"It was the best of times, it was the worst of times” is the iconic opening line of Charles Dickens’ “A Tale of Two Cities,” and nothing could better describe the state of today’s electrical contracting industry. Contractors continue to navigate post-pandemic challenges such as material delays, labor shortages and price increases. However, a range of promising opportunities, including ongoing conversions to smart and renewable technology as well as the prospect of extensive upgrades to the nation’s electric grid, stand to engage the contracting industry for decades.

In this roundtable discussion, electrical contracting firm executives nationwide share some of the ups and downs of the industry and how they’re addressing challenges and seizing opportunities.

How has business been for your firm so far in 2023? What segments or sectors are currently the strongest or the weakest in your area, and why? 

Travis Cram, regional vice president for The Hydaker­-Wheatlake Co., Reed City, Mich.: Business in the utility power line construction sector has been steady this year. Residential distribution construction has been the busiest sector for us, likely due to the backlog of customer-driven projects that were delayed due to COVID and material shortages over the past couple of years. Because these projects are customer/end-user-driven, our utility clients have put those at the top of the list in order to meet their customers’ needs and demands. Transmission infrastructure projects have been the weakest for us right now; there are still material shortages that are affecting transmission construction as well as a backlog in engineering, permitting and right-of-way acquisition that are keeping those types of projects from proceeding. Due to the lack of larger transmission projects being let out, competition between contractors to win bids has been high, causing aggressive pricing. 

Kenny Doyle, vice president of field operations at Danard Electric Inc., Tacoma, Wash.: Business has been mixed for the year. Jobs that were awarded and started construction during the pandemic are still struggling to finish, and smaller, hard-bid jobs continue to be challenging due to short schedules and procurement delays. Design-build projects have been going well, however, and continue to be our strongest segment. As part of the design team, we’re able to select products that have shorter lead times and we’re procuring long-lead items early on in our design-build projects to mitigate schedule creep.

Laura Karow, president of Gunnar Electric Inc., Eden Prairie, Minn.: We’ve seen about a 50% increase in revenue to-date over last year. Some of the strongest sectors for us right now are education, municipal and green energy projects (involving government funds). Currently, our weakest segments are capital improvements by private owners and tenant improvements using private money. I believe that owners are concerned and holding tight to their purse strings.

Mark Milton, vice president and co-owner of ­Buffalo Electric Inc., Baker, La.: Our business is probably down 10% relative to last year and we’re seeing some weakness in all segments across the board. Historically, most of our work (75%–80%) has been industrial, but that’s since shifted to a 50–50 split between commercial and industrial. In our region, the industrial market has become incredibly competitive; the oil industry has also taken a hit and put a damper on the many businesses and industries it touches.

Following three years of supply chain issues and other upheaval, what are some of the biggest issues you continue to grapple with in your market? 

Cram: Material shortages are still causing project schedules to fluctuate rapidly, and [the] dependability of schedules has been the most difficult aspect of dealing with these shortages. It’s been very hard to determine manpower and equipment needs as well as figure out the amount of backlog needed to keep a consistent flow of work going due to the ever​-­changing schedules. On projects where we’re procuring the material, it’s also been quite difficult to hold dependable material pricing—pricing is fluctuating quickly in the process of bidding, procuring and installing that material, and most material suppliers can’t honor their quotes over that time frame. As a result, we have to eat those price escalations, as we aren’t able to pass the price creep on to our clients. This situation is causing us to add risk dollars into our bids, and sometimes that alone keeps us from winning the work. 

Doyle: Gear and generator lead times continue to be long. The biggest issue now is getting accurate ship dates from factories; some factories are still providing bad ship dates and provide no notification regarding missing shipments. Most times the cause of the delay can’t be articulated and a plan for resolution can’t be provided, which makes it difficult for contractors like us to mitigate the delay. 

Karow: So many projects have been delayed; we’re not only busy with the projects we were planning on doing in 2023, but also those that were pushed from 2022 into 2023. We’re also still dealing with long lead times on certain materials.

Milton: We run over 50 vehicles in our fleet and are constantly in need of new ones because some have close to 300,000 miles on them. In the last year, however, we can’t seem to find the basic work trucks we need; the vehicles available in our area have more features than we need and vehicle prices have gone up 25% in the past year. Our insurance rates have also gone up significantly this year. On a slightly more positive note, material delays still persist but seem like they’re starting to ease. We were just awarded a sizable job involving 10 large generators, which were over a year out when we first started looking into procuring them, but their timing is now down to eight months.

Since emerging from the pandemic, many contractors state that business and construction activity are booming. How are you meeting strong demand given nationwide labor shortages, material delays, price volatility and other challenges? 

Cram: We’re still not seeing a boom in our segment of the industry. The work is coming and it seems like we’re at the starting gate ready for the race to begin, but we just don’t know if we’re preparing for a 100-yard dash or a long marathon month-to-month. It feels as though when the work does break, we’re going to have to be prepared to maintain the 100-yard dash pace over the course of a marathon race. Currently, IBEW labor is the easier part of the equation because work is on the slow side. We’re worried that the work is going to break all at once and that we’ll be right back to dealing with labor shortages.

Doyle: Our firm has a few seasoned foremen and lots of young and prospective foremen, and we’ve shifted our field management structure to allow our seasoned foremen to act as general foremen and manage multiple jobs. A young or prospective foreman would be dedicated to one job, which allows for better mentorship and a smoother job. Material lead times are improving, but large items like gear and generators are still problematic, so we’re working with our clients to order gear and generator packages well in advance and scheduling projects around the expected ship date of the long-lead items.

Karow: On the labor side, we don’t currently have any apprentices in either our Minneapolis or St. Paul locals available for work, and the number of journeyman wiremen on Book 1 are also dwindling. Our local has a pre-apprentice program, but you can’t employ these pre-apprentices on prevailing wage projects, and unfortunately, many of the projects I see coming to our locals are tied to federal funds, which will require prevailing wage workers. The union and contractors need to work together to develop a direct entry/pre-apprentice program that can be considered an indentured apprenticeship so that we can hire more people for these projects. On the material side, we’re looking at product availability and long lead times much more closely than we have in the past, and we’re also releasing materials and storing them for longer to ensure that they’re available when we need them. 

Milton: There’s work out there, but it’s so competitive right now and prices have increased on everything; firms are just trying to keep their people busy. We don’t necessarily have a labor shortage; it’s more about having the right people in place for the jobs at hand. We’ve had a few key people retire in the last couple of years and have some good young people coming up, but right now they don’t have the experience that our seasoned people had. We work on a lot of high-tech projects involving high-voltage and advanced controls, and you can’t just send anyone in to do that work. 

What do you see as some of the biggest opportunities for your firm or for electrical contractors in general in the near-term, and why? 

Cram: Probably the biggest opportunity we’re keeping an eye on is the Midcontinent Independent System Operator’s Long Range Transmission Planning. This is expected to involve many transmission construction projects in the next few years. 

Doyle: Washington state’s gas tax is among the highest in the nation, and there’s a big push to move to electric vehicles, so EV and solar will continue to grow in our area. I also see electrical infrastructure opportunities increasing. As EVs become more popular and gas HVAC units fall out of favor, many buildings will need upgraded electrical services to support the additional demand.

Karow: EV charging and other renewables are opportunities. Anything that’s tied to the federal infrastructure bill will require qualified electricians paid at prevailing wage.

Milton: A lot of new technology has become available in recent years, including advanced controls and smart building systems, and their prices have come down over time, so we expect that these types of upgrade projects will be in greater demand. We’re seeing some solar work and have recently been doing more EV charger installations, which has created a little incremental work for us, but they’re not very involved to install.

Finally, what advice can you share with fellow contractors nationwide when it comes to positioning for success in the market today and in the future? 

Cram: In some ways, I feel like I’m the last person to be giving advice—like many contracting firms these days, we’re just working to keep our heads above water and drive a responsible business plan.

Doyle: At Danard Electric, our purpose is to build a better world. We’ve found that seeking out projects and project teams that fit our purpose and align with our core values of quality and safety support our success.

Karow: My advice would be to diversify your work type and workforce. We usually don’t see strength in all of the markets we work in at the same time, but we still need to be relevant in every market, because when one is down, one or more of the others is usually booming. As an industry, we need to be hiring employees from all backgrounds, because the more diversified our workforce is, the larger pool of qualified workers we’ll have. As a small business, I’m working very hard on standard operating procedures and ensuring that there’s cross-training in our company—from each GC/owner having two contacts in our project management group to two people knowing how to create a progress bill for a job or running the weekly payroll. We all need to wear multiple hats and support each other. Especially with the turnover we’re seeing, it’s important to have procedures in place in case you lose a key employee.

Milton: I think that contractors need to manage things a lot more closely today—it’s about monitoring where every penny is spent, managing labor better and staying on top of things to remain profitable. You need to have the right, qualified people on the job to survive in this market.

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