Other Specialty Trade Contractors (NAICS 2389): An Investor's Primer

NAICS 2022 code 2389 is an "industry group" — the four-digit level of the North American Industry Classification System (NAICS), the standard federal taxonomy for grouping businesses [1]. This is a rollup page: it synthesizes the two industries beneath it (23891 and 23899) and gives the group's own ground-truth federal figures. The full company-level detail lives in the child primers, which this page points to rather than repeats.

1. Overview

NAICS 2389 is the "everything else" corner of the U.S. specialty construction trades — the on-site jobs that don't fit the named categories (foundations and exteriors, mechanical trades, or interior finishing). In practice it holds two very different businesses: the dirt-moving trades that come first on a jobsite (clearing, grading, excavating, demolition, trenching), and a grab-bag of residual specialties that come at the edges of a job (fencing, driveway and lot paving, swimming pools, crane rental with an operator, scaffolding, sandblasting, sign erection, manufactured-home setup) [1].

For an investor, three facts define the whole group. It is large — roughly a quarter-trillion dollars of annual receipts. It is extraordinarily fragmented — one of the least-concentrated industry groups the federal government measures. And it is hard to buy in public markets — there is no pure-play listed stock for either child, so public exposure is indirect (buried inside diversified builders, equipment makers, or adjacent product companies) while the real ownership, and the real opportunity, is private: family firms, small independents, and private-equity roll-ups.

The distinctive thing about this level is the contrast between its two children, so that is where this primer leads.

2. What's inside — the two children and how they differ

An "industry group" (4-digit) splits into "industries" (5-digit), which split again into "national industries" (6-digit). NAICS 2389 has two children, and each is a pass-through to a single 6-digit industry — so 23891 = 238910 and 23899 = 238990. The interesting split is not within the children but between them.

The single most useful contrast: Site Prep earns two-thirds of the group's revenue from roughly half its establishments. Its firms are bigger and more capital-intensive because moving earth requires owned fleets of heavy machines; revenue per employee runs about $336,000 versus roughly $268,000 in All Other [2][3]. All Other is more of a long tail of small, labor-led operators — which is also why it is slightly more concentrated at the very top (a handful of national crane and scaffold players lift its four-firm share), even as it is more fragmented at the bottom.

Scope and exclusions (unchanged from the children). The group excludes poured-concrete and exterior foundation work (NAICS 2381), the mechanical trades — electrical, plumbing, and HVAC (heating, ventilation, and air-conditioning) (2382) — the finishing trades (2383), public road and bridge paving (237310), utility-line work (2371), land subdivision (237210), and equipment rental without an operator (532412) [1].

3. Size (this level's rollup figures)

These are the ground-truth federal figures for NAICS 2389 from our dataset. Receipts and concentration are from the 2022 Economic Census; establishments, employment, and payroll are from County Business Patterns (CBP) 2023. They come from different Census products and should not be combined into one denominator.

The children add up cleanly into these totals — receipts ($158.7B + $82.8B = $241.5B), establishments (41,777 + 42,748 = 84,525), employees (472,783 + 309,293 = 782,076), and payroll all reconcile [2][3]. (The firm count is a hair below the naive sum because a firm working in both sub-trades is counted once at the group level.)

Least-concentrated in the economy. The four largest firms take just 2.3% of group revenue — the "CR4," or four-firm concentration ratio; the top 8, 3.5%; the top 20, 5.9%; the top 50, 9.6% [3]. The Herfindahl-Hirschman Index (HHI, a 0–10,000 concentration score where anything under 1,500 counts as "unconcentrated") is 3.2 — essentially zero [3]. The group figure sits right next to Site Prep's because Site Prep dominates the revenue; All Other is modestly more concentrated on its own (its four-firm share is about 5.1%) [3].

Undercount caveat. CBP counts only employer establishments — those with at least one paid employee — and excludes the self-employed, businesses without an Employer Identification Number (EIN), and EIN holders with no employees [4]. Both children have low barriers at the small end (one operator and one machine, or one crew and a truck), so each carries a long tail of nonemployer sole proprietors the Census tabulates separately [4]. Our dataset has no nonemployer count for code 2389, so we flag the direction of the bias — the true number of operating businesses is a large multiple of the 84,525 employer establishments, and total economic activity exceeds the $241.5 billion employer receipts — without inventing a figure. Read the receipts number as the anchor for the employer footprint, not the whole industry.

4. Investable universe (where value concentrates across the children)

There is no clean public pure play for either child, so value clusters in different places for each.

• Site Prep (23891). The closest listed proxy is Sterling Infrastructure, whose large-scale site-development segment builds data-center and factory pads; it owns Plateau Excavation. Partial, diversified exposure comes from Granite Construction, Construction Partners, MasTec, Tutor Perini, and Primoris; Great Lakes Dredge & Dock is the listed marine-earthmoving cousin. The heart of the trade, though, is private — H&K Group, Kokosing, Kiewit, PCL, and thousands of regional excavators [5][6][7].
• All Other (23899). Public value sits in adjacent names, not on the jobsite: pool makers and distributors (Latham Group; Pool Corporation) ride pool demand but earn in the factory and warehouse; Construction Partners and Sterling touch driveway/lot paving and residential site work. The genuinely-238990 crane, scaffold, and rigging operators (BrandSafway, Mammoet, Sarens, Barnhart, and others) are almost all private or PE-sponsored.

Across the whole group, the "picks-and-shovels" exposure is the same: the equipment makers (Caterpillar, Deere) and rental firms (United Rentals, Herc) that sell into the entire fragmented contractor base. For most investors the real access route to NAICS 2389 is private — owning or backing an operator or platform — not a brokerage account. Tickers and multiples are in Section 10 and, in full, the child primers.

5. How the money works

These are project-based, bid-driven businesses. Most work is won competitively on fixed-price (lump-sum) or unit-price terms — so much per cubic yard moved, per linear foot of fence, per crane-hour — so the estimate is the business. The forward gauge is backlog (signed but not-yet-built work); cash lags revenue because of upfront mobilization costs and retainage (money the customer holds back, typically 5%–10%, until completion) [7].

The profit lever splits by how capital-intensive the work is:

• Equipment-heavy trades — excavation, cranes, scaffolding, rigging — live and die on fleet utilization. An idle owned machine costs more per day than it bills, and higher barriers to entry support more durable pricing.
• Labor-led trades — fencing, paving, pools, sealcoating — earn on crew productivity, accurate estimating, and repeat work, with far less fixed capital.

Because Site Prep is overwhelmingly equipment-heavy and All Other is a blend, the group's economics tilt toward utilization and estimating discipline. Margins vary widely: independent excavators commonly clear mid-single-digit to low-teens net margins, while scaled players on complex data-center sites earn much more (Sterling's site-development segment reached adjusted operating margins near 25% in 2025) [5][17][18]. The recurring maintenance revenue inside All Other — pool service, sealcoat re-do cycles, industrial access and outage work — is the prize, and the reason roll-ups chase service over one-and-done installation.

6. Demand drivers

This is a derived-demand group: it tracks how much construction is starting, magnified by site size, and split across two cycles.

• Data centers and reshoring — the dominant current pull. The AI build-out is generating enormous earthwork on compressed schedules (U.S. data-center construction was running near a $45 billion annual rate in late 2025), and semiconductor fabs (spurred by the CHIPS Act, the 2022 chip-manufacturing subsidy law) and battery plants are massive site jobs [10][12]. This lands hardest on Site Prep.
• Housing turnover and remodeling. New owners fence yards, repave driveways, and add pools — the swing factor for much of All Other, and sensitive to mortgage rates and home equity.
• Public infrastructure. The Infrastructure Investment and Jobs Act (IIJA, the 2021 law) authorized roughly $1.2 trillion, feeding roadway and utility grading; 2026 is its final authorized year, with a "funding cliff" risk after [11].
• Industrial maintenance and replacement cycles. Plant outages and access work (crane/scaffold), plus the fact that asphalt needs resealing and fences and pool liners wear out, create a less-cyclical baseline — a feature more pronounced in All Other than in Site Prep.

7. Regulation

Regulation here is operational and project-level — safety, environmental, wage, and licensing — not industry-wide price control. The core touchpoints, drawn from both children:

• Safety. The Occupational Safety and Health Administration (OSHA) governs trenching under 29 CFR (Code of Federal Regulations) 1926 Subpart P — cave-in protection is required at five feet or deeper — and, for the All Other trades, cranes, scaffolds, fall protection, and respirable silica [13].
• Environmental. Work disturbing one acre or more needs a Construction General Permit under the U.S. Environmental Protection Agency's (EPA) National Pollutant Discharge Elimination System (NPDES), with a Stormwater Pollution Prevention Plan (SWPPP); wetlands work can require a Clean Water Act (CWA) Section 404 permit from the U.S. Army Corps of Engineers [14][15].
• Wage, bonding, and specialty codes. The Davis-Bacon Act sets prevailing wages, and the Miller Act sets bonding, on covered federal work; pool-safety codes and U.S. Department of Housing and Urban Development (HUD) standards for manufactured-home setup apply to specific All Other trades [16]. Local grading, licensing, bonding, and dust and haul-route rules add cost and schedule risk everywhere.

The investment consequence is schedule and cost uncertainty on fixed-price contracts. Full maps are in the child primers.

8. Consolidation

Extreme fragmentation is the defining feature of the whole group — a four-firm revenue share of 2.3% and an HHI of 3.2 [3] — and consolidation is accelerating from two directions:

• Bottom-up roll-ups. Private equity (PE — firms that buy companies) is combining small contractors into regional platforms in excavation, pool service, paving/sealcoating, and fencing; construction-services mergers and acquisitions (M&A) ran to hundreds of deals in 2025 [8][9].
• Top-down scale. Megaproject site work rewards large fleets, rapid mobilization, and bonding capacity that small firms can't muster — Sterling's roughly $400 million acquisition of Plateau Excavation is the marquee public example — while the crane, scaffold, and rigging sub-trades already have national and global (mostly private) scale players [6].

No single consolidation thesis fits the whole code, because Site Prep and the All Other sub-trades differ in customers, assets, and barriers. Expect the top of each market to keep concentrating while the long tail stays fragmented.

9. Risks

• Cyclicality and interest rates. Demand falls with the construction cycle; high-ticket discretionary work (pools) and rate-sensitive housing turnover get hit first, and a downturn idles equipment-heavy fleets fast.
• Fixed-price execution. Underpricing, or hitting unforeseen rock, groundwater, contamination, or weather, falls on the contractor.
• Theme concentration. The current boom leans on a handful of hyperscale data-center buyers; a pullback in AI capital spending would hit the fastest-growing (Site Prep) segment hardest.
• Labor scarcity and capital intensity. Skilled operators are hard to replace, and heavy equipment ties up cash when utilization drops.
• Working capital, bonding, and input costs. Retainage, slow-paying general contractors, and "pay-if-paid" clauses strain liquidity; limited surety capacity caps bidding; diesel, asphalt, steel, and cement can move faster than fixed contract prices [7].
• Policy cliffs. IIJA funding runs through 2026 and the CHIPS construction incentive deadline is end-2026 — both could soften demand afterward [11][12].
• Data risk specific to reading this code. The low headline concentration can hide much higher concentration within a specific local niche, and the employer statistics omit nonemployer operators.

10. How to invest and outlook

Public routes are indirect only. There is no pure play for either child, so use the NAICS code as a screening starting point, not an investable definition, and value the relevant segment — not headline revenue — on normalized earnings and real free cash flow. The cleanest listed exposure is Sterling Infrastructure (STRL, Nasdaq) for site development, though it has re-rated sharply on the data-center theme; Granite Construction (GVA) and Construction Partners (ROAD) blend sitework, civil, and materials; MasTec (MTZ), Tutor Perini (TPC), and Primoris (PRIM) give diversified partial exposure; pool names (Latham/SWIM, Pool Corporation/POOL) are the adjacent play for the All Other side; and equipment makers and renters (Caterpillar, Deere, United Rentals, Herc) are a less company-specific bet.

Private routes are where the group lives. Own or back a regional excavation, paving, fencing, pool-service, or crane/scaffold operator (small firms trade around low-to-mid single-digit multiples of EBITDA — earnings before interest, taxes, depreciation, and amortization) [17]. Underwrite at the job level: normalized owner pay, maintenance capital expenditure, working capital, backlog quality, claims, permits, safety history, bonding, and customer concentration — and keep leverage conservative.

Outlook. Constructive but uneven, because this group is two cycles in one code. Site Prep is unusually strong near-term thanks to AI data centers and reshoring, with richer margins on complex mission-critical sites; the All Other trades ride a housing-turnover recovery as mortgage rates ease, cushioned by a steadier industrial-maintenance and replacement baseline. Public infrastructure spending should peak in 2026 as the IIJA runs its final authorized year. Watch the 2026 policy cliffs, the durability of AI capital spending, and interest-rate-sensitive housing. For the company-by-company breakdown, valuation checklists, and private-diligence guides, see the 23891 Site Preparation and 23899 All Other Specialty Trade Contractors primers.

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Sources

1. U.S. Census Bureau. 2022 NAICS Definitions — 238910 Site Preparation Contractors and 238990 All Other Specialty Trade Contractors (scope, illustrative activities, cross-references). 2022. https://www.census.gov/naics/?input=2389&year=2022
2. U.S. Census Bureau. County Business Patterns: 2023 (NAICS 23891 / 23899) — establishments, paid employees, and payroll. 2025. https://www.census.gov/programs-surveys/cbp.html
3. U.S. Census Bureau. 2022 Economic Census — Concentration of Largest Firms and receipts, NAICS 23891 / 23899 (EC2200SIZECONCEN). 2025. https://api.census.gov/data/2022/ecnsize/groups/EC2200SIZECONCEN.html
4. U.S. Census Bureau. County Business Patterns Methodology and Nonemployer Statistics. 2026. https://www.census.gov/programs-surveys/nonemployer-statistics.html
5. Sterling Infrastructure, Inc. Fourth Quarter and Full Year 2025 Results and 2026 Guidance. 2026. https://www.strlco.com/news/sterling-reports-strong-fourth-quarter-and-full-year-2025-results-and-issues-full-year-2026-guidance/
6. Sterling Infrastructure, Inc. Sterling Completes Acquisition of Plateau Excavation, Inc. 2020. https://www.strlco.com/news/sterling-construction-completes-acquisition-of-plateau-excavation-inc-and-enters-into-new-credit-agreement/
7. Granite Construction, Inc. 2025 Annual Report (Form 10-K). 2026. https://www.sec.gov/Archives/edgar/data/861459/000086145926000014/a2025annualreport.htm
8. Construction Dive. Why private equity's rollup of construction firms increases project risk. 2025. https://www.constructiondive.com/news/private-equity-risk-construction-affiliated-contractors/822534/
9. Capstone Partners. Construction Services M&A Update. 2025. https://www.capstonepartners.com/insights/article-construction-ma-update/
10. Construction Dive. Data center construction rolls into 2026. 2026. https://www.constructiondive.com/news/data-center-construction-rolls-into-2026/808636/
11. The Bond Buyer. Transportation infrastructure rides into final year of IIJA with record spending expected. 2026. https://www.bondbuyer.com/news/transportation-infrastructure-rides-into-final-year-of-iija-with-record-spending-expected
12. Congressional Research Service. Semiconductor Fabrication Facilities Funded by the CHIPS Act: Project Status. 2025. https://www.everycrsreport.com/reports/R49031.html
13. U.S. Occupational Safety and Health Administration. Trenching and Excavation — Construction (29 CFR 1926 Subpart P). 2026. https://www.osha.gov/trenching-excavation/construction
14. U.S. Environmental Protection Agency. Stormwater Discharges from Construction Activities (Construction General Permit / SWPPP). 2026. https://www.epa.gov/npdes/stormwater-discharges-construction-activities
15. U.S. Environmental Protection Agency. Permit Program under Clean Water Act Section 404. 2026. https://www.epa.gov/cwa-404/permit-program-under-cwa-section-404
16. U.S. Department of Labor. Fact Sheet #66: The Davis-Bacon and Related Acts. 2023. https://www.dol.gov/agencies/whd/fact-sheets/66-dbra
17. CT Acquisitions. Excavation Business Valuation: 2026 Multiples by Segment. 2026. https://ctacquisitions.com/guides/excavation-business-valuation/
18. The Construction CFO. Excavation Contractor Net Profit Margin. 2025. https://constructioncfo.net/excavation-contractor-net-profit-margin