The 2005 Pipe Trades Giants
With $998.4 billion spent on new construction last year (a 9 percent increase from 2003) and an estimated 12.3 percent increase in spending for improvements and repair of residential properties ($198.6 billion), 2004 was a pretty good year for most in the construction industry. So says the U.S. Commerce Department's Census Bureau in its annual rundown of construction put in place and home improvement/repair spending.
Total commercial construction, both private and public, was $65.5 billion, a 5.2 percent jump from the previous year. Private commercial construction stood at $61.1 billion, while public commercial projects totaled $4.4 billion. Total office construction spending jumped 6.1 percent to $44 billion in 2004, and construction spending on educational projects rose 2.5 percent to $76.1 billion. Lodging construction ($12.5 billion) and health care ($66.5 billion) also saw significant increases from 2003 - 12.2 percent and 9.5 percent, respectively.
Spending on power projects decreased 1.2 percent to $32.8 billion, and water supply projects went down 0.9 percent ($10.3 billion). Sewage and waste disposal projects saw an increase in spending of 7.3 percent for a total of $14.7 billion in 2004. Manufacturing construction rose 2.8 percent from the previous year for a total of $14.7 billion.
Private residential construction in 2004 was $542.7 billion, a 14 percent jump from the previous year. Public residential spending rose 10.3 percent to $7.5 billion.
On the remodel side, $147.9 billion was spent on home improvements last year, with $50.7 billion spent on maintenance and repairs.
Pipe Trades OutlookIn our sector of the industry, 2004 saw more utilities pulling out of the mechanical contracting business. Exelon Corp. and Public Service Enterprise Group merged in December 2004. PSEG had divested all of its mechanical contractors at the end of 2003, and Exelon finished selling off its Exelon Services businesses (No. 73) by the end of 2004. KeySpan Corp. sold the remainder of its Business Solutions firms (No. 6) in January and February of this year; and FirstEnergy decided to begin divesting all of its Facilities Services Group companies (No. 40). Blue Dot Services had one remaining company left at the end of last year, and subsequently did not make it onto this year's list.
BCH Mechanical, which TECO Energy sold in January, had a significant drop in revenues; it also did not make it onto this year's list.
Not all utilities are selling mechanical contracting firms; some are buying them. Direct Energy bought Residential Services Group (No. 31), the redefined former Encompass, at the end of 2004 for $150 million in cash.
Otter Tail Corp., a former electric utility that has diversified into plastics, manufacturing, health services and food ingredient processing, bought Foley Co. (No. 77) late in 2003.
American Plumbing & Mechanical came out of bankruptcy with just five companies remaining, focusing on new residential construction. It moved to No. 14 on this year's list.
New in the Top Ten is Mr. Rooter Corp. at No. 7 (Note: its revenue is completely derived from franchise operations).
About 56 percent of respondents to our questionnaire saw an increase in revenues last year; 33 percent saw a decrease and 6 percent reported flat revenues. When asked what kind of work they do, respondents said nearly two-thirds of their business was in private work projects, with 22.5 percent in public construction. The numbers broke down to almost 23 percent service work, 20 percent retrofit projects and 55 percent in new construction. And commercial projects (84 percent) outweighed residential projects (12 percent).
The Pipe Trades Giants are not ranked on total sales volume, but what we call “pipe trades volume” - the percentage of a company's revenue that comes from plumbing, piping, hydronics, fire protection and water/wastewater treatment. HVAC and related revenue is not added in to our computations (the “Other” category).
How The Pipe Trades Giants HappensThe information that Plumbing & Mechanical uses to rank the 100 Pipe Trades Giants is the most accurate we can gather. We use several different methods, but by far the most effective is the questionnaire we send to every company in our 300+ firm database.
There were some companies who opted not to supply some or all of the information we requested. So we have estimated sales volume and percentage breakdowns for those companies, indicated with an asterisk. For some public companies, we used information from annual reports or SEC filings. The only way to present a meaningful report on the state of the industry is to include every company that is a significant player, even if it has had a bad year or is in turmoil for some other reason.
Pipe Trades GiantsRevenues - 2004 Vs. 2003
Increase - 56%
Decrease - 33%
Flat - 6%
No response - 5%
Source: Plumbing & Mechanical