News Column

Surviving the Housing Slump

June 2007, HISPANIC BUSINESS Magazine

Frank Nelson

Related Group CEO Jorge Perez
Related Group CEO Jorge Perez

Nationwide housing woes have sent the HISPANIC BUSINESS 500 construction sector into a tailspin with 90 companies reporting a combined 20 percent decline in 2006 revenues.

The Related Group of Florida, last year's No. 1 company, absorbed the brunt of the impact, dropping 56 percent in year-over-year revenues after being crowned the first $3 billion company in Hispanic Business 500 history in 2006. The average company revenues in this year's construction sector dropped by 22 percent, more than any other sector.

But the slowdown in the housing market is not all bad news, according to Matthew Allen, COO and CFO of The Related Group, which remains the dominant Hispanic-owned company in the construction sector.

The Miami-based company, which was started by CEO Jorge Perez in 1979, posted revenues in excess of $1.4 billion last year and, despite a persistent industry-wide contraction, Mr. Allen is forecasting 2007 figures of around $1.6 billion.

One positive factor, Mr. Allen says, is that much of the excess inventory on the market is now being absorbed, something he expects to help the industry bounce back within a couple of years. Another plus is that the cooling U.S. market has encouraged The Related Group to expand its horizons from projects in Baja California, Mexico, the company has pushed farther south into Panama, Colombia, and Uruguay.

But Mr. Allen admits 2006 was a struggle. The Related Group reported revenues of $2.1 billion for 2004 and a whopping $3.2 billion for 2005, but 2006's figures show a 56 percent year-over-year decline.

"We've had our challenges," says Mr. Allen, whose company's two-year reign atop the Hispanic Business 500 ended this year as it slipped to No. 4. "The expansion south is creating an alternative to the domestic market."

MasTec Inc., another Florida-based company, boasts 200 nationwide locations and 9,200 employees who build, upgrade, and maintain underground and aerial communications and utility infrastructures for new and existing buildings. The Miami-based specialty contractor [No. 6 on the Hispanic Buisness 500] works on federal and municipal government projects and for industrial clients such as gas, water, and electric utilities, phone companies, and those installing cable and satellite television.

President and CEO Jose Mas presides over a business that has grown steadily in recent years. Revenues were $807 million in 2004, $848 million in 2005, and it jumped to $946 million last year. The company's 2007 forecast calls for revenues in excess of $1 billion.

Commercial general contractor Thos. S. Byrne Ltd., based in Fort Worth, Texas, has been around for 83 years, so when John Avila Jr. bought the business in 1995, the last thing he wanted to do was change the name.

While the company builds offices, retail outlets, aviation facilities, hospitals, and hotels, Mr. Avila, the president and CEO, says it is perhaps best known for cultural centers, museums, and performing arts centers. Such projects include the $7.7 million Latino Cultural Center in Dallas.
Last year, the No. 45 company posted revenues of $165 million and Mr. Avila expects similar results in 2007. "We're trying to sustain our size rather than grow," he explains. "That lets us be more selective in the types of projects we choose. We are not volume-driven. We're quality-driven."



Source: HISPANIC BUSINESS Magazine and Hispanicbusiness.com, Copyright (c) 2007 All Rights Reserved.


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