Falling Revenue Overshadows Most Commercial Contractors

by George Waldon  on Monday, Jun. 28, 2010 12:00 am  

Total revenue among the top 20 commercial contractors in Arkansas tumbled to $1.8 billion during 2009. The fall was reflected across the state's roster of firms. Only four general contractors reported year-to-year revenue gains in this year's list. (Click here to see the list and here for a spreadsheet version.)

Leading the way was Van Horn Construction Inc. of Russellville with a 32 percent jump to $33 million, which ranked No. 9. That propelled the company from No. 17 last year, making it the biggest mover on the list.

Little Rock's Baldwin & Shell Construction Co., which works exclusively on Arkansas projects, recorded a 15.6 percent climb and ranked No. 4 with 2009 revenue of $129.5 million.

Combined revenue for the top 20 firms stood at nearly $2.28 billion in 2006, $2.61 billion in 2007 and $2.21 billion in 2008.

Bill Hannah, CEO at Conway's Nabholz Construction Corp., said the health care and education sectors had helped sustain the company's book of business and generated requests for proposals the past couple of years.

"We're pretty lucky in the sense that we have a strong backlog, especially out of the central Arkansas operations," Hannah said. "Things are still pretty slow in northwest Arkansas, but we're starting to see things pick up with more opportunities and more RFPs coming out."

Annual revenue grew 4.1 percent at Nabholz, which ranked No. 2 at $450.8 million. Rounding out the firms with year-to-year revenue gains is Little Rock's Dave Grundfest Co., with a 1.4 percent increase to $22.8 million that ranked No. 16.

Michael Garner, chief development officer with Little Rock's James H. Cone Inc., said uncertainty about the economy and the financial markets made for a tough 2 ½ years for commercial contractors.

"Our last year was terrible, but this year is going to be much better," Garner said. "Since April, we've seen a significant increase in construction activity. Projects that we thought were dead have come back to life."

Double-digit declines in business were common among contractors in this year's list, with eight reporting revenue drops of 20 percent or more.

Declines in business among contractors during 2009 ranged from 37.5 percent at Little Rock's East-Harding Inc. (No. 13 with revenue of $25 million) to 6.7 percent at CBM Construction Co. (No. 18 with revenue of $14 million). CBM moved its headquarters from North Little Rock to Little Rock.

CR Crawford Construction Inc. of Fayetteville opened its doors in February 2006, catching the tail end of the boom times and the front end of the lean times in northwest Arkansas.

"We feel like things are starting to stabilize," said Cody Crawford, president of the firm. "It's obviously been a declining couple of years. We've reached the bottom. This is probably going to be the new norm. Contractors who are able to survive these conditions will be able to succeed."

Bob Shell, CEO of Baldwin & Shell, said 2010 was shaping up to be a stellar year for the firm, with revenues expected to top $175 million.

While business has been good for his company, he acknowledged the overall market was much softer. Shell said the pace could pick up in the fall based on his conversations with architects and engineers.

"It's really slow, and people are really hurting," he said. "A lot of the subcontractors are really struggling."

However, compared to reports from other parts of the country, Arkansas is more than holding its own.

"I've attended national meetings of the Associated General Contractors," Shell said. "People from other states are so much worse off than we are. They're saying there is no work, with failures and bankruptcies everywhere."

 

Absences and More

Slumps in business and worse prompted three leading commercial contractors to exit the list.

Among those were two Little Rock firms, which declined to provide 2009 revenue figures and updated information for this year's list: May Construction Co. and MDH Builders Inc.

Lewis May, president of May Construction, is scheduled to stand trial Oct. 20-21 on charges of intent to defraud in Virginia's Stafford County Circuit Court.

"I'll be glad when all of this is over, so I can get on with my life," May said.

He is accused of receiving construction funds on a Lowe's project that opened in October 2008 in Stafford, Va., but failing to fully pay several subcontractors for completed work.

A line of subcontractors has claims totaling about $1 million for unpaid work against May Construction.

Under Virginia law: "Funds paid to general contractor or subcontractor must be used to pay persons performing labor or furnishing material."

May allegedly had paperwork signed and presented to Lowe's to collect money for subcontractor work. Instead of paying the subcontractors, he allegedly retained the money to keep his financially challenged firm afloat.

May Construction last year ranked as the fifth-largest commercial contractor based in Arkansas, with 2008 revenue of $94 million.

MDH Builders closed its doors this year after battling since 2008 clients who wouldn't pay and subcontractors who failed to perform. Those financial setbacks, in turn, caused problems when the company couldn't stay current with its creditors.

"I'm just trying to lick my wounds," said Mike Hill, company president, who founded the venture 17 years ago.

MDH Builders last year ranked as the eighth-largest commercial contractor based in Arkansas, with 2008 revenue of $52 million.

In May, the former west Little Rock headquarters of MDH Builders sold for $1 million to a fledgling commercial contracting firm.

Clark Contractors LLC, led by William Clark, opened its doors for business in February 2009 after Clark resigned a month earlier as CEO of the firm his father co-founded in 1987 with Dillard's Inc.: CDI Contractors.

Clark Contractors generated 2009 revenue of $6.3 million, which fell below this year's list threshold.

Latco Inc. of Lincoln also declined to provide information for this year's list. The firm ranked No. 7 last year, with 2008 revenue of $60 million.

The absence of May Construction, MDH and Latco cleared the way for a string of firms to move up the list despite a tough year.

New to this year's list are two northwest Arkansas concerns: CR Crawford Construction, No. 12 at $25.8 million; and Milestone Construction Co. of Springdale, No. 20 at $11.5 million.

 

 

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