Top Contractors Grateful to Work in Texas

’08 turned out to be a good year for many Texas contractors

By Debra Wood

While no region has completely escaped the current economic recession, Texas fared better than some areas in 2008, and many contractors are optimistic about the rest of 2009.

“Texas is one of the best markets in the country,” says Mike Scott, vice president of Austin Commercial in Dallas, attributing his company’s success to “our reputation and diversity of project types.”

Austin Industries of Dallas took the No. 2 spot in the Top Contractors ranking. It completed the Long Center for the Performing Arts (shown) and broke ground on the Block 21 W Hotel, both in Austin, in ‘08.

Scott says his firm worked on a good mix of projects in 2008. He adds that Austin Commercial’s decision more than 10 years ago to concentrate more on the institutional and health care markets helped make the past year profitable.

Austin Commercial in Houston completed a $61-million, 233,816-sq-ft, five-story patient tower for JPS Health Network at John Peter Smith Hospital in Fort Worth and a $178-million expansion of Methodist Sugar Land Hospital in Sugar Land.

In 2008, the company also finished the $100-million Long Center for the Performing Arts in Austin. It’s building the a $102-million, 512,000-sq-ft acute-care tower at Presbyterian Hospital of Dallas and the $137-million, 275,000-sq-ft first phase of the Irving Convention Center in the Las Colinas Urban Center.

Austin Commercial, which ranked No. 2 on the Top Texas Contractors list, has served the Texas market since 1889. Scott says business was up $200,000 in 2008, coming in at $1.1 billion. He attributes much of the company’s success to its employee ownership, which means that every carpenter or supervisor has a stake in the firm.

Austin Commercial was not alone in 2008.

Gilbane started work on the $125.4 million, 763,000-sq-ft Clear Creek Independent School District’s Educational Village High School in League City.

“We were fortunate to be part of a rising tide,” says Wendy Burke, vice president of client development for Linbeck in Houston. “2008 was a phenomenal year for the industry as a whole. Construction was up across the board, and it was particularly strong in Texas and in Houston.”

Up to 85% of Linbeck’s revenue comes from repeat clients. The company, founded in 1938, works primarily for institutional, health-care and educational clients, market segments that have held up better than some others. Linbeck also builds cultural facilities, which during the robust economy raised funds for new museums and entertainment centers. The firm ranked No. 11 on the list of top contractors.

Linbeck is building the approximately $100-million, 234,460-sq-ft Winspear Opera House at the Dallas Center for the Performing Arts. In 2008, it completed the $40-million, 40,700-sq-ft Co-Cathedral of the Sacred Heart in Houston. The company is building the $230-million Baylor Clinic and Hospital in Houston and is completing interior work at the $150-million Collaborative Research Center at Rice University in Houston.

Randy Lowrance, regional business development manager for Gilbane Building Co. in Houston, also reports a strong 2008, but he acknowledges the regional market started to soften last fall, particularly K-12 work in districts with declining enrollment.

“Going back to the summer of 2007 and looking into 2008, prior to September, there was a lot of work,” Lowrance says. “The economy was good and a lot of people started projects. The volume we put in place in 2008 was exceptional.”

Gilbane, a national firm, entered the Texas market in 1981. It now has offices in Grapevine, Austin and Houston, and ranked No. 7 on the list of Texas’ top contractors. The company began construction in 2008 on the 29-story Hess Tower in Houston for Trammell Crow of Houston. The company broke ground on the $29.7-million, 117,400-sq-ft first phase of the University of Texas Southwestern Medical Center at Dallas Biotechnology Development Complex, and it is working on a $125.4-million, 763,000-sq-ft Clear Creek Independent School District Education Village in League City.

advertisement

Other Gilbane projects include the $71.8-million, 490,000-sq-ft Summer Creek High School for the Humble Independent School District and a $40-million, 123,000-sq-ft, two-story science building for Richland College. Gilbane broke ground in January on the $58-million, 206,000-sq-ft Texas A&M Texarkana Multi-Use Library and Physical Plant Building.

“Higher education, health care, K-12 and commercial have been our strengths last year,” Lowrance says.

Bartlett-Cocke General Contractors, which focuses on the education market, reports a stellar 2008, with more than $461 million in volume.

“Volume-wise, it was a record year of us,” says Kirk Kistner, vice president of business development at Bartlett-Cocke in San Antonio. “It was a year where we could retain nearly 60% of our earnings for added bonding capacity.”

Gilbane Building broke ground in 2008 on the 29-story Hess Tower in Houston for developer Trammel Crow. (Image courtesy of Gilbane.)

In 2008, it completed an $80 million Medical Arts Research Center for UT Medicine Group in San Antonio. It also finished an $80-million high school for Northside Independent School District in San Antonio, and it is starting an $80-million second high school for the same district. The company finished a $35-million recreation and wellness facility for Texas State University-San Marcos.

Bartlett-Cocke, No. 13 on the list, also tapped into 2008 revenues to beef up its employee-training program. The company, founded in 1959, is owned by 55 employees, all project managers, superintendents and estimators. Eighty-five percent of its projects are for repeat customers.

“Most of our project teams, at least one of the individuals and usually both of them are an owner of the company,” Kistner says. “That’s unique to us. We run a pretty flat organization chart because of that. That team has a vested interest in that project. It’s not just another job to them. They are trying to maximize profits as well as maximize value to the owner.”

Government a bright spot David Pinson, president of the Dallas division of Walton Construction Co. in Dallas, credits a strong presence in the military market for pushing his firm ahead in 2008. However, that is not the company’s only forte. It broke ground in early 2009 on the $29-million, five-building replacement campus for the Texas School for the Blind and Visually Impaired in Austin. It also received an $8-million contract to build seven duplexes at the campus.

Walton, No. 105 in the top contractors ranking, has several military projects under way. One is the design-build, $7.5-million contract to expand Hangar 1048 at the Naval Air Station Fort Worth. The company also has a $4.5-million hangar renovation project, $4.3-million parking garage and $10.8-million air-traffic control tower under construction at the air station.

Linbeck completed the 40,700-sq-ft Co-Cathedral of the Sacred Heart in Houston for the Archdiocese of Galveston-Houston. (Photo courtesy of Linbeck.)

Started in 1985 in Kansas City, Walton has expanded to five locations, which from 2002 until 2008 grew from $300 million to $700 million in revenue. It opened a Dallas office in 2003. Pinson says the Texas office has grown slowly and steadily and now has 49 employees, having added 16 in 2008. And he is looking to hire five more people.

“Within 2008, we increased our sales by more than 70%,” he adds.

Walton is joint venturing with its Kansas City division on the firm’s first Texas health-care project, a $42-million, design-build medical clinic at Fort Bliss in El Paso.

“We’re looking at pockets of the military that are still growing,” says Pinson, citing about $4 billion in work coming out of Fort Bliss in El Paso and opportunities at Fort Hood and Fort Sam Houston in San Antonio.

Also in the defense market, Gilbane is working on the $92-million, 150,000-sq-ft Joint Center of Excellence for Battlefield Health and Trauma Research Center at Fort Sam Houston.

Looking forward The 2008 Top Contractors are optimistic about 2009.

“Linbeck has a strong backlog, but we’re making significant investments in marketing and client development to make sure we have a steady revenue stream for 2009, 2010 and beyond,” says Burke, who expects few bright spots economically. “But Houston will probably be one of those. There are two growth markets that will maintain 2008 spending levels-health care and education.”

While Burke expects more projects to move forward, she also anticipates greater competition.

Gilbane’s Lowrance also reports increased competition. He says pricing of steel and concrete are down but not labor costs.

“We feel comfortable because we have a nice backlog,” Lowrance says. “2009 doesn’t look too bad, but we’re clearly seeing in the K-12, commercial and retail [markets] a dramatic slowdown. But higher education continues to look strong, and the more complex projects, like health care and research, are still moving forward.”

An aerial of the medical facility Walton Construction is building at Fort Bliss on El Paso. (Image courtesy of Walton.)

Kistner says Bartlett-Cocke’s backlog is larger than it has ever been, and he anticipates revenues of $550 million in 2009, much of it from schools. The company picked up $85 million in work on Austin-area school projects. He also sees an increase in competition from contractors that were building multifamily residential, retail or other segments that have dropped off.

Walton Construction’s Pinson also sees an increase in competition. He says that, typically, there might be five bidders, but the last job the company bid on had 15 qualified bidders.

Walton has begun looking for niche sectors in which to grow. Pinson sees opportunities in renovations, such as its $11-million, 131,000-sq-ft renovation of public spaces at the Sheraton Dallas Hotel.

Pinson adds that there are jobs building infrastructure related to road projects, such as toll plazas.

“We entered 2009 with a nice backlog, that we are excited about,” he says. “What we need to do is bolster sales in 2009 in order to drive 2010.”

Scott says Austin Commercial also entered 2009 with a strong backlog of signed contracts and significant university work, which will help the company keep people employed for the long term.

“We are focused in markets where we can be profitable and thrive on repeat customers and long-term relationships,” Scott says. “We feel blessed to be in Texas.”