The introduction of fiber optics revolutionized the voice, video and data world. Clearer signals, better durability, improved serviceability and material availability allowed an explosion of this market. In the past 15 years, many electrical contractors have entered this market segment, benefiting greatly from its potential.

This game is not over. The explosion of wireless technology in the last 10 years has been the natural expansion of the data and telecommunication market sector. Just as data and telecommunication allowed the Internet and e-commerce expansion, introducing a new business-to-business as well as business-to-customer market, wireless will not only expand this market, but create new markets, such as smart buildings, smart factories, control units (fire alarm systems, control panels) and on-site material ordering and tracking. This will help improve the country’s economy by making more data available faster.

Is the electrical construction industry ready for this new market, which in the long run, could replace wired data telecommunication? Every business and industry is under constant threat of obsolescence; what can make electrical contractors obsolete?

In 2001, Electri’21 commissioned research to investigate wireless market potential and feasibility. A summary reveals:

• 47 percent of survey respondents show annual sales of less than $5 million

• 33.6 percent of the contractors are involved in some kind of wireless

• Market potential will be larger than $4 to $5 billion by 2005

• The market is divided into: towers/antennas, communication, LAN/WAN, video/audio, building controls, machine to machine, control panels and robots

• Profitability depends on the market segment; the range of gross profit is from 16 to 40 percent

• Larger contractors ($30 million plus) have more involvement with wireless than smaller ones

• Manufacturers are developing products in machine controls, an area not well penetrated by the electrical contracting industry

• In-house training is the prevailing method of acquiring technical resources

• Market is being penetrated by nontraditional competitors

• Primary application of wireless is in low-voltage

• No major technological breakthroughs are on the horizon for wireless applications in power and high voltage

In conclusion, the wireless market is a serious factor that needs to be reckoned with. However, to penetrate this market contractors need a clear plan for business, integration and technology.

Research detail

The results of a wireless market survey were divided into size of the electrical contractor, wireless as part of overall company sales, and human resource capital required to expand into this market.

Size of the electrical contractors

The survey (Figure 1) indicated that 47.5 percent of existing contractors have annual sales smaller than $5 million. Lower sales could be a limiting factor for investment required to penetrate the market.

Wireless as part of overall sales

The participation of the contractors (33.6 percent) in wireless is relatively low.

The market is divided into:

• Towers/antennas

• Communication

• LAN

• WAN

• Video/audio

• Building controls

• Machine to machine

• Control panels

• Robots

The activities are well-distributed among various wireless markets. The fastest-growing market, however, is towers and antennas. Contractors are active in all segments of this new market, an excellent indicator of market potential. The towers and antennas segment is expected to quadruple within the next four years.

The response to profitability and sales was mixed. Despite expected larger-than-average gross profits from this electrical market segment, the respondents’ future sales have lined up with market potential.

Human capital needed to expand

Available human resource capital is not sufficient to enter and capture the wireless market. According to the survey, field and office resources are not equipped to deal with the market.

Future strategies for application

Wireless technology and its application are in flux. Wireless devices manufacturers in building controls, control panels, PLCs and robots are working feverishly to introduce their products within the next two years. Control devices manufacturers predict a greater than 15 percent labor savings in the initial assembly of panels and control boxes. Primarily, the workforce and its skills determine entry into this segment. In order to compete, contractors need design-build capabilities. Most customers are looking for a turnkey contractor for design and installation of control devices.

Philosophy for market entry

Unlike the traditional market entry for electrical work, wireless requires in-depth understanding, strategic planning and risk analysis. This promising market is not a simple expansion of the existing market. Technological, integration and business risks must be taken into account before attempts at market entry.

Conclusion

This study shows conclusively that wireless is an up-and-coming market; its nine segments will have potential growth in billions of dollars.

The control segment will help electrical contractors become more independent from the construction industry. The developing technologies will be in the market within the next five years. It is extremely evident based on the study that in order for contractors to succeed in this new and developing industry, a collection of industrywide policies and work force development programs need to be developed. EC

DANESHGARI is an adjunct professor at the University of Michigan-Dearborn where he teaches masters degree engineering courses on process and product development. He can be reached at perry@mca.net.