SIC 1629 Heavy Construction, Not Elsewhere Classified

 
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SIC 1629

This classification covers general and special trade contractors primarily engaged in the construction of heavy projects, not elsewhere classified.

NAICS CODE(S)

234930

Industrial Nonbuilding Structure Construction

234990

All Other Heavy Construction

INDUSTRY SNAPSHOT

The heavy construction business is divided into several specific categories that represent separate building and development industries. There remain, however, multiple specialty construction activities that cannot be easily classified. Consequently, this miscellaneous heavy construction industry was named to encompass and represent these specialties. This industry is composed of companies primarily engaged in the construction of heavy projects not classified elsewhere. The array of categories in this group include athletic field and golf course construction, clearing of brush and land, land drainage, canal and channel construction, chemical complex or facilities construction, dam and dike construction, hydroelectric plant and petrochemical plant construction, missile facilities construction, pier, wharf and waterway construction, pond construction, power plant construction, and railroad construction.

The structure, history, and current status of this industry is closely related to, and often overlaps, the major divisions of the overall construction industry. Therefore, this entry stresses many of the unique specialties that are considered miscellaneous, and serves to tie-up loose ends of the heavy construction market that are not addressed in other standard industrial classifications. For more information on the structure and history of this industry, see related entries in the heavy construction industry.

The U.S. construction industry overall continued to grow throughout the late 1990s, largely as a result of a strong economy, which drove building in both residential and nonresidential markets. However, by the early 2000s, as the U.S. economy weakened considerably, this trend had reversed. Based on a 2003 ENR survey of the top 400 contractors, revenues fell by 3.2 percent in 2001 and by another 2.9 percent in 2002. Estimated 2002 domestic revenues for all establishments in this classification were $174.79 billion, compared to $200.93 billion in 2001. International revenues declined by 10.9 percent to $19.6 billion in 2002.

Apart from a weak economy, factors influencing the decline in this industry were the terrorist attacks of September 11, which devastated the U.S. insurance industry, and the Enron scandal and subsequent bankruptcy, as well as various other highly publicized discoveries of corporate fraud and accounting irregularities. As the economy worsened, declining tax revenues and funding cuts prompted state and local governments to tighten their construction budgets.

Despite the troubles of the early 2000s, prospects for the near future in this industry were generally considered favorable by industry analysts and insiders. The opening of foreign markets to American construction companies created great potential for further international growth, while domestic funding for government-based initiatives was expected to increase as the economy slowly recovered. The transportation sector is expected to perform particularly well.

ORGANIZATION AND STRUCTURE

Because the miscellaneous heavy construction industry is actually a conglomeration of many distinct activities performed by diverse companies, there is not a formal structure by which it is characterized. Likewise, few statistics exist that provide a representative picture of the companies within the industry or the markets that they serve. Many of the firms in this industry are active in several areas, while others are highly specialized. Furthermore, it is difficult to distinguish this classification from other sectors of the overall construction industry because many of the miscellaneous activities are closely related to other markets. For instance, aqueduct construction is not part of this industry, but both canal building and waterway development are included. Similarly, subway tunnel construction is part of the industry, but highway tunnel work is not encompassed by this classification.

Most companies in this industry usually act as general contractors for specific construction projects. This means that they sign a contract with the entity for whom the job is being done and are responsible for seeing that all work pertaining to the job is accomplished. Responsibilities of general contractors include hiring and managing sub-contractors. In some cases, however, companies in this industry act merely as sub-contractors, serving as part of a team of companies working to construct a project rather than orchestrating and managing the entire job.

Although huge multinationals dominate the top 10 lists of industry leaders, most companies in this industry are quite small. According to the latest U.S. Census Bureau statistics available, 15,475 establishments were classified as Heavy Construction, n.e.c., with a total of 192,974 employees—an average of 12.5 employees per establishment, which marks a decline from the average of 19.2 in 1992. The vast majority of establishments indicated that at least 51 percent of their business was specialized; taking into consideration both the number of establishments and the size of those establishments, the most common areas of specialization included conservation and development, sewage and water treatment plants, and mass transit construction. Larger corporations may achieve specialization through divisions and subsidiaries, or through joint ventures with more specialized firms.

Industry Divisions

Many of the miscellaneous projects in the heavy construction industry are so irregular that they cannot be comfortably categorized with a significant number of other activities. For instance, removing underwater timber and extinguishing oil well fires are both relatively distinctive enterprises. On the other hand, a few broad categories exist that encompass many of the miscellaneous activities, and thus bring some order to this industry classification.

A 2003 survey of the top 400 contractors broke down as follows: 50.6 percent of 2002 revenues in the construction industry came under the general category of building, most of which does not fit into this classification. The remaining 49.4 percent was split among various specialties, including several in this classification.

Transportation took 13.3 percent of the market, with $25.8 billion in revenues. Some of the projects included in this miscellaneous heavy construction field are subways, railroads, and canal construction, including repair work on existing projects. Nearly 400 companies specialized to some degree in mass transit construction alone.

Power-related construction had 9.7 percent of revenues, with $18.8 billion dollars. Construction projects that fall under this category include new power plants, conversion of existing power plants from oil and gas to coal, modernization of power plant buildings, and myriad modern, unconventional power plant projects, which are spurred by technological advances. With the inclusion of power and telephone lines, roughly 500 establishments specialized to some degree in this sector of the industry.

Sewage and wastewater treatment, and related projects, took 1.7 percent of the market, with $3.3 billion in revenues. Work in this category primarily entails contracts related to water and sewage treatment plant construction and renovation, including filtration and desalinization plants. Sewer and water line development is not considered part of the miscellaneous heavy construction industry. Nearly 700 establishments considered this one of their specialties.

Other water projects, such as reservoirs and dams, represented 1.6 percent of the market, with $3.0 billion in revenues. Spending on water construction remained relatively steady through the late 1990s, although it also felt the effects of the economic downturn in the early 2000s.

The "Other" category had 2.0 percent of the total market, with $3.7 billion dollars. A few of these...

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