Construction forecast is concrete.

The outlook for the construction industry is very good, boosted by an economy on the rise. Moreover, the measures ACC Construction took during lean times have helped immeasurably and are now enabling us to secure a stronger position in the market. By diversifying our client base to include both public and private sectors, while expanding our service lines, ACC has developed expertise on a much broader scale, which positions us to take advantage of the current upswing.

The impact this strategy has had on our business is dramatic. Even when the economy softened, we were obliged to hire additional senior staff with the experience to manage projects in specific sectors. This year alone, we have been responsible for ten retail projects, six residential projects entailing major capital improvements, plus several healthcare facility projects, university projects and commercial office build-outs. The retail projects included basic rehabs, gut renovations and out-of-ground construction. We were also awarded more large-scale residential projects than ever before.

Three years ago when the effects of the recession filtered to construction, there was tremendous anxiety through-out the local industry. Despite a rise in new residential construction throughout the area, the benefits hardly affected mid-size and smaller firms. Plus, ACC's traditional base, which at the time was largely made up of interior office build-outs, was less active commensurate with the increase in office vacancies. But so much has changed since the beginning of the year. For one thing, office occupancy in New York City is on the rise and institutional projects, a sector in which we have become well established, are also increasing.

Clearly, ACC is positioned for the next economic boon differently than in the past and with much broader capabilities than when the recession began nearly four years ago. In fact, we not only survived, we actually grew. Our success has been the product of a team effort: a consensus among senior staff to extend and diversify our client base, which has helped to make us stronger.

Throughout 2004, ACC was hired to work on major capital improvements projects in high profile residential buildings.

The dynamics of building around peoples' lives in their apartments is a far cry from our commercial projects. To that end, our experience in hospital construction was helpful because, in many ways, the sensitivity required for residential construction parallels healthcare and institutional work. Using those paradigms, we knew to take extraordinary measures to protect our clients--and the residents--by sealing off specific areas and scheduling the work within tight time frames. Our focus was on completing the work, while working with residents to minimize disruptions.

At a fully operational and occupied condominium on Manhattan's Upper East Side, ACC performed a total gut rehab of the common areas and managed to avoid serious debris problems in the individual units. We were also responsible for renovating the mail room and reception room.

In Westchester County, NY, ACC renovated a 181-unit occupied apartment complex. All the units were upgraded with new kitchens, renovated bathrooms and wood laminate flooring. In addition, ACC renovated the common corridors, lobby and community rooms. We installed new boilers, modernized the elevators, upgraded the fire alarm system, installed a new roof and completed a structural rehabilitation of the parking garage.

ACC Construction is about to embark upon a challenging major capital improvements project at a 375-unit apartment complex in Orange County, NY. Not only is this project a testament to our efforts to diversify our client base when the economy first began to falter, it is now a solid indication of an economic recovery on a much greater scale.

Ultimately, the third quarter of any year subsequent to 2001 will be colored by the tragic events that transpired at that time just over three years ago. But an improved economic forecast certainly gives us optimism at a time in which there are so many difficulties worldwide.

So in a year checkered with triumphs and tragedies, third quarter 2004 has ended with a great sigh of relief. As an inveterate optimist, I see positive trends continuing to build and am already looking forward to what the fourth quarter has in store.

MICHELE MEDAGLIA, PRESIDENT, ACC CONSTRUCTION