San Diego Business Journal

Despite talks of an economic slowdown, local building contractors maintain they are busier than ever. In the San Diego Business Journal's List of the Largest Building Contractors, it ranked local building contractors by their gross revenues in San Diego County. Twenty-three of the local building contractors reported an increase of $46.8 million in 1999, an increase of 3 percent from the previous year. "The real estate market is at historic highs, which I've never seen in my 30 to 40 years," said Steven Roel, president of Roel Construction Co., Inc., No. 2 on The List. "There's a huge demand for all kinds of infrastructure." According to the California State Employment Development Department, building contractors employed 16,900 persons in San Diego County as of September 2000, an increase of 700 employees, or 4.3 percent from the previous year. The latest unemployment figure was also reported at 3.0 percent for San Diego County in September 2000. With the tightening of the labor force, building contractors are concerned the economy will expand too fast without the proper contractors and subcontractors in place to meet the demands. "It's very simple , no man equals no work," Roel said. "There's simply not enough people to fill these jobs to meet with every project out there."

- Labor Recruited Out Of Colleges

Roel said his company circumvents the labor problems by recruiting good employees for the company straight out of college. By this recruitment method, his company would have employees who seek lifetime careers in the building contracting business. The company reported $162.7 million in gross revenues for its San Diego County offices in 1999, a decrease of $3.8 million or 2 percent from its previous year. Approximately, 87 percent of its building projects are in San Diego County. The company specializes in general construction, tenant improvements, and forensic consulting for country clubs, auto dealers, sport facilities, casinos and the defense industry. Some of its current projects include the Horizons Twin Towers, Renaissance Twin Towers Condo, Ray and Joan Kroc Center and Park in the Park for the Downtown San Diego ballpark project. Paul Madaio, president of Davis & Adams Construction, Inc., No. 24 on The List, agreed the economy has tightened the labor market.

- Speedy Projects Enhance Success

He credited the success of building contractors to the "time to market." He defined the time to market as companies wanting to proceed in construction of a building project so their business could quickly get off and running. "Everyone's trying to make hay where the sun shines," Madaio said. "With all these rush-rush projects, these companies want building contractors to trust who can deliver the projects on time." Davis & Adams reported $8.9 million in gross revenues in 1999, an increase of $0.9 million, or 11 percent from its previous year. The company focuses on tenant improvements, ground-up construction and interior/exterior remodeling projects.

- Developing Good Relations With Subs

To meet the demands, many building contractors look toward subcontractors for assistance, Madaio said. "Relationships with subcontractors are very important to help each other in completing many of the building projects," he said. "As partners, building contractors need to make sure they're not winning at their (subcontractors') expenses." He said subcontractors needed to be paid on time for a job well done and then move on to the next project. It will develop a better relationship between building contractors and subcontractors and labor issues will not be a problem. Davis & Adams subcontract approximately 68 percent of its projects to subcontractors. Approximately 82 percent of the 1999 projects are within San Diego County. With the strong high-tech and biotech industries, Madaio believes there are plenty of work projects for any building contractors. "There's a lot of opportunities in San Diego and as contractors, we need to be responsive to all the different sectors," he said. "The future simply looks bright for all of us."