The area’s construction sector, overall, looks healthy, in terms of growth. But some problems are percolating.
By one key metric — overall revenue growth — the region’s construction sector continues to blow past any signs of a slowdown. To wit: For the second straight year, the cumulative revenue growth of the region’s 50 largest contractors increased at least 15%.
In 2019, the top 50 posted a total of $6.45 billion in revenue, up 15.1% over $5.6 billion in 2018. That comes on top of 15.4% growth in 2018 over 2017. (To make the Top 50 Contractor list, companies must be based in the Business Observer’s coverage area, from Polk County south to Collier County. Companies must be in some type of contracting field: electrical, general construction, roofing and more. Data is self-submitted.)
Yet a deeper dive into the data reveals some potential pitfalls for the industry as it navigates a host of issues, from the rising costs of materials to labor challenges and shortages. And looming in the background: any potential impact of the coronavirus scare impacting communities and businesses worldwide.
One potential crack is in the total number of top 50 companies that posted year-over-year revenue gains. In 2018, there were 43 such companies. In 2019, that number fell to 33. That nugget leads to another potential crack: The top 50 is top-heavy, with the leading four companies — Manhattan Construction Group, Power Design, DeAngelis Diamond and Ripa & Associates — generating $3.28 billion in 2019 revenue. That’s more than half of the total revenue of all 50 companies.
Of that top four, Naples-based Manhattan Construction isn’t only the biggest. It’s one of the fastest-growing, increasing revenue 70%, from $1.35 billion in 2018 to $1.94 billion last year. The firm has recently worked on some of Southwest Florida’s most notable projects, including the city of Naples Baker Park, the Luminary Hotel and parking garage in Fort Myers and Kalea Bay Tower. It has some 1,500 employees.
Outside of sales growth lies another big industry conundrum: the piercing labor shortage. Steve Cona, president and CEO of the Associated Builders and Contractors Florida Gulf Coast, based in Tampa, says of late the entire industry has seen “more of a crying for skilled labor.”
There are multiple reasons for the shortage, including lack of interest among younger potential employees. Several industry leaders worry the issue will only get worse in the next decade, as more people leave the industry. “Demand has not slowed down,” says Ryan Benson, principal with A Vernon Allen Builders in Naples, “and there’s not a new group of labor force available to accommodate the consistent high demand.”
At least contractors can take solace in one part of the shortage situation — that demand hasn’t slowed down.
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