While respondents to this year’s Pipe Trades Giants survey say that more of their business in 2012 was commercial and industrial rather than residential, 56% of them report an increase in revenue from 2011. Yet the U.S. Census Bureau reports that public construction such as education, sewage/waste disposal and water supply were down last year. Health-care construction was up by 4.1% from 2011.
Education and health-care construction spending are down for the first five months this year, the Census Bureau reports, but sewage/waste disposal and water supply show increases this year — 2.7% and 9.9%, respectively.
A report from the Architectural Record notes that “uncertainty around the Affordable Care Act and the future of Medicare and Medicaid have been weighing down health-care construction.” Financing also has been a factor.
The Dodge Momentum — a monthly measure of the initial report for nonresidential building projects in planning, which has been known to lead construction spending for nonresidential buildings by a full year — dropped slightly in June from May, which recorded the highest level since May 2009.
“This indicates that the rising trend for nonresidential building remains subject to the occasional setback,” the report notes. “As shown by such market fundamentals as vacancy rates, the commercial building sector is getting healthier, but the improvement continues to occur at a gradual and hesitant pace.”
The June Momentum Index revealed a mixed reading for its two major components, as a sharp increase in plans for institutional buildings offset a drop in commercial development.
More than half of PM’s Pipe Trades survey respondents say they anticipate an increase in work for the rest of the year (respondents were surveyed in May and June). “We have improved our forecasting tools, which allowed us to ramp up our hiring efforts in advance of the improvement of the housing market,” an optimistic respondent says. “This has allowed us to capitalize on opportunities that other contractors could not.”
Overall construction spending in 2012 increased 9.2% from 2011, for a total of $850.3 billion. The value of private residential construction rose 16.1% in 2012 and private nonresidential construction rose 15.4% for a total of $297.7 billion.
For the first five months of 2013, construction spending has continued to climb 6.2% from the same period in 2012. Private residential construction rose 23.1% since May of last year, but new multifamily construction is the big winner so far, with a 55% increase in spending from May 2012 compared to a 33.2% increase for single-family homes. Building permits and housing starts have fluctuated the first half of 2013, but the trend seems to be an increasing percentage for both.
BIM, mobile technology
Mechanical contractors have increased their use building information modeling technology — 78% of Pipe Trades survey respondents say they use BIM.
Midlands Mechanical has put a “greater focus on BIM and virtual design construction,” President Bill Kilmer says. The company also uses total stations and global positioning for “faster and more accurate layouts.”
David Weiner, president of Advance Mechanical Systems, says his company integrated BIM into its prefabrication process. Modern Piping CEO Dave Brown says his company has increased its use of BIM as well as prefabrication.
Other companies, such as the DiGisare Group and Ivey Mechanical, have increased their prefab work.
“We continue to increase our prefabrication efforts and have improved safety performance to the best levels in company history,” Ivey Mechanical President Denny Terrell notes. “And we have improved our sales effort by monitoring implementation. We changed to new CRM software to help with this effort.”
Mobile technology beyond smartphones is being used more and more to improve communication between field personnel and project managers and to increase productivity.
“In 2012, we adopted tablet technology for both project management and field personnel,” says Tom Palange, director of marketing at J.C. Cannistraro. “Project managers and foremen now use iPads to assist them with communication, documentation and various other operations.”
Increasing safety in the shop and on the jobsite are still important considerations for mechanical contractors, not only for their employees but also for their bottom lines.
“Limbach’s loss control, risk management and safety programs are the basis of Limbach’s improving productivity,” explains Angela Weiser, director of marketing and communication at http://limbachinc.com/Limbach Facility Services. “With significant decreases in insurance costs, Limbach can concentrate on improving its position in the market. The company uses industry-leading building information modeling and offsite prefabrication, both of which have increased Limbach’s contracting opportunities.”
One respondent notes: “In an increasingly aggressive market, we have strived to differentiate the company from the competition by emphasizing our ability to deliver a safety-oriented, superior end product with on-time completions, professionalism and high ethical standards. We have no interest in being the cheapest; we prefer to be the best in order to attract a higher-end client who will see value in paying a little more.”
Many respondents note they have put more emphasis on training — technical as well as sales or customer-service training.
“We have a company-wide recommitment to excellence in every department of our company,” notes Luciano Piccirilli, CEO of http://www.psvplumbing.com/Piccirilli-Slavik & Vincent Plumbing & Heating. “We’ve invested in technology-oriented tools and programs, and continued the recognition of the talented employees we are surrounded by, as well as invested time and money into educating the young up-and-coming technicians.”
Green is still relevant
More than half of respondents (55%) belong to a green construction organization, with the U.S. Green Building Council the most popular. And 82% of respondents say they have LEED-certified personnel on staff.
Green building seems to be growing in the retail and hospitality sectors — projects that address water conservation, energy efficiency and indoor air quality. McGraw Hill Construction’s report, “Green Retail and Hospitality SmartMarket Report: Capitalizing on the Growth in Green Building Investments,” reports that owners of retail and hotel establishments are reporting increasing levels of green building activity planned over the next two years.
“The percentage of retail owners that have taken a green approach in over half of their building projects rose from 18% in 2011 to 38% this year, and is expected to rise to 52% by 2015,” the report states. “Hotel owners show an even greater investment in green building — the percentage of those owners that have taken a green approach in over half of their building projects rose from 28% in 2011 to 48% in 2013, and is projected to rise to 64% by 2015.”
Almost two-thirds of respondents (62%) say they recommend Energy Star- or WaterSense-labeled products to their clients. This finding follows the trends of increased interest in water conservation and energy efficiency detailed in the McGraw Hill report.
Water-saving products installed by respondents include graywater or recycled water systems and touch-free faucets. With regard to energy-efficient technologies, geothermal heating and cooling systems are becoming more popular as solar thermal projects have waned.
How do we rank companies?
The information that Plumbing & Mechanical uses to rank the top mechanical companies in the industry is the most accurate we can gather. We use several different methods, but by far the most effective is the survey we send out. However, as happens every year, some companies opt not to supply some or all the information we request.
We use industry reports, annual reports or SEC filings to obtain information. For others, we have estimated sales volume and percentage breakdowns for those companies, indicated with an asterisk (see rankings below in pdf form).
The only way to present a meaningful report on the state of the industry is to include companies that are significant players, even if they experienced a bad year or are in turmoil for another reason.
The Pipe Trades Giants are not ranked on total sales revenues, but what we call “pipe trades” revenue — the percentage of a company’s revenue that comes from plumbing, hydronics/radiant, piping, fire protection and water/wastewater treatment. HVAC, electrical and other revenue is not included in our computations (the “Other” category).
To read the full pdf of “Top 10 By Category” click here.
To read the full pdf of “The 2013 Pipe Trades Giants By Rank (1-38)” click here.
To read the full pdf of “The 2013 Pipe Trades Giants By Rank (39-75)” click here.
To read the full pdf of “The 2013 Pipe Trades Giants Alphabetical List” click here.
