Electrical Contractors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 77,500 electrical contractor firms in the US provide electrical installation, repair, and maintenance work. They handle wiring, lighting, networking, fire and safety equipment, and energy management systems, among other tasks. Much of the work is installation and repair of residential electrical wiring. Contractors must buy materials and then install them according to code in homes and other buildings.
Liability for Damages
Oftentimes builders or general contractors will try to cut corners, directing ECs to take shortcuts that violate code.
Demand Dependent on Construction Activity
Contractors can market new services such as design work during periods of low demand, but new construction ultimately drives the industry.
Industry size & Structure
An average electrical contractor has 14 employees and does $2.2 million in annual revenue.
- Overall, the electrical contractor industry has $173 billion in annual revenue and 1.1 million employees.
- Segments include power installation, telecommunications setup, fire and safety systems.
- 88% of establishments have fewer than 20 employees.
- About 41% of establishments do less than $500,000 a year in business.
- Large firms include Emcor Group (CT), Integrated Electrical Services (TX), and Rosendin Electric (CA).
Industry Forecast
Electrical Contractors Industry Growth
Recent Developments
Dec 12, 2024 - Housing Market May Not Rebound in 2025
- The 2024 housing market is on track to be the slowest in nearly 30 years as high mortgage rates and home prices combined with extremely low housing inventories have kept homeowners locked in place and would-be homebuyers priced out of the market, according to The New York Times. The National Association of Realtors estimates that four million homes will be sold in 2024, marking the second straight year of historically weak activity and the slowest home sales since 1995. Market observers note that the housing crisis is a product of weak supply. Builders have struggled amid lingering pandemic-era problems, including high borrowing, labor, and materials costs. Freddie Mac estimates the housing shortage equals about 3.7 million homes. The outlook for 2025 remains uncertain as home prices and mortgage rates are expected to remain stubbornly high.
- The missing-middle segment of the US multifamily housing construction market saw its biggest gain in 17 years in the third quarter of 2024, according to The National Association of Home Builders (NAHB). The missing middle, which consists of housing properties with 2-4 units, has been weak since the Great Recession. However, in the third quarter, there were 6,000 construction starts for projects with 2-4 units, more than double the amount in Q3 2023. The missing middle’s share of overall multifamily construction was just over 6% in Q3 2024, down considerably from about 11% that was typical between 2000 and 2010. While the NAHB notes that missing middle developments are likely to continue lagging absent zoning reforms, the recent increase is encouraging.
- Some building contractors are concerned that the Trump administration's promises of tariffs and a tougher stance on immigration could increase their costs and make their labor difficulties worse, according to The Wall Street Journal. Some industry observers suggest Trump’s plan to deport undocumented workers could cause labor shortages. In California, New Jersey, Texas, and Washington, DC, immigrants make up more than half of the construction workforce, according to the Harvard Joint Center for Housing Studies. Nationwide, undocumented workers make up about 13% of the construction sector’s workforce, according to the Pew Research Center. President-elect Trump’s proposed 25% tariffs on goods from Canada and Mexico could drive up construction costs for key inputs, including softwood lumber, cement, gypsum (used to make drywall), and iron and steel. However, some builders are optimistic that Trump’s deregulation plans could reduce construction costs.
- The Dodge Momentum Index (DMI) decreased by 2.3% in November 2024 to 191.5 (2000=100), down from the revised October reading of 196. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component fell 4.6%, but institutional increased 2.5%. Dodge’s associate director of forecasting, Sarah Martin, said, “Throughout 2024, we’ve seen robust growth in nonresidential planning activity – but labor shortages and high construction costs have prevented those projects from moving through the planning process at a normal pace. The current backlog may be constraining demand for commercial planning in the short-term. Uncertainty over new tariff and immigration policies under President-elect Trump’s administration may also generate some pause with developers, although it’s a bit too early to tell if that’s the primary factor here. Overall, easing monetary policy will help alleviate the backlog of projects in the planning queue throughout 2025 and spur more demand for projects in the coming months.”
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