Alabama engineering design firms are raising their national profile, with Mobile-based Hargrove Engineers + Constructors leading the way, according to new Engineering News-Record rankings.
The ENR's recently unveiled list of the top 500 engineering design firms in the country includes four from Alabama. Three are based in Mobile and two of those have inched their way upward in the Top 100.
The highest-ranked among them is Hargrove, which rose from 73 in the 2017 list to No. 70 for 2018. ENR says its rankings are "based on design-specific revenue."
Answering questions via e-mail, company president and CEO Ralph A. Hargrove said that Hargrove's design revenue was $227 million in 2017. "Over 99% of our revenue comes from process industrial, petroleum refining, manufacturing, and power generation industries," he wrote. "Our clients - many of which are also in Alabama - call upon Hargrove to plan, design, automate, build, and maintain their facilities."
Ralph A. Hargrove, president and CEO of Hargrove Engineers + Constructors. (Courtesy of Hargrove)
Hargrove said the company also has offices in Birmingham and Huntsville and employs more than 700 people in Alabama. Founded in 1995, it describes itself as a 100 percent employee-owned company.
ENR said that together, the Top 500 firms had design revenue of $93.9 billion in 2017, up from $92.8 billion in 2016. Domestic revenue drove the increase, as revenue from overseas outside the United States fell, a decline attributed largely to the oil and gas sector.
Other ranked Alabama firms were Mobile-based Volkert Inc., which rose from No. 94 to No. 87; Montgomery-based Goodwyn Mills Cawood, which rose from 216 to 213; and Mobile-based Thompson Engineering, which rose from 317 to 291.
In a company news release responding to the rankings, CEO Hargrove said that "Listening to our clients and understanding their needs as they relate to project drivers continue to be key factors in our success." Hargrove said that so-called EPCM contracts, in which a single contractor has oversight of Engineering, Procurement and Construction Management, are a company strong point.
"With a strong pipeline of EPCM projects, 2018 is shaping up to be another record year of growth," Hargrove predicted.
That tone of optimism matched the analysis ENR published along with its list. In that story, ENR reported that "The market for major design firms is growing and is poised to continue to grow in the foreseeable future."
However, ENR also said that a "sense of euphoria" seen last year has faded as the wait continues for the Trump administration to deliver on a proposed infrastructure funding package:
"The big question for much of the design world is whether there will be a major infrastructure or transportation funding bill passed by Congress this year," says the analysis. "Without a guaranteed federal funding stream, state and local agencies are constrained from implementing major long-term transportation projects. Most design firms in the market say there is a consensus in Congress that a boost in funding is desperately needed, but they are worried that wrangling over the form it takes will stall any action this year."
Speaking in Mobile on Tuesday, U.S. Sen. Richard Shelby said he intends to make sure that Alabama has "a seat at the table" if and when infrastructure money begins to flow. It would be critical to a plan to enlarge the Mobile Ship Channel in particular, he said.
"There's going to be, we hope, an infrastructure package," said Shelby, the chairman of the Senate Appropriations Committee. "President Trump has talked about an infrastructure package."
The ENR report suggests that if midterm elections produce a significant shift in party power within Congress, negotiations over infrastructure could become more adversarial. One company CEO quoted by ENR said that "an infrastructure bill in 2019 looks like a much more likely scenario" in that case.
Hargrove said he didn't think his company would feel the brunt of such a delay, because its business "is primarily heavy industrial." Moreover, he said, changes in the federal tax code will continue to provide a boost.
"The law enables our clients to expense 100% of their capital investments and assets within the first years of spending on equipment and services like engineering and construction," he wrote. "Our clients have indicated that this tax treatment is allowing them to both kickoff new projects and recommission projects that they've shelved due to previous capital constraints. This essentially incentivizes the manufacturing, refining, and process industries to fast track spending to improve their facilities and products before the benefit begins to sunset in 2022."
ENR releases a series of lists over the years in an effort "to bring structure to an otherwise huge and chaotic construction industry by performing annual surveys of its key segments."
The 2018 list of the top 400 contractors is due this month. Mobile may have dominated the Alabama design contingent, but Birmingham firms likely will have a bigger presence in the contractor rankings.
In ENR's 2017 contractor rankings, five Birmingham companies made the cut: Brasfield & Gorrie LLC at No. 30, BL Harbert International at No. 58, Robins & Morton at No. 77, Hoar Construction at No. 126 and Doster Construction Co. at No. 321. Montgomery-based Caddell Construction Co. was among them at No. 137. Hargrove made its debut at No. 349 and another newcomer, Montgomery-based Sys-Con LLC, was at No. 397.
If Hargrove stays on the 2018 constructors list, it may be the only Alabama firm to appear among both the ENR's Top 500 design firms and its Top 400 contractors.
"Hargrove is an engineering, procurement and construction (EPC) company with the capability to take projects from conceptual engineering to construction and start-up/commissioning," Hargrove wrote. "We can take the project cost, schedule, and execution risks and develop a design-build execution strategy for our clients by subcontracting with construction contractors. Our commitment to excellence covers all aspects of the project and ensures a consistent culture directed towards a safe, efficient, high quality end product."
"Alabama's top contractors and design firms, including Hargrove, deploy across the state (and even regionally, nationally, and internationally.)" he wrote. "We hope to continue making Alabama a hub for innovation and technology jobs."
"What is most significant for Hargrove is our growth alongside our direct competitors in the sectors we serve," Hargrove wrote. He said the company had risen from No. 20 to No. 15 in ENR's Industrial Process/Petroleum category. Within that, he said, Hargrove ranked No. 3 in the chemicals subcategory, No. 4 in pulp and paper, No. 10 in pharmaceuticals, No. 11 in refining and No. 15 in fossil fuel generation.
"I'm incredibly proud of our Team," he wrote. "It all points back to the strong relationships we've built with our clients and within our Team over the past 22 years."