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Top Metal Builders for 2018 May 1, 2019

What does that mean? It means 2018 was a very good year for the largest metal building contractors. Larger buildings, more steel and more projects all translate into substantial growth in spite of some significant potential restrictions such as the shortage of labor, rising prices and slower lead times.

It is a truism in any survey of top contractors that they are more likely to participate in good years than bad years, and this year we had a record number of companies submit their numbers, topping out at more than 170. That meant making the list was more competitive than in any year in nearly a decade. Consider that the 100th largest company reported 526 tons used in 2017, but the 100th largest in 2018 used 677 tons of steel.

If the survey had only reported a leap in tonnage, we could pass it off to increased participation, but with a jump in the size of the buildings coming along with it, we can conclude the 100 largest metal building contractors are likely getting more market share and seeing the lion’s share of the growth of the market. That would track with other industries that have seen consolidation at the top of the market and greater fragmentation at the bottom.

As mentioned, the growth comes in spite of severe market constraints that have restricted contractors. For several years, when asked what was the biggest challenge they faced, the top metal builders have pointed to the shortage of skilled labor. That holds true again with about a third of our respondents indicating the lack of workers was the hardest difficulty they had to overcome in 2018.

When you add in the 3 percent who report subcontractor availability as a challenge, the labor shortage shows an even larger impact.

In addition to the labor shortage, a couple of other challenges tend to be perennial topics among contractors. About 5 percent of top metal builders indicated they faced significant weather challenges, which is just about the same as in the previous two years.

Complaints about declining markets and the regulatory environment (with the exception of permitting) disappeared from the challenges reported in 2018. It’s unlikely those issues disappeared entirely, but they weren’t as pressing as others.

One significant and well-documented issue in 2018 was the imposition of steel tariffs. The result of that action showed in two places. Seven percent of the top metal builders said rising steel prices was their biggest challenge, and 8 percent indicated longer lead times was the hardest challenge to overcome. While lead times are influenced by market growth— and it was a very good year—the imposition of tariffs also caused a rapid increase in orders, so contractors could beat anticipated price increases. That bubble of growth impacted the delivery process for the entire year, slowing projects.

The lead time issue combined with reports of slower permitting processes (another result of a robust market) gave lots of the top metal builders headaches trying to schedule projects and make sure labor and subcontractors were available when needed.

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