If it wasn’t clear before, the 2010 Profile of the Electrical Contractor, featured in the past two issues of this magazine, settles the question unequivocally: The economy has had a serious impact on electrical contractors (ECs).
Almost 40 percent of the contractors who responded to the survey on which the Profile is based lost employees since the downturn set in. Most of those losses are directly attributable to “the bursting of the residential bubble” and declines in new construction across most sectors that resulted in significant reductions of revenue for many electrical contractors. As the Profile states, “Some ECs have changed their business models altogether to adapt to the major disturbances in the market.”
I note, however, that this scenario can be viewed several ways: as negative and depressing, as no more than a simple statement of truth to be read and then filed away, or as an inducement to positive action. I’m an optimist, so you can guess where I’m heading with this.
The facts show a definite majority (53 percent) of electrical contractors were able to retain the same number of workers during the recession, and this was especially true for the smallest firms. Another 8 percent actually added employees. And, while “the economy took many ECs back under the $250,000 revenue mark that were above it for the 2008 survey,” larger firms didn’t change much in terms of revenue.
As for that quote about contractors changing their business models to adapt to hard times? I see the evidence that “ECs branched out into new project types to fill gaps created by less new home and CII [commercial, industrial, institutional] construction” as a positive testament to the indestructible resiliency of the electrical contracting industry.
Of course, it’s not the industry it used to be.
I see it as bigger and better, with a significant and ongoing increase in new types of projects in which ambitious contractors can succeed. While many contractors are filling the gaps with maintenance, service and repair work, that work is—in many cases—vastly more technically advanced than the kind of work that would have been described by those three words not so very long ago.
In addition, there has been a dramatic increase in the percentage of ECs involved in green/sustainable building and alternative-energy projects—almost 60 percent of those contractors accounted for in the 2010 Profile, up from 46 percent two years ago. Electrical contractors have stepped up their involvement in LEED projects, solar/photovoltaics, and wind generation significantly. More mundane types of green work (such as energy audits and energy-efficient lighting retrofits) are now performed routinely.
Obviously, traditional power/lighting work continues to be a mainstay, with 94 percent of ECs performing in this area. Electrical power distribution still provides the largest chunk (54 percent) of revenue (though that figure has been declining steadily).
However, about two-thirds of the survey respondents are providing services related to power quality, communications/systems connectivity and/or CII automation/controls, and more than 50 percent are involved with residential automation/controls and/or alternative energy/sustainable building technology. About 50 percent are working with radiant/electric heat and preassembly and/or prefabrication of electrical components—classifications that weren’t even queried in the 2008 Profile. A surprisingly large segment (almost 40 percent) is actively engaged in systems integration or work in data centers. In all, the Profile lays out 35 distinct types of work performed by today’s electrical contractors, and that’s not counting types of work in the “other” category.
And those are just a few of the things I learned from the 2010 Profile of the Electrical Contractor. It touches on many other topics—the contractor’s role in design, specification and brand selection and the ramifications of an aging work force, for example. I will have more to say about the Profile in future columns. In the meantime, I hope you will give it your full attention and learn from it. It’s posted at www.ECmag.com for permanent reference.
The most important thing you can learn from the Profile, and the point of this column, is: “Adapting to the changing dynamics of the market is critical to a company’s long-term health.” It’s not always easy. It almost always involves re-education, and perhaps some painful adjustments, for management and productive employees alike. But it is definitely doable. The thousands of ECs who adapted their way to their own economic recovery attest to that, and the numbers show it.