Construction industry ready for fierce price competition

Despite the recession and lack of easy

financing that stalled new development

throughout northern Nevada, Craig Willcut,

president and chief executive officer of Renobased

United Construction, predicts a 36 percent

growth in revenues for his company in

2009.

Not bad considering the large loss of construction

employment throughout Reno and

Sparks. Construction companies in the region

employed about 17,000 in October down

4,200 jobs from the same period in 2007, a

change of nearly 20 percent, according to the

Department of Employment, Training and

Rehabilitation.

Willcut says United stands to increase its

revenues this year mainly because it didn't

muscle up during boom years. He says controlled

growth is the key to United's longevity

and its ability to weather economic storms.

"It is the way we run our business in good

years as well as bad,"Willcut says."When

things were booming we didn't go out and

chase everything under the sun and try to be

this big company.We didn't have to hire a

bunch of new people and buy a bunch of new

equipment. By having controlled growth we

maintained a level we were comfortable

with."

But the number of jobs chased by United

and other contractors continues to be small.

PENTA Building Group Area Manager Lou

Primak says competition among northern

Nevada's large general contractors is tougher

than ever.

"We have quite a few qualified firms

vying for a very small market," Primak says.

"The pie has gotten very small, and when you

cut the pie up the pieces are even smaller.

Until the credit market thaws out, a lot of the

developers we had projects in the works with

have shelved those projects for an indefinite

amount of time."

BJ Sullivan, who co-founded Clark and

Sullivan in 1980, says this period is the

toughest he's seen.

"Bar none," Sullivan says of the downturn.

"It is just a crazy time."

Sullivan notes that 2009 will see very

competitive bidding among the region's general

contractors for school district work and municipal projects.

"Competition across the construction

market is tight as there are more contractors

and subs than there are jobs," Sullivan says.

"Everybody is pulling out all the stops to be

as competitive as they can. It is really a tough

market."

United will keep busy in 2009 finishing

up a new middle school in South Meadows,

as well as on ongoing project at the Air

National Guard facility.

Although the company cut its teeth on

building tilt-up distribution and warehouse

projects, United shifted focus as development

of new spec warehouses ground to a halt.

Willcut says the company isn't planning to

build a single warehouse this year based on

current vacancy rates.

"Whether it is distribution, office or

retail, I think spec building will be very minimal

this year and possibly into the following

years," he says.

United does, however, have contracts for

four build-to-suit warehouse buildings starting

in the first or second quarters."These are

all projects that have tenants ready to go," he

says.

United currently employs 55 non-field

employees, such as supervisors and office

support staff, and has 25 field workers. The

company has had minimal layoffs.

"We have had the same crew now for a

number of years,"Willcut says. By maintaining

growth and controlling it, we keep

staffing levels consistent both in the office

and in the field."

The PENTA Building Group also has a fair

share of work on the horizon with the $47

million Davidson Math and Science Center at

the University of Nevada, Reno, under way

and a pending job for the $26 million Washoe

County Justice Court in Spanish Springs.

Primak says PENTA looks at the coming

year as a glass half-full.

"We are fortunate that in early '08 we

took on a $47 million job on the south end of

the campus, of which the lion's share of work

will be executed through 2009, and several

other sizeable projects will ground us in

northern Nevada for the next few years,"

Primak says. "It's still on the light side for us

in northern Nevada, but considering the circumstances

we are very happy to be in the

position we are in."

PENTA employs 11 field workers at the

math and sciences center job, and has 15

salaried project managers, estimators, superintendents

and project engineers.More than

100 other tradesmen from subcontractors

also are on the UNR job.

"We are still very bullish about the economy

in northern Nevada and around Lake

Tahoe and look forward to being in the area

for many years to come," Primak says.

Clark and Sullivan will stay busy in 2009

with the $54 million UNR Center for

Molecular Medicine. Work just started, and

the project is expected to be completed in

2010.

At its peak the job will employ 400

tradesmen, Sullivan says.

Clark and Sullivan has employed between

100 and 400 construction workers during its

history, but Sullivan says the company currently

is at the low end of that scale.

"If you don't have a place for people to

work, you have to reduce staff," he says.