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Jim Roherty

Head of Pacific Building Group sees health care sector as bright spot

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The ability to define the result of months of work in the accomplishment of a single project is what Jim Roherty, president of Pacific Building Group, enjoys most about the construction business.

Pacific Building Group works primarily in the commercial and health care sectors. Recent projects include work at the Callaway Golf Co. (NYSE: ELY) headquarters in Carlsbad and work at construction of Sony Electronics Inc.'s corporate headquarters in Ranch Bernardo. The Sony project received awards from the San Diego chapters of both the Associated General Contractors and Associated Builders and Contractors.

Pacific Building Group has been challenged by an estimated 20 percent decrease in commercial construction projects the company has observed during the past two years, Roherty said. He expects 2010 will be even more challenging than 2009.

A number of the contractor's projects have been delayed due to economic conditions, he said. The types of projects affected include a mix of smaller office buildings and retail centers.

Pacific Building Group is using the downtime to improve its systems, processes and services, with hopes of emerging as a stronger contractor when the market recovers, Roherty said.

"At some point people will still need retail centers and office buildings," he said.

Health care will be the bright spot in the market due to government regulations that require hospitals to complete upgrades in order to improve structural safety. Such projects require a high level of technical expertise, which creates opportunities for companies such as Pacific Building Group that possess the necessary skills and experience, Roherty said.

Pacific Building Group plans to continue expanding its medical construction division to meet the needs of the market and gain a larger market share, he added.

The company also plans to expand into the federal market, particularly in the military sector, which has seen a significant increase in project volume in the past year, Roherty said. Rather than serving as a general contractor, Pacific Building Group will likely partner with a pre-qualified contractor and serve in a subcontractor role.

Teaming up with an experienced military contractor will help Pacific Building Group succeed in the market, Roherty said. He is concerned with the emerging trend of contractors entering markets in which they do not have the skills or knowledge of regulations to succeed. Such has become the case all too frequently in the health care construction market.

Contractors that specialized in homebuilding are bidding on projects in healthier markets, such as medical buildings, to keep their struggling businesses afloat, Roherty said. He expects in coming years owners will have problems with inexperienced contractors on such projects.

Such problems aside, for qualified contractors, state-mandated retrofit and remodel projects at hospitals will continue to provide work for qualified contractors, Roherty said.

"We expect health care to continue as a bright spot for years to come," he said.

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