In ranking the state's largest general contractors, we find their projects aren't the only things that keep going up.

People are very bullish on the construction industry in North Carolina, even for the long run," says Michael Walden, an economics professor at N.C. State University. "It's not just that it's a boom economy. It's that so many people are moving here. Buildings follow people."

The money is there, too. In a flurry of bond referendums, the state and counties have earmarked more than $2 billion for school construction and renovation, with more on the way. And from 1996 to 1997, state funding for highways doubled, to $392 million.

In Raleigh, retail space - which some industry watchers predicted would be overbuilt in 1997 - was at a low 4.6% vacancy rate at the start of 1998. In Mecklenburg County, 3.4 million square feet of office space was under construction, according to Cary-based Karnes Research Co. That's a record for the '90s, though Frank Warren in Karnes' Charlotte office points out that 2 million of that is in three skyscrapers the banks are building downtown.

Increased government spending is good news for Charlotte-based McDevitt Street Bovis, the South Atlantic division of parent Bovis Inc. Work on Charlotte-Mecklenburg schools and private commercial projects helped land it at No. 2 on BNC's first ranking of the state's busiest general contractors. The company is managing 14 local-school projects, including three new schools. "These are pretty exciting times," says Larry Atkins, president of the South Atlantic region. McDevitt Street Bovis is bidding for a second contract to refurbish and build Mecklenburg schools. The county passed $415 million in bonds last year, and in late February it was still deciding how to split up the contracts.

North Carolina's 30 largest contractors are typically well-established - they've been working in the state an average 48 years. But only 14, less than half, are locally owned. Out-of-state U.S. companies own nine. Foreign conglomerates such as Hanson PLC own seven. Of the five largest, three answer to owners outside North Carolina.

Two-thirds listed office construction as one of their three main fields, and more than half mentioned industrial construction. Because of the boom in health-care construction, particularly hospitals, 12 cited medical facilities. Seven get a large share of their revenue from highways. Others work on projects as varied as churches and sports venues. Perhaps the most unusual projects were Rentenbach Constructors Inc.'s work on the state's first casino, Harrah's Cherokee Casino, and Miller Building Corp.'s construction of the first private prisons in the state, in Spruce Pine and Bayboro.

The sprouting skyscrapers in downtown Charlotte boosted Shelco Inc. to No. 1, with its work on projects such as 10-story [TABULAR DATA OMITTED] Transamerica square. Among the top 10, McDevitt Street Bovis, No. 4 FN Thompson Co. and No. 6 J.A. Jones Construction Co. are also based in Charlotte, though each is owned by an out-of-state company. Raleigh had two contractors and the Triad none among that first tier.

If you combine sister companies, FN Thompson and No. 30 Suitt Construction Co., both owned by Birmingham-Ala.-based BE&K Inc., total $235 million in revenues, which would be second-best. Close behind, at $230.5 million, would be the duo of J.A. Jones Construction and No. 20 Rea Construction, both owned by Charlotte-based J.A. Jones Inc. The combo of No. 10 DJB Construction Group and No. 12 Fowler Jones Beers Construction, both part of Atlanta-based Beers Construction Co., had $210 million.

The largest Raleigh-based company is No. 9 Clancy & Theys Construction Co. It pulled off its best year ever in 1997. Two-thirds of its $222 million in revenues came from this state, building a nursing-home development in Charlotte, an office in Cary for contract-research company Clintrials Research Inc. and additions to Kenan Stadium at UNC Chapel Hill. "That diversity is a survival tactic," says Scott Cutler, marketing vice president. "They are good times now, but we all know the industry and the economy are cyclical." Now is the time to develop several specialties, he says. If one sector gets overbuilt, you can emphasize another. "When the economy slows, this industry will be too crowded."

Contractors' worry at the moment, though, is the tightening labor market. They have to entice workers away from other companies, then battle to hold on to them. Higher wages and competition for benefits are hurting small contractors. "Right now we're competing for a set pool of employees," Atkins at Bovis says. "Companies will have to spend money on training, on technology, on benefits." General contractors expect labor costs to increase 6% in 1998, according to a survey by the Carolinas Associated General Contractors.

The competition for subcontractors is also fierce, and that is raising the price of projects. It can also delay construction as electricians and plumbers juggle a number of jobs. That means boom times don't necessarily mean fast times. "When the economy slows, building schedules speed up," Cutler at Clancy & Theys says.

The heaviest building is once again in the biggest cities. "This year we're going to continue to see a lot more construction in the Triangle and Charlotte," says analyst Eric Karnes of Karnes Research. While vacancy rates in the Triangle are low for office and flex space, 1.8 million square feet of both were under construction in January. In Charlotte, office and warehouse space was still in demand. "Last year was a record for these sectors," Warren of Karnes Research says. "And they continue to be very active."

For 1998, the hottest areas are likely to be Charlotte and the coast, according to the AGC survey. Contractors statewide expect a 10% rise in activity, with the biggest bump coming in highway construction.

A majority of the top 30 contractors are based in Charlotte, Raleigh or the Triad. Outside the major hubs, Miller Building of Wilmington tied for No. 5, due in part to the prison work. It continues to be family-run. No. 8 John S. Clark Co. bucks two trends. Not only is it based in tiny Mount Airy, it is moving in the opposite direction of industry consolidation. Managers bought the company from its New York City-based parent, Clarendon National Insurance Co., in December 1997. Clarendon had taken it over in 1990.

The construction industry is still heavy with midsize firms, a situation that most contractors expect to change, but not overnight. "We'll see consolidation - we already have," says Cutler from Clancy & Theys. But there's no pressure to force a merging spree just yet. "Right now there's just so much work to go around."