the past year to $7.2 billion in combined business.
The Business Journal ranks companies by annual revenue generated from OC offices, whether the projects are in OC or elsewhere.
Prior to this year, companies on our list had reported two straight years of more than 20% revenue growth, after several years of flat growth.
Thirteen companies on this year’s list reported declines in revenue, while eight posted increases in business. Four companies were Business Journal estimates.
The value of contracts to OC operations dropped even further, with a 23% decrease to about $7.3 billion.
And another slow year is projected for 2009.
“It’s definitely a tougher year than last year. We all have to do more with less,” said Betty Lynn Senes, vice president for the Irvine office of San Diego-based Roel Construction Co.
Companies on the list reported a 6% decline in employees from a year ago, with a total of about 5,260 workers.
The level of job cuts seen on our list isn’t as steep as what’s being reported elsewhere,the University of California, Los Angeles, reported last week that statewide construction employment fell about 12% in 2008.
Including subcontractors and housing-focused construction companies, OC’s lost more than 30,000 construction-related jobs in the past three years, according to state employment figures.
Few New Projects
Much of the work currently under way in the construction industry at large had been planned several years ago, especially for big-ticket educational and healthcare projects, which kept last year’s decline from being more pronounced.
Now, there are fewer new projects than normal being added to many local companies’ backlogs, said Bruce Nelson, vice president of business development for the Newport Beach office of McCarthy Building Cos.
“There’s still work out there, (but) everyone’s chasing after it,” Nelson said.
McCarthy ranked No. 3 on this year’s list with $824 million in revenue, a 3% increase from a year earlier.
The company’s been involved in two projects for the St. Joseph Health System,a new patient care tower in Mission Viejo and additions to St. Jude Medical Plaza in Fullerton,among other big contracts.
Last year’s results brought OC’s construction industry back to levels of business last seen four or five years ago, according to local observers.
The problem now is that few sectors are likely to expand construction spending any time soon.
“The only projects that are moving are the smaller ones, which have financing from the private side,” said Robert Carley, vice president of Taisei Construction Corp.
Taisei’s been looking to grab projects in the $5 million to $40 million range, down from the company’s typical project sizes of a couple years ago, Carley said.
And Taisei’s been expanding its search for business outside of the 50-mile radius from its office it would normally limit itself to. Recent projects include work in Bakersfield, Nevada and outside San Diego, Carley said.
The U.S. operations of Tokyo-based Taisei ranked No. 8 on this year’s list, with $311 million in revenue in 2008, up 24% from a year earlier. The company was one of only four companies to report year-over-year growth exceeding 10%.
Fluor Falters
Even the long-time No. 1 on our list, Irving, Texas-based Fluor Corp., had a tougher year, according to Business Journal estimates.
Fluor’s local operations, based in Irvine, largely handle work for the chemical, mining and transportation industries. At times in the past 10 years, we’ve estimated the business handled by Fluor’s local operations, which were once the headquarters, to nearly exceed the combined totals of all the other construction companies on our list.
That wasn’t the case this year. We estimated Fluor to have done about $950 million in local business in 2008, which was flat for the year. The estimate keeps the company at the No. 1 spot again.
The company has seen a big jump in profits nationally, although the case could be made that its OC operations didn’t fare nearly as well, based on local employee moves.
In late April, the company said that close to 350 of its 2,000 local workers would be laid off by the end of this month.
Fluor officials cited a slowdown in oil and gas projects that the company’s local office had been working on for the cuts. The company could see a boost in business next year, though. It’s hoping a new renewable energy department in Irvine will land a few billion-dollar deals, officials said.
Following Fluor, the Costa Mesa office of Bethesda, Md.-based Clark Construction Group LLC remained at the No. 2 spot on this year’s list. The company reported $933 million in local revenue, a 2% decline from a year earlier.
Local projects in the works include additions to Walt Disney Co.’s California Adventure theme park in Anaheim, Clark Construction said.
