Turner leads the general contracting pack.

But 1991 is rougher and many are wary over next year

Turner Construction Co. was the largest commercial/industrial contractor in Los Angeles County last year, enjoying a 10.1 percent increase in local contracts and a 3.1 percent rise in nationwide contracts, despite a severe real estate recession, reveals this week's List (see page 28).

Turner landed $511 million in local contracts during 1990, compared with $464 million the year before.

D. Barry Sibson, western group vice president at Turner, attributed his company's success to its well-timed shift away from office construction. Instead, Turner has turned to three other sectors that are experiencing relatively healthy levels of activity: health care, research and development, and government projects.

Another reason for Turner's strong 1990 performance in Los Angeles is the firm's decision to allocate more resources to California, and away from weaker areas of the country.

"California has stayed stronger than many other areas of the country," Sibson asserts. "And that has allowed us to bring people here with special expertise in some of these other (three) market types."

Local projects that contributed to Turner landing in the No. 1 slot this year include the Glendale Adventist Hospital expansion, the St. Joseph's Medical Center expansion in Burbank, Amgen Inc.'s research facility in Woodland Hills and a new state prison facility in downtown Los Angeles.

Sibson concedes, however, that 1991 is turning out to be a much rougher year for Turner, and 1992 might not be much better.

"There are two major problems," he says. "One is that the large volume of commercial work done during the '80s has created incredible softness, and the other is widespread unavailability of financing for almost any type of commercial development."

Light will eventually come to both those blackened tunnels, Sibson believes.

"But how soon that light will come is the major question mark right now," he adds. "This year is more difficult than last year. We seem to have really hit bottom. And it appears as though 1992 will continue to be slow for our industry."

This year's List of commercial/industrial contractors is not directly comparable to last year's because the Business Journal, in a continuing effort to upgrade the quality of its Lists, has revised the guidelines to exclude firms engaged primarily or exclusively in construction management, engineering, designing/building and project management.

That redefinition resulted in three companies being excluded from this year's List: Tishman Realty & Construction Co., ranked No. 1 last year; Bechtel Corp., ranked ninth last year; and Parsons Corp., ranked 10th last year.

Three other companies on last year's List also do not appear this year. Koll Construction, ranked 16th last year, relocated its L.A. County office to Orange County; Stolte Inc., ranked 17th last year, shut down its L.A. County office; and Cannon Constructors Inc., ranked 24th last year, declined to release financial information.

Six newcomers to this year's List are: M.H. Golden Co., Environmental Contracting Corp., Cal Pac Construction, Turelk Inc., Kemp Brothers and Crown City Construction.

The company that experienced the largest jump in the rankings this year, compared with last year, was Jacobs Engineering Group Inc. of Pasadena. Jacobs jumped all the way to fifth place this year from 20th, mostly as a result of the firm shutting down its Robert E. McKee Inc. subsidiary in Dallas and transferring most of McKee's operations to L.A. County.

Jacobs' other operations here, however, have also been doing exceptionally well, reports Dr. Joseph Jacobs, chairman and chief executive officer. Jacobs' projects typically involve the construction of large-scale plants, which has remained relatively active in recent months.

"Our business used to be tied to capacity," Jacobs explains. "If more gasoline was needed, for example, we'd be building more petroleum refineries. But today about 70 percent of our business is regulation-driven. Projects are now undertaken to improve efficiency or meet environmental standards, not to increase capacity."

The company that experienced the largest drop in the rankings was Oltman Construction Co. of Whittier. Oltman was ranked seventh last year, but fell to 12th place this year. The firm suffered a 47.7 percent decline in local contracts and a 12.8 percent decline in contracts company-wide.

Oltman specializes in office construction in Los Angeles and Orange counties, and in industrial construction in the Inland Empire. And both those segments have been hit hard, confirms John Gormly, a vice president at Oltman.

"Most of the greater Los Angeles and Orange County markets don't seem to be in need of much office space," Gormly says. "And the Inland Empire, where all our major distribution and industrial buildings were being built, has at least an 18 month supply of those types of buildings."

The drop-off in Oltman's core businesses has been partially offset by strength in its Tenant Improvement Division, Gormly adds. "But we don't anticipate a very strong 1992."