When a portfolio of work dried up in 2007 for Components Express, an electrical cable manufacturer in Woodridge, Ill., the company found a market niche and focused on a narrow but specialized line of cables used for video transmission: machine vision cables. It provided excellent quality and built a reputation.
Component Express’ story illustrates what many wire and cable manufacturers are embracing as specific market niches offer growth and opportunity in a complex wired world. For electrical contractors, this is an opportunity to bring knowledge of material quality and application to projects and customers.
Wiring and cabling materials saw their heyday during the Industrial Revolution. Manufacturing was booming as companies scrambled to meet the demand of alternating current power and the advent of electrical equipment. Today, wiring, cabling and electrical material companies seek market niches and offer very specific value.
“We have seen manufacturers focusing on labor savings,” said Adam Palmer, project manager, J.M. Electrical Co. Inc., Lynnfield, Mass. “They are taking a step back to see how their product is installed and doing everything they can to make that product able to be installed better, faster and safer. It is no longer a race to the lowest price but a drive for a value-add.”
Competitive manufacturers face the economic pressures of fluctuating currency rates and demand for products dependent on electric power. Such products include consumer electronics, defense electronics, automotive manufacturing and wired networks, particularly those that use fiber optics.
“With increased edge bandwidth requirements, caused by an increasing number of mobile devices and connected vehicles, we are starting to see that fiber is being pushed closer and closer to the edge device itself in order to support said devices,” said David Antar, president, A+ Technology & Security Solutions, Bay Shore, N.Y. “Companies that are heavily investing in technology infrastructure development will benefit the most from this paradigm. Companies that do not recognize this shift and fail to adapt will be hurt the most.”
Market demand for electrical materials often depends on derived demand from some other demand, for example, wireless home technology or automobiles. Worldwide need for automobiles drives the requirement for subcomponents and assemblies such as wiring harnesses.
According to Allied Market Research, the automotive wiring-harness market was valued at $66.5 million just two years ago and should increase by about 50 percent in the next five years. Passenger car production in Asia is at the root of the expansion.
Other market niches, such as wire connectors, are on the rise because smart home technology, medical technology and more call for modernization of aging transmission, distribution grids and power networks.
According to researcher IBISworld, “Most of the wire-connector manufacturing industry’s products are generally made from the same materials and offer similar functions and potential applications. As a result, the industry is highly price sensitive, and companies must keep costs low to maintain margins while remaining competitive in building construction, home electrical work and electronic goods markets. However, a significant portion of industry products is designed for more complex systems such as avionics, medical devices and defense items. In these market products, reliability is more important than price.”
The demand for electrical conduit insulation should also grow. According to industry analysis by Research and Markets, the electrical-insulation materials market is projected to reach $9.58 billion by 2021 at a growth rate of 5.82 percent. This is attributed to the demand for conduit-insulation materials to be driven by transmission and distribution network modernization and an overall global demand for electricity, particularly from economies such as China and India. About 62 percent of copper wire demand comes from China, which plans to expand its transmission and distribution by $720 billion over the next three years or so.
ECs should develop their expertise about conduit, connectors, insulation and other materials, according to specific market demand for niches they seek to enter. The more they know about material quality and its installation, the better.
The economics of supply and demand will drive price, but the ECs who bring consumers the product are the face of electrical materials. Their knowledge and skill of installation, for a particular application or market niche, will add great value—not only for ECs, but also for their customers.
“In our business, the commodity prices seem to come second compared to the technology required to manufacture and prepare the material,” J.M. Electrical Co.’s Palmer said.