Help Wanted

Specialty Contractors Seek Workers As Market Continues to Grow Steadily

Contractors employ technology and other innovations to close the gap between labor shortages and a steady construction market.

By Mary Lou Jay

It’s not the prospect of an economic slowdown that’s worrying executives in specialty contracting firms these days. It’s having enough workers to get the work done. 

“The availability of qualified labor is clearly the biggest issue that we’re going to be facing and that many contractors in the construction industry will be facing over the next few years,” says Michael Caliel, president and CEO of Integrated Electrical Services Inc. of Houston.  The company was the third-largest specialty contractor in Texas in 2006 with regional revenues of $156.5 million.

Integrated Electrical Services is working on career programs for high school and technical school students and returning military personnel.

“We are also using technology and improved work processes and improved tools to help our existing labor force be more productive,” Caliel says. “The more productive our workforce, the more pressure you take off specific staffing requirements.”

Founded in 1997, the company provides services to residential, commercial and industrial customers in more than 100 locations, primarily in the Sunbelt states.  Its top Texas markets are Houston, Austin and San Antonio.

Customers in each sector have different needs, Caliel says. “Our residential customers don’t know this week what they are going to be building next week. So they are looking for qualified contractors who can mobilize quickly, who can address their cost and quality issues and who can be responsive to their needs.” 

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Customers of Houston-based Gowan Inc., a division of the EMCOR Group, are looking for specialty contractors that have building information modeling capabilities, says President Mark Froman. 

One way Gowan is trying to do more with less is by utilizing the advantages of Building Information Modeling to be more productive.  “BIM provides better productivity,” Froman adds. “We’re able to take full advantage of our shop fabrication capabilities, and by moving workers from the jobsites into our shop, we’re better able to control quality, productivity and safety.”

EMCOR is #10 on Texas Construction’s list of top specialty contractors with $97.3 million in regional revenues.  In Texas, the main customers for its mechanical/electrical services are health-care facilities.

“I think guaranteed maximum price type work is probably most prevalent now because you’re having to deal with pricing escalations and labor shortages,” Froman says.  “It’s very hard to go out and hard dollar bid a large project.”  .

Baker Drywall of Dallas, the state’s top wall/ceiling contractor and #13 overall, is seeing more online use of technology, says company CEO Steve Baker. Baker Drywall has more than 1,000 employees, five Texas offices and revenues of almost $91 million in revenue,. Revenue grew 23% year to year.

“The shortage of skilled employees is the greatest challenge that we face now,” Baker says. “Two years ago it was probably the escalation of materials prices, but we’re starting to see that level off now.”

With a work backlog that stretches to 2009, Harold McDowell, CEO of TDIndustries of Dallas, says he is also concerned about labor. “The war for talent is only getting tougher,” he says. “There’s a lot of wage pressure and escalation among the skilled trades because of the shortage of skilled tradespeople.” 

Employee-owned TDIndustries is #1 specialty contractor in the state this year, with 1,300 Texas employees working in Dallas, Fort  Worth, Austin, Houston and San Antonio.  Its regional revenues last year grew from $178 million in 2005 to $234 million in 2006. The 61-year-old company specializes in the design/build, operating and maintenance of mechanical systems.

To meet its needs, TDIndustries constantly trains its people, gets referrals from current employees and has two-full time recruiters on its staff.

“All of the specialty trades are working hard to do things with less labor,” McDowell says. Manufacturers are prepackaging equipment and systems to reduce labor on the jobsite, something that TDIndustries has been doing for years.

Richard Muller, founder and CEO of Tri Dal Ltd. and Affiliates, a site utilities and excavation company based in Southlake, says that work is plentiful but so is the competition from small, start-up companies. “We have to do more volume to make our profit,” he adds.

But Tri Dal is holding its own, Muller says. Regional revenues pushed close to $65 million in 2006, and halfway through 2007, the firm is tracking to hit $80 million, Muller adds. “It’s about controlling costs and strategizing and keeping focused on what we do best,” he says.

Safety is a bigger issue today than it has ever been before, Muller says. “There’s a higher standard on these jobs with the cost of insurance,” he adds. 

Rising costs are problematic. “The price of diesel fuel and gasoline has hurt us not only with our equipment but even in the price of pipe,” Muller says. “If we estimate a job today and don’t get it for 30 or 60 days, the pipe may go up 20%, and there goes all your profit.”.

Even small changes have helped electrical/technology contractor Fisk of Houston reduce its costs and manpower needs. “Using different types of hanger and clips, we may save only five or 10 minutes, but if you’re installing 1,000 of them, it adds up to a lot of time,” says James Madget, corporate vice president.

Fisk, #11 on the list, had regional revenues of $92 million last year. Customers today are demanding more green building components and more safety on the worksite, Madget says. “We’re also seeing a surge of interest in standby power, probably as a result of the hurricanes. We are installing a tremendous number of generators and even one or more gas turbines.” 

These standby power sources are capable of powering computers, lighting and air conditioning in event of prolonged outages, Madget says. Customers also request redundant cable connections to computers and the setup of remote data centers so that work can continue even if a storm hits, he adds.