Picture a big pipeline. Now picture it filled with money flying at you under high pressure. The largest mechanical contractors interviewed for this year’s Book of Giants feature conveyed a little bit of bad news — who knew that low energy prices could be a bad thing? But there’s lots more good news.
In western New York, the John W. Danforth Co. began 2016 with the largest backlog in the company’s 132-year history. I’d like to repeat that. The largest backlog in the company’s history.
In Florida, Daryl Blume, president of BCH Mechanical, notes, “We’re at an eight-year high in backlog, with a promising short-term outlook including strong demand due to numerous large local Tampa Bay market projects at airports, Pinellas County Jail, Raymond James Stadium, plus upswing in pent-up demand for new hotels, secondary school construction.”
An eight-year high in backlog.
Meanwhile, in New England, “With a pipeline of $7 billion worth of projects currently scheduled to break ground yielding 14 million square feet of new development, there is no question that Boston is riding the wave of a construction boom,” said Tom Palange, director of marketing, J.C. Cannistraro, Watertown, Mass. This work is more diverse than ever, including a reimagined TD Garden, luxury apartments and hotels, office skyscrapers, hospital and university expansions, and perhaps the city’s first casino.
“By all indications, we’re hopeful that the draw of living and working in metropolitan Boston will continue to drive construction for at least the next few years,” says Palange.
In Colorado, RK Mechanical is experiencing the most success, and a high volume of projects, in office buildings, aviation, healthcare, hotels/convention centers and multifamily residential. RK Mechanical was awarded the mechanical contract for the Gaylord Rockies Hotel and Convention Center project, one of Colorado’s most prominent projects.
“Due to the large size and multi-year nature of many of our mechanical contracts, we consistently maintain a backlog of contracted work,” says RK Mechanical’s Marc Paolicelli, VP corporate business development. “We have a large backlog of awarded work through the end of 2016 and into 2017. In the past year, we increased our win ratio on bids and are experiencing a higher volume of awards to RFPs.”
‘We’re at an eight-year high in backlog, with a promising short-term outlook.’
But then there’s that problem with low energy prices being a bad thing. Construction employment increased in 234 out of 358 metro areas, was unchanged in 52 and declined in 72 between February 2015 and February 2016, according to federal employment data released by the Associated General Contractors of America (AGC). Association officials noted that many energy-producing areas experienced job losses during the past year.
“Many parts of the country continue to see robust construction job growth as demand for projects rises,” says Ken Simonson, AGC’s chief economist. “Construction employment in many energy producing areas, however, appears to be suffering as lower prices for products like coal, oil and natural gas cuts into demand for construction services.”
Still, we’ll take what this economy is offering mechanical contractors. Contractors who aren’t struggling to win bids can focus on workforce development and integrating technologies such as BIM, and new delivery options such as Integrated Product Delivery, into their firms.
Finally, a thank-you to CONTRACTOR’s Editor-At-Large John Mesenbrink for taking the reigns for this year’s Book of Giants. John, who co-founded www.mechanical-hub.com with our columnist Eric Aune, really stepped up when I needed him. Thanks, John! You’re the man.