2007 Top Specialty Contractors

Challenges Facing Subs Include Labor, Material Costs,
and Better Understanding Green Building Initiatives.

By Brad Fullmer

Intermountain Contractor’s list of Top Specialty Contractors for 2007 was compiled via a survey that was sent out to specialty firms in Utah and Idaho. Every effort was made to contact each of the respective participating firms to ensure their revenue information is accurate. Contractors who did not disclose revenue information were excluded from the rankings, even if they obviously are one of the largest subs in the two-state Intermountain region. In future years, we encourage all specialty firms to participate in our annual survey.

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In addition to our rankings, we are profiling eight various specialty contractors, including both up-and-coming firms, as well as companies that have been
around for many years.

Specialty Contractor Profiles

Kilgore Paving
             
CCI Mechanical
           
Arco Electric
                       
DeBest

R&M Mechanical

Beacon Metals

Halverson Mechanical
           
GSL Electric

Sidebar

Electrical and Mechanical Trends

Local Association Leaders Weigh In on Industry Trends

Labor shortages, material costs, alternative delivery methods,
and green building all important topics for M/E contractors.

By Brad Fullmer

“Subcontractors often are treated as a commodity, especially prime subs like mechanical and electrical. We’re trying to educate our members as to how they can add more value to a project.” – UMCA executive vice president Bob Bergman.

Concerns with labor and volatile material costs aside, leaders of electrical and mechanical contractor associations in the Intermountain Region remain optimistic that the future of the construction industry will remain stable and solid for the next two to five years.

“Manpower is a critical issue,” says Bob Bergman, executive vice president the past 14 years for the Utah Mechanical Contractors Association (UMCA). “It’s tight for everybody. The union mechanicals are maybe having a little more success just because the union has the ability to pull people in from out of state. But there’s just not a huge depth of skilled labor available right now.”

“Recruiting new people into the industry is one of our main goals,” adds Renee McDonough, executive director for six years of the Independent Electrical Contractors (IEC) of Utah. “We had a speaker come and talk with us about how to get through to students, and he recommends that you start in seventh grade and go into schools to talk about the industry, having hands-on projects for them to do.”

“Labor is the number one issue for almost everyone across the industry,” says Klaas DeBoer, Jr., executive director for the Intermountain Electrical Association. “It’s not just electrical contractors, it’s also sales distributors and other companies within the electrical industry.”

DeBoer adds that wild fluctuations and spikes with certain construction materials continues to remain a concern, although not as bad as a year ago when copper prices soared more than 500% within a few short months.

“Material costs have been really high,” says DeBoer. “Availability a huge issue. Most of our distributors don’t even have an hour hold on pricing right now. It’s held for 60 seconds because it fluctuates so crazily and so fast.”

Other trends include an increase in design-build and value engineering projects for M/E contractors, a growing awareness and understanding of green building initiatives such as the U.S. Green Building Council’s Leadership in Energy Efficient Design (LEED), and maintaining good working relationships between subs and generals.
Bergman says owners and design firms have become more aware of the value prime subs can have on the overall delivery of a project.

“Six to eight years ago design-build was more of a trend, but you’re seeing a lot more value engineering in today’s construction market,” says Bergman. “In many cases, particularly on medium and large projects, a lot of mechanical contractors are being brought on earlier than what they traditionally used to be because they’re able to add value to the practical side of engineering.”

He adds that owners like design-build because it promises a faster delivery.
“What’s driving design-build is the delivery – everybody wants the project yesterday,” Bergman says. “The nature of the market has changed. There is more turn-key, quick delivery. What we’ve found over the years is that if you’re truly going to have a turn-key project, you’ve got to have prime subs – the mechanical and electrical – in at the ground level.”

Green building and LEED also is a growing trend, as subs are required to understand elements like recycling old materials and installing high-end, energy efficient systems.
“One of the main trends I’ve been looking at in terms of helping mechanical contractors add value to a project is green building and LEED,” says Bergman. “It’s a huge issue, and nationally MCA has jumped on this and we’re trying to do the same on the local level. We see it as a real opportunity. It’s right for the environment, and it makes sense.”

UMCA, along with Local #140, also recently bought six acres out at the International Center in Salt Lake for a proposed new multi-million training facility. Bergman says the new facility will be in excess of 20,000 sq. ft. – approximately three times the size of the existing training facility in North Salt Lake – and should be open by spring 2009 if everything goes according to plan.

Relationships with GC’s

A sizzling economy notwithstanding, there remains some concern with subcontractors getting paid on time from general contractors, or even owners.

“Getting paid (on time) is still an issue,” says McDonough. “We’re looking at possibly doing some type of legislation this next year and trying to work with generals and owners to keep the flow of money coming down the pipeline. A lot of times it’s not the general contractors, it’s the owner who holds (payments) up.”

“Subcontractors often are treated as a commodity, especially prime subs like mechanical and electrical,” adds Bergman. “We’re trying to educate our members as to how they can add more value to a project.”

Associated General Contractors (AGC) of Utah president and CEO Rich Thorn says that during good economic times such as these, any friction or dissension between generals and subs is usually mitigated by the fact that everyone is simply too busy, and hopefully, being very profitable.

“The construction industry is in a state of almost harmony because everybody is busy and margins are probably good,” says Thorn. “The complaining seems to go away.

Right now, on balance, most of the industry is getting along nicely. Most of the challenges between generals and subs is meeting schedules. If a (general contractor) has a schedule that is pretty aggressive and is only self-performing 20% to 50%  of a project, the question becomes how to get a job done when everybody is busy.”

“We realize that (subcontractors) can’t burn bridges either,” says McDonough. “What goes up, will come down. You have to build relationships during good times and bad. If a sub does his work on time and on budget, there is a good chance the general will pay on time. It’s about establishing good relationships between generals and subs.”

Miscellaneous Items

• UMCA’s four-year collective bargaining agreement (CBA) expired July 31, 2007, and the association is gearing up for a challenging negotiation period.
  
  
• IEA is looking to add an association insurance plan, which should boost membership from a current level of 130 to 200 or more. In addition, IEA is starting a humanitarian aid fun that is similar to its successful scholarship fund, where it is built into a self-sustaining foundation. Two fund raising events are being planned for this fund, including a Harley Ride from Sugarhouse to Ogden via East Canyon on August 25, and a golf tournament at Talon’s Cove on September 28.
  
  
• 22 apprentices graduated from IEC’s Apprenticeship Training program this year and were honored during the annual Apprenticeship Banquet May 18. Salt Lake County Mayor Peter Coroon was the guest speaker.

Upcoming Events

• IEA: Five Mountain Rendezvous in Sun Valley, Idaho, August 9-11.
  
  
• UMCA: Annual Convention in Sun Valley, Idaho, August 23-25.
  
  
• IEC: 6th Annual Breakfast at IEC office, September 7.