SEAL BEACH — Koll Construction, one of California's largest commercial builders, said it will reorganize its southern regional staff.
The move will eliminate nine management jobs, making it the company's first layoff during the real estate market's relentless two-year slump.
An arm of Newport Beach developer Koll Co., Koll Construction is divided into southern and northern regions. Its southern region has offices in Seal Beach, where it is based, San Diego, Phoenix and Las Vegas. The northern region has posts in Seattle, Portland, Ore., and Northern California.
Three of the staff cuts were made in Koll Construction's Seal Beach office, four in San Diego and two in Phoenix, Vic Laidlaw, executive vice president of the southern region, said Monday. Northern region offices were not affected.
Koll Construction now has about 300 employees, with 167 of them in the southern region.
Laidlaw said the reorganization consolidated "redundant management positions" in the southern region's four offices. "We broadened the responsibilities of some people who once handled a single area and now will handle multiple areas," he said.
For instance, Laidlaw said, the company now has a marketing manager for the entire region, rather than one in each office.
Like other construction companies across California, Koll Construction has been hurt by a lack of new building projects. "Private industry is not going forward due to an excess of product on the market, as well as the problem of financial institutions not lending the kind of money that they did in the past," Laidlaw said.
The company has kept its head above water, however, by taking on government projects and trimming overhead, he said. "Today 25% to 35% of our work is government contracts, while in the '80s it was zero percent," Laidlaw said. "By adjusting the way we handle our business, we are making about the same profits that we did a few years ago."
New government contracts for the company include the renovation of the Newport Beach Library and a new civic center in the city of San Marcos.
Koll Construction's southern division expects to handle more than $250 million worth of new and renovation projects this year. That figure compares with $300 million in projects annually during the late 1980s, Laidlaw said.
Many construction companies that once focused on the private sector are courting government contracts to stay afloat during the recession, said real estate consultant Mike Meyer, managing partner in the Newport Beach office of the accounting firm Kenneth Leventhal & Co.
"In the '80s, their primary source of revenue came from the construction of office buildings, retail centers and industrial parks," Meyer said. "Those sources have virtually dried up. The biggest provider of contracts has become the government."
Koll Construction has also been hurt by its parent company's decline in new building projects, Meyer said. "Prior to the recession, there was quite a bit of interplay between Koll's development and construction arms. Clearly, Koll Construction has had to diminish its reliance on Koll Co. projects."
Laidlaw said that in more prosperous times, 60% of Koll Construction's work was in-house. But this year, fewer than 10% of its projects will come from Koll Co.
Last year, Koll Construction reduced costs by consolidating its Los Angeles and Newport Beach offices at its new headquarters in Seal Beach. No layoffs were made then.
"We didn't cut personnel, but we did cut our rent in half," Laidlaw said.