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I have spent time in your state in the 80’s building two projects,
one in Oxnard and one in Westlake Village. I continue to have
contact with your state through my management consulting work with
construction contractor clients. I only work with these types of
firms. This allows me to offer what I believe to be a deeper
insight into the potential effects of any law or proposed
regulation on construction companies than a general business
consultant. 

I am aware of the clean air initiative in California. It is the
kind of direction worthy and needed by all regardless of nation,
ethnicity, or profession. However, I want to voice my opinion
about its potential impact on our important industry. This is not
about the need for this insightful legislation but, about its
unfair impact for construction contracting companies. 

Construction companies are analogous to the family farm. There are
more owner / operator and closely held firms in construction than
any other kind. Of all construction firms, most are owned by
individuals and / or families and operated by the same in many
cases. These people rely on construction income and thus, profit
to insure their financial futures.

Families working together in the construction industry have a
healthy social consequence making family relations closer, local
and long term. To ignore this fact is to be unobservant of the
quality of a good society. 

Nearly all California Construction Companies are home grown, will
stay in California and will continue to be an “insitu” industry to
your leading state. Economic winds will blow some industries across
the world but, construction companies (and their sister demolition
firms) will not be exported. They will stay local and thus,
important to California’s economy. 

Information provided by Risk Management Associates (RMA) deserves
careful consideration. We are using Annual Statement Studies –
Financial Ratio Benchmarks / 2005 – 2006. This publication is a
statistical compilation of source documents furnished to banks and
other lending institutions. It is information in which we can be
statistically confident. 







The average profit before tax for contractors is currently less
than 5%. As a breakdown:
•	Heavy / Highway Contractors (composite of multiple NAICS)
		2.6%
•	Site Preparation Contractors (NAICS 238910) 				3.3%
•	Highway, Street and Bridge Construction (NAICS 237310)		3.3%
•	Other Heavy and Civil Engineering Construction (NAICS
237990)	3.8% 
As shown above, there is very little room between profit and loss.
Construction contracting is not a generous business. If demands of
the new legislation are sudden, thoughtless and otherwise unfair,
then bankruptcies are certain to rise (construction is the second
riskiest industry currently). Subsequently, costs to Californians
will rise in governmental and business costs in among other
things, uncompleted contracts, uncollectible debt and business
expansion delays. 

Most construction is built by small business. According to RMA,
approximately 65% of all construction companies have 10 employees
or less. These are not large faceless enterprises but, ones
comprised of a few individuals who are working as a team and who
are impacted greatly with changes. These small businesses may be
unfairly treated by the implementation of the regulations. I
strongly feel care should be taken in the formulation of these
rules. 
 
We don't debate the need for clean air and in essence, the health
prospects of the citizens of California. We do debate the
unilateral burden that the preliminary legislation places on
construction company owners and their families.