There’s no question that lighting is one of the most important aspects of any electrical contractor’s bid package. Lighting in many cases is the largest portion of their jobs. With the “2001 Lighting Survey,” ELECTRICAL CONTRACTOR magazine hopes to shed some light on the role electrical contractors play in illuminating buildings and homes across the nation.
Every two years, ELECTRICAL CONTRACTOR sets out with original research to track the buying patterns of electrical contractors specifically in the lighting category. The results of the “2001 Lighting Survey” confirm much of what we already know, but further highlight patterns we were unaware of. Let’s examine some of the data and explain the changing dynamics of the lighting market.
Electrical contractors’ role in purchasing
According to the survey, electrical contractors still maintain a prominent role in choosing which lighting products go into America’s construction projects. Of those contractors surveyed, 77 percent indicated they performed the purchasing of the lighting products for their projects, while an additional 5 percent influenced the purchasing decision. Therefore, in 82 percent of the projects reported in the survey, electrical contractors factored prominently in the purchase of lighting materials.
Electrical contractors had the greatest purchasing role in commercial projects, where they bought the lighting materials in 90 percent of the projects, accounting for 99 percent of the contract value on the work performed. A separate analysis indicates that the bulk of this commercial work (90 percent) was for new construction. The contractor also has a substantial influence in terms of percentage of projects and the percentage of contract value on institutional projects.
However, on a dollar basis, the contractor’s buying role is considerably smaller. This isn’t surprising because the preponderance of new construction purchasing, especially on complex and highly specialized projects, is centralized through a construction manager.
When purchasing lighting products, electrical contractors rely mostly on their local electrical distributors, which account for 58 percent of the jobs and 35 percent of contract value on the jobs reported. Each of the other vendor categories—home centers, manufacturers and industrial distributors—accounted for no more than 7 percent each. Where the electrical distributor plays the largest role for electrical contractors is in commercial lighting work, where electrical distributors get 70 percent of the projects and 95 percent of the contract value.
Surprisingly, the survey uncovered another interesting buying pattern that is expected to grow as contractors get more familiar and comfortable with the various e-commerce options available to them. According to the survey, 10 percent of the respondents said they used the Internet in the purchasing process. The Internet played a larger role in rehab work, specifically in institutional and commercial lighting projects, as opposed to residential and industrial work.
Types of projects
The 121 respondents reported that the collective price of their last two lighting projects totaled more than $307 million. On average, each of the 233 projects held a contract value of about $1.4 million.
New construction accounted for about one-half of the lighting projects performed by those surveyed, followed closely by rehab/upgrade jobs. However, on a dollar basis, new construction dominates, accounting for 94 percent of the contract value of the work performed. The average (mean) contract was worth $2.67 million.
Although rehab/upgrade lighting work accounted for almost as many total projects in the survey (88) as did new construction, both the total and the average contract value were dwarfed by new construction. Maintenance/service/repair lighting work made up the smallest number of projects (24) and the lowest total and average contract value.
Residential work accounts for the largest number of lighting projects in this survey, but it accounts for the smallest amount on a contract value basis—only 2 percent. Of the 233 projects reported, 34 were residential. They accounted for only $5.9 million in contract value and only $81,000 in average (mean) contract value.
Industrial lighting projects were among the smallest in terms of numbers of projects (48), but they accounted for the highest contract value ($163 million) and the highest average project price ($3.6 million). Commercial and institutional lighting projects each accounted for substantially smaller contract values—$55 million and $45 million respectively.
Types of lighting materials
Making up the majority of the lighting purchases by electrical contractors are indoor fixtures and lamps, which account for 82 percent of the expenditures on lighting materials. Comprising 57 percent of overall lighting purchases, indoor fixtures represent the largest single category, followed by indoor lamps at 24 percent.
In the indoor fixtures category, incandescent and fluorescent installations are comparable in terms of contractor spending. However, on a project basis, a few more jobs involve fluorescent materials. High-intensity discharge (HID) lighting accounts for fewer of the projects and a much lower percentage of contractors’ spending. In the indoor lamps category, fluorescent lamps account for virtually the entire amount of contractor spending. Fluorescent lamps are part of the installation slightly more often than are incandescent lamps. Both are used more than HID lighting, according to the results.
Outdoor fixtures, outdoor lamps, and area poles and standards collectively accounted for only 13 percent of the spending on lighting projects by electrical contractors, according to the survey. And only 5 percent of contractors’ spending went toward dimmers, lighting controls/systems and ballasts.
In the outdoor fixtures category, spending is concentrated in HID and incandescent installations, while in the outdoor lamps category, both the proportion of spending and projects are concentrated in HID and incandescent installations.
When selecting which products go into a lighting job, electrical contractors determine the brand purchased more often than other building professionals and building owners. According to the survey, electrical contractors determine the brand 59 percent of the time, while owners account for 23 percent. Specifying engineers choose brand on lighting projects 10 percent of the time, followed by architects, who also decide brand in 10 percent of the cases.
In purchasing lighting jobs, there is a direct correlation between contractors purchasing the lighting materials and who determines which brands are used on the job site. Simply put, contractors who determine brand are also very likely to purchase the materials themselves. However, contractors also made some purchases in cases where other professionals made the brand selection. This raises the question of whether the contractor was able to make brand substitutions. That question was not addressed in this survey, but is likely to be explored further in upcoming research.
Also, as part of the survey, electrical contractors were asked to identify the single most important trend in lighting today. Energy efficiency topped the list at 19 percent, followed by cost savings and/or better lighting products at 7 percent. Other trends mentioned by respondents include: more direct lighting sales; fluorescent lighting; decorative lighting styles and lighting controls.
In the final analysis of the ELECTRICAL CONTRACTOR’S “2001 Lighting Survey,” electrical contractors remain the key player in the decision-making process on lighting jobs. They are not only influential in purchasing the materials, but more specifically, they have a major say in which brands are chosen. In addition, commercial and industrial projects collectively maintain the lion’s share of the lighting dollars, while residential work carries the most projects. Now, it will be interesting to see how much more of a role e-commerce will play in the purchasing process. EC
KELLY is editor of ELECTRICAL CONTRACTOR. He can be reached at firstname.lastname@example.org.