Specialty contractors remain stable, despite poor economy

by Lucy Bodilly

Despite the slow economy and volatile materials prices, the majority of specialty contractors managed to either increase revenues or remain level with 2002, according to the results of the 2003 Northwest Construction Specialty Contractors Survey. The survey, sent to the Northwest Construction database, asked for revenues in Washington, Oregon and Alaska and for area of specialty.

Results were not as gloomy as expected, but scarce work and unpredictable materials prices, especially for steel and lumber and concrete, demanded flexibility and finesse.

Industry experts blame a huge increase in the amount of construction in China for the rising materials supplies. Ironically, as interest rates rise, and the pace of construction slows down, materials prices will stabilize.

Steel prices were the main worry as several companies saw a 100 percent increase in the price of steel wall studs between the time jobs bid, and the invoices came in. Fortunately, most owners were understanding and some, such as the Oregon Department of Transportation are considering putting a clause in their contracts to allow for variances. While juggling materials prices with one hand, subs balanced revenues by moving into different markets.

No matter what the market, subcontractors still faced the traditional squeeze between the general contractor and the materials supplier, especially when it comes to payment. To protect their interests, most general contractors are issuing two party checks to the subcontractor and the sub-tier. This complicates payment issues, because of the problem of getting secondary endorsements and collecting from a sub-tier for back charges or retention.

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