Plumbing and mechanical contractors spent 2010 dealing with an extremely slow economic recovery. The construction unemployment rate for 2010 was 20.7 percent, more than double the 9.6 percent national unemployment rate. The $787 billion stimulus package was supposed to help the industry get work and keep employees, but it seems highway roadwork projects have been the biggest beneficiaries of this program so far.
Construction spending last year totaled $814.2 billion, a 10.3 percent decrease from 2009 figures. Residential construction was down 1.7 percent. Nonresidential was down 23.3 percent, with lodging and office construction the hardest hit - down 48.7 percent and 27 percent, respectively.
Public construction was down 2.7 percent, with health-care construction decreased 2 percent and educational construction decreased 11.2 percent. Construction of power plants was the bright spot, with a 73.3 percent jump from 2009 figures.
“Power will continue to be a growing construction market (2 percent growth in 2011) as there is no sign that our need for more of it will abate,” notes industry consultant FMI in its “Construction Outlook: Second Quarter 2011 Report.” “We expect growth to accelerate over the next five years as more attention is paid to renewable energy sources.”
Respondents to PM’s Pipe Trades Giants survey this year are working smarter to get what few jobs are available in their markets. “We quit trying to be everything to everyone and focused on being really good for a few,” says Jim Salter, president of Infinity Contractors in Fort Worth, Texas.
A little more than half of respondents (53.6 percent) say they have a good balance of work and labor; 51.4 percent say they expect their workload to increase in 2011. “Market indicators seem to be improving” and “Sales staff is working hard to get our workload high” are some of the comments we received. A few note their companies were about to start big projects or had signed fast-track contracts for this year. Fifty-five percent say they expect their sales to increase in 2012.
Wage and raise freezes as well as trimming overhead are methods used by some respondents to keep employees working rather than laying them off, while others added employees to sales, marketing and estimating staffs to drum up more work.
Many say they went “back to the basics” to beef up sales and marketing skills; this includes in-house and off-site training. Others focused on strengthening core processes.
“Our quality program continues to be a distinguishing feature of our company,” says Melissa Padilla Gomez, marketing administrator at Albuquerque, N.M.-based Jack B. Henderson Construction Co. “We have invested in building a robust program that meets the needs of highly demanding customers. It’s paying off as this narrows the field of competition. We foresee more stringent quality requirements from our customers and feel we are prepared to exceed those expectations.”
Websites, social media and community involvement (through local charities or sponsorships) were cited by some respondents to help them better connect with customers. Several respondents focused their marketing efforts on customer retention programs to keep clients from using competitors. Others used lean construction, building information modeling and prefabrication to stand out from the competition.
“We utilize and improve our BIM capabilities on almost every major project,” notes Robert L. Krier, president of Franklin Park, Ill.-based Hill Mechanical Group.
Still others branched out into different types of work or expanded areas of work, such as industrial, HVAC or renewable energy.
Sustainability issuesWith Americans increasingly focused on energy efficiency, some respondents focused efforts on providing services to their customers that help them use their energy wisely. “We developed energy-saving programs to help customers overcome their fear of spending capital,” explains Mark Kerney, COO of Hill York, Fort Lauderdale, Fla.
Another respondent notes: “We have always focused on value of return on projects. But with the new focus on energy costs, we have developed our business model over the past several years to focus on energy services projects with guaranteed energy savings.”
Fifty-four percent of respondents actively discuss with customers the advantages of installing Energy Star-certified appliances (such as water heaters); 35 percent discuss WaterSense-certified fixtures such as toilets with customers.
Repondents installed solar thermal (32.1 percent) and geothermal (34.9 percent) systems last year. And three-fourths (74.3 percent) took part in building a LEED-certified structure.
(Editor’s note: 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, electrical and other revenue are not included in our computations.)