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Construction Is A Foundation
Of Economy
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The region’s
large general contractors bring home construction revenue from work
outside the area, supporting and driving the local economy.
By Peter Downs
St. Louis is home to an unusually large number of the largest general
contractors in the nation, and the nation’s largest firm. Together,
they make up a powerful engine for economic growth in the region.
Above:
McCarthy recently completed the $79.8 million University of Colorado
Hospital’s Anschutz Outpatient Pavilion in Aurora, Colo. Believed
to be the largest healthcare design/build project ever completed
in the United States, the 476,000-square-foot, eight-story comprehensive
ambulatory center houses primary and specialty ambulatory care,
outpatient surgery and recovery, complete diagnostic capabilities
and other patient-focused support services.
The use of St. Louis subcontractors Sachs Electric and Murphy Company
Mechanical Contractors, enabled the building team to effectively
meet an extremely aggressive design and construction schedule—initial
occupancy was completed within 24 months. Because of this success,
the project is being considered for national recognition as project
of the year by the Design-Build Institute of America.
The Midwest Division of McCarthy, based in St. Louis, currently
completes approximately 70 percent of its work outside of the St.
Louis metropolitan area.
The 11 largest construction and design firms based in St. Louis
had revenues last year totaling nearly $4.39 billion—three times
the “economic impact” of the St. Louis Cardinals, and nearly twice
the amount that tourism and conventions bring to the area.
More than two-thirds of the construction revenue, at least $3 billion,
is money brought into the metropolitan economy from work outside
the area. That money supports centralized corporate services, such
as information technology and purchasing, and flows into local banks,
insurance agencies, and bonding companies. And it means these companies
keep revenue flowing into St. Louis, and jobs here, even when the
St. Louis economy is slow.
Above:
For the year 2000, 80 percent of revenues for Fru-Con Construction
Corp. and subsidiary Fru-Con Engineering Inc. was generated by out-of-town
projects. Fru-Con frequently teams up with St. Louis-area contractors
on out-of-town jobs. As general contractor of the Missouri South
Central Correctional Facility in Licking, Mo., a maximum-security
prison that opened in June 2000, Fru-Con hired subcontractors that
included close to 30 St. Louis-area companies.
The exact amount that St. Louis-based construction and design firms
bring home to St. Louis is hard to determine. In many of the big
companies, the St. Louis office is responsible for work beyond the
borders of the metropolis. The St. Louis office of McCarthy, for
example, brought in one-third of the firm’s $1.2 billion revenue
last year, but that includes work performed throughout the Midwest,
not just in St. Louis. The same is true of other companies. The
10 percent of HOK’s revenues generated by the St. Louis office even
included work in Argentina and at Mt. Carmel in Israel. The sum
of $3 billion from work outside St. Louis does not include such
work.
The strong relationships between many of the larger companies and
their consultants and subcontractors compounds the impact of national
work: most of the larger companies take their smaller local partners
with them.
Michael Bolen, chief executive officer of McCarthy Building Companies,
says local electrical, mechanical, and plumbing subcontractors “travel
with us all over the country...For example, I did a job in Huntington
Beach, Calif. with Sachs [Electric], and we did a hospital in New
Hampshire with them.” Several other general contractors say companies
such as Murphy, Jarrell, Sachs, and Guarantee Electrical travel
with them, too.
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10
Largest St. Louis-Based General Contractors and Architects
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Company
Name
|
2000
Revenue
(million $)
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Out-of-town
%
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| McCarthy
Building Companies |
1,205
|
67
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| J.S.
Alberici Construction Co. |
837
|
60
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| Fru-Con*
|
540
|
80
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| Clayco |
430
|
80
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| Hellmuth,
Obata + Kassabaum (HOK) |
342
|
90
|
| HBE
Corp. |
329
|
99
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| ARCO
Construction Co. |
200
|
88
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| Paric
Corp. |
193
|
13
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| R.G.
Brinkmann Construction Co. |
183
|
16
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| The
Korte Co. |
164
|
68
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James Frey, vice president for business development at J.S. Alberici
Construction Co., says Alberici’s out-of-town work provides opportunities
not just for the larger St. Louis subcontractors, but also for smaller
ones, such as painting contractor Bazan Custom Coatings. Hillsdale
Fabricators, Alberici’s locally-based steel fabrication subsidiary,
also fabricates steel for out-of-town Alberici projects.
Greg Holthouse, senior vice president of Fru-Con Construction Company,
says that in addition to relationships with subcontractors, his
company’s key supplier relationships are here as well, which means
supplies for out-of-town jobs often get ordered through St. Louis
companies.
HOK will sometimes take engineering consultants with it on out-of-town
jobs. William Tao & Associates, for example, is working for HOK
on a project for Eli Lilly in Indianapolis, and on a project at
the University of Wisconsin.
For design/build leader Clayco, however, using St. Louis professional
consultants is more the rule than the exception. Clayco does 80
percent of its business outside of metropolitan St. Louis, and usually
uses St. Louis-based design and engineering consultants on those
projects, says Bob Clark, the company’s chief executive officer.
Matt Ladd, vice president of ARCO Construction Co., estimated that
25 to 50 percent of his company’s out-of-town business trickles
down to local subcontractors. ARCO has at least six local subcontractors
that it uses regularly on out-of-town business, he says. “They are
familiar with how we do business...[and] as we become successful,
we want to share that success with the subcontractors with whom
we built a working relationship.”
Keith Myers, vice president of business development for Condaire,
Inc., a St. Louis-based mechanical contractor, says St. Louis-based
general contractors rely on the St. Louis-based subcontractors on
out-of-town jobs for two reasons. First, “we know how to operate
in their safety programs, we know the kind of paperwork they expect,
and the kind of management they expect.” Second, “they trust us
to deal with the local unions. If they tried to hire directly, nine
times out of 10 they would get bottom of the barrel. Because we
are plumbers and pipefitters, we get a little better choice of people.”
Above:
Almost all of HBE's work is performed out of town, an example
of which is Century Bank in Santa Fe, N.M.
All of that out-of-town work means jobs, and career opportunities,
for St. Louisans. Paric Corp. Chairman Paul McKee says almost all
of his company’s projects are managed from St. Louis, down to the
level of project superintendent. Bolen says two-thirds of McCarthy’s
Midwest projects are managed from St. Louis, as well as some projects
elsewhere in the country. At Fru-Con, operations managers and senior
project managers come from St. Louis, while Alberici’s St. Louis
headquarters sends out not just project managers and engineers to
out-of-town jobs, but also even for craft supervisors.
None of these companies restrict recruiting to just St. Louis, however.
They all hire regionally, if not nationally, bringing new people
and their talents into St. Louis to live.
“Imported” revenues tell only part of the story of how large construction
companies affect the St. Louis economy, however. Contrary to the
popular image of construction as a reactive industry in which companies
only respond to proposals released by developers and owners, some
of the larger general contractors actively seek investors and developers
to come to St. Louis to initiate projects the generals want to build,
and so does HOK. And, Fru-Con, Clayco, and Paric all have related
development companies that get projects started for the construction
companies.
Paric may be the best example of such a proactive construction company.
S.M. Wilson President Scott Wilson calls Paric’s co-founder McKee
“an entrepreneur’s entrepreneur,” and he has imbued his company
with an entrepreneurial culture.
Four years ago, Paric split into five business units in order to
better encourage entrepreneurism, and the hospitality and residential
division set sights on retirement communities and assisted living
centers. That division “could build [senior living facilities] faster
than people were developing them, so we had to show more people
how to develop them,” McKee says. The company went outside St. Louis
to find investors and developers to put money into building new
senior living facilities here, instead of just waiting for opportunities
to bid. Among the companies Paric enticed to St. Louis is Sunrise
Assisted Living, which has one new facility in Chesterfield and
is negotiating for the purchase of sites for three more.
Beyond that, those companies are looking down the road at social
and development issues that haven’t yet been addressed, says Paric’s
Marketing Director Tim Lorson. “We’re developing answers before
problems hit.”
Peter Downs is a free-lance writer and editor of Construction
News & Review.
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