Residential Updates: Let There be Light

By Debbie McClung | Feb 15, 2005
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In the residential market overall, we're all into the high-end new homes. We're eating ourselves alive-there's a razor-thin margin. Within residential, there's an opportunity to update existing lighting, and if one or two contractors in every area specialized in it, they'd be the only ones providing that niche service in the market,” said Todd Michaelsen, manager of the Ohio/Michigan NECA Chapter.

Depending on your local market, Michaelsen's business suggestion might come across as right on target or he may seem to be constructing a mountain from a molehill. Regardless of your vantage point, the influx of residential lighting technologies available in an unprecedented age of home improvement and new home construction continues to make residential work a viable segment of the industry with potential to grow.

Updating interior lighting caters to a demographic segment often underestimated in the electrical industry, said lighting consultant Laurie Gross of Gross Electric, a lighting distribution firm in Toledo, Ohio.

“The majority of our market is aging. We're all getting older and as we do, we need more light,” said Gross. “Many homeowners don't understand that part of their frustration with their existing homes and rooms is that they're dark. I think part of the job a contractor can do walking into a remodeling project is to help people gain not only more light but more ease of control,” she said.

According to the National Association of Home Builders, most of the aging 80 million baby boomers will likely remain in their current homes after retirement. Improved lighting sources and multiple controls that increase convenience and ergonomics are just a few of the “age-in-place” features homeowners are already seeking.

Identifying these housing and consumer patterns has resulted in lighting manufacturers designing products that address residential lighting upgrades. Electrical contractors can also see residential upgrades in a new light if they can reposition their services, grow their expertise and overcome local market challenges.

Spotlighting opportunity

According to NECA Marketing Manager Rob Colgan, most of the approximately 4,700 NECA members concentrate on commercial and industrial markets, but are connected-if even loosely-to residential by offering some type of service. He estimates approximately 35 percent of the membership classifies residential work but only 5 to 15 percent actually do it on a regular basis.

“NECA contractors know how to do most residential projects because it's where everyone starts. They won't turn the work down, but they aren't actively seeking it,” said Colgan. That mindset is changing in some areas of the country as mid-range and upscale homeowners, builders and remodelers are specifying amenities for smarter homes with energy-management systems, communications networks, home theaters and automation packages that make residential projects more lucrative.

Michaelsen and others in the industry said there's also an opportunity in updating residential lighting.

“It's really about creating a new market. Right now there are a lot of people who would like to update their lighting, but no one's come to them to let them know that they can and that it has enough value to pay for itself,” said Michaelsen.

Wages rebuild Midwest markets

If Michaelsen sounds like the exception rather than the rule, it's because he is. The Ohio/Michigan NECA Chapter has one of the highest concentrations of residential contractors anywhere in the United States except the Chicago area.

It's not by default, but rather a concerted effort to regain residential competitiveness, which they believe has created market niches and is serving as a tool to help secure future commercial work.

NECA's Eastern Region field representative Frank Piatt explained that from the 1960s through the 1980s, most contractors focused on industrial and commercial sectors. As those markets leveled and slowed, there was a realization that larger and more sophisticated homes were being built in a segment that had been ignored.

“We think doing residential work will help contractors get more commercial projects. There's crossover skills and knowledge between those markets. The more capability, the more work volume will follow,” said Piatt.

Michaelsen added: “Over half of the chapters around the country do literally no residential. How can we ever be a dominant player if we'll walk away from over a third of our marketplace? I say to people, if you're not doing any of it, the union will help negotiate a very competitive agreement.”

Dan Bollin, of Toledo, Ohio's Transtar Electric Inc., said a concerted effort by the chapter and IBEW Local 8 to gain back the residential market overall has resulted in a unique dominance.

“The majority of NECA contractors have lost the residential market. What it takes to get it back is cooperation between business managers and NECA contractors to work together and come up with a plan to recapture that market. We did this about 10 years ago, and we now control about 95 percent of the residential business,” said Bollin. “Guys are really missing the boat. If they don't control the residential market, they're never going to grow their commercial marketshare.

Training talks

NECA member Hardt Electric Inc. in Chicago does small and large residential projects for new construction and retrofitting, but doesn't actively market the work.

“We would need to have a person who is technically trained in that area who follows all the trends. At the end of the day, you're still competing with a nonunion guy who's going to have much cheaper labor than us,” said Dave Hardt.

Lighting consultant Laurie Gross of Gross Electric, a distributor in Toledo, Ohio, has seen the investment in training to gain technology expertise pay off in her territory.

“The electrical contractors who are making money in residential have training in the high-end products and are very good at selling them, or they're bringing in someone who has the expertise,” she said.

In most jobs around Chicago, Hardt's Residential Division Manager, Bob Trylovich, said a general contractor works directly with a lighting consultant who provides product expertise. The consultant typically hires a specialized lighting contractor for the development and installation of low-voltage systems and equipment.

“We bring the power to it,” Hardt said.

Hardt said the firm takes on projects as small as single-fixture upgrades, but specializes in residential-line voltage work. That work is increasing as more people migrate into the city for greater convenience, primarily in neighborhoods around Wrigley Field. Hardt said the trend is resulting in people converting dilapidated $50,000 properties into multi- million-dollar residences.

Hardt Electric also has benefited from a joint program implemented by IBEW Local 134's Labor Management Cooperation Committee (LMCC) and NECA contractors that provides homeowners a five-year extended guarantee if they use a union contractor. “I don't think the market for residential is largely untapped. It's also the price that stops a lot of people from going that direction.”

Bollin agreed the success of the residential market is tied directly to wage structures.

“We've got a wage package now that makes it hard for the nonunion contractor to compete. It rewards our people that start out at that lower wage package and allows them to move up into the commercial program.”

Consulting with technology

While it is assumed much of the interior residential lighting updating is being done in new, high-end homes, the burgeoning home- improvement market for all types of homes is another key driver.

“The remodel industry is very large and continues to grow, and there are successful electrical contractors who specialize in that area,” said Steven Pyshos, marketing manager for recessed products at Cooper Lighting.

According to 2000 Census figures, just more than 100 million single-family dwellings exist in the United States. Nearly 20 percent of those were built from 1970 to 1979 alone, while 16 million homes were built in the 1980s and another 15 million before 1939.

Many of these homes function with outdated technologies and uncoded wiring. Contractors have an opportunity to perform a consulting role by providing homeowners with low-voltage trend information and options from energy-efficient lamp selection to fixtures to whole-house integration of media, security and lighting.

Several manufacturers, including Leviton, offer home automation packages for custom-build homeowners who want a higher level of sophistication and are willing to pay for it. According to Jay Sherman, Leviton's marketing director for its Residential Products Division, the company's line of Decora Home Controls use the home's existing AC wiring as a communications network for automated control of lighting and appliances.

“Leviton also offers scene controls where the touch of a button simultaneously controls the brightness levels of independent light sources to create unique lighting scenes in one or more rooms,” Sherman said.

Leviton recently introduced its Acenti Collection for customers in the high-end building and remodeling market. The devices feature the industry's first triplex receptacle, stainless-steel wall plates and return-to-neutral-position on/off switches for a symmetrical appearance.

According to Cooper's Pyshos, there are several lighting trends contractors should recognize in functional lighting categories.

“I see a growing preference for miniature surface-mount products like track lighting or decorative pendants,” said Pyshos.

Remodeler-type recessed downlights in smaller apertures offered in Cooper's Halo and IRiS lines are popular.

“Discriminating homeowners don't want to see a cluttered ceiling. They want to see the lighting effect,” Pyshos said.

Bollin said that surface-mounted products also answer the challenge of updating lighting in turn-of-the-20th-century homes equipped with original wiring.

“It's hard to get up in the walls and the ceilings unless someone's gutting the house and getting down to the studs. We'll go in and bring the house up to Code by adding things like duplex receptacles and changing the old fuse boxes to circuit breakers. As far as the wiring in the wall, we're just leaving it in there,” he said.

The other recognizable trend, Pyshos said, is toward higher-efficient light sources like those mandated by California's energy standard, Title 24, which specifies the use of compact fluorescent technology.

Lighting consultants such as Gross are also trying to make contractors aware lighting fixtures have become a fashion item, which means installation is not a one-time shot.

“Many people will update fixtures at some point. Styles are changing every two to three years,” said Gross. “Finishes used to be polished brass for years. Nickel is hot now, and that's even changing to darker metals with bits of brass coming back.”

Contractors, said Gross, would benefit from doing simple targeted customer mailings containing market and service information or promoting recent training.

“Once you've put that $50 fixture up and stay in touch with them, who do you think they're going to call when it's time to rip out walls for that major remodel to their home or their business?” she said. EC

MCCLUNG, owner of Woodland Communications, is a construction writer from Iowa. She can be reached via e-mail at [email protected].


About The Author

Debbie McClung, owner of Woodland Communications, is a construction writer from Iowa.





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