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
Aug 12, 2024 - Nonresidential Building Construction Spending to Drop in 2025
- Construction spending for nonresidential buildings is projected to rise 7% in 2024, then drop to 2% growth in 2025, according to the American Institute of Architects’ (AIA) mid-year Consensus Construction Forecast. Weaker property values will weigh on the nonresidential building market next year. Spending for commercial projects is forecast to be flat in 2024 and 2025, while manufacturing projects will see spending rise 14% this year then flatten in 2025. Spending for institutional building will increase by 10% in 2024 then drop to 4% growth in 2025. The AIA’s Chief Economist Kermit Baker said, “The disparity in sector performance highlights the uneven economic conditions and ongoing market uncertainties. Despite the challenges, specific sectors like manufacturing construction are showing strong ongoing activity from the surge in projects that started during the pandemic, while most institutional sectors are seeing reasonably healthy gains, fueled by the education market.”
- Multifamily developers’ confidence declined in the second quarter of 2024, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) fell twelve points in Q2 2024 to 44 compared to the second quarter of 2023. The Multifamily Occupancy Index decreased by eight points to 81 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. Multifamily developers’ headwinds include a tight lending environment, higher borrowing costs, and difficulties with getting projects approved. However, increasing signs of a weakening US economy may prompt the Federal Reserve to begin cutting interest rates before the end of the year.
- The Dodge Momentum Index (DMI) increased 7.9% in July 2024 to 216.3 (2000=100), up from the revised June reading of 200.5. 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 improved by 6.8% and institutional rose by 11.1%. Dodge’s associate director of forecasting, Sarah Martin, said, “While data centers have had an outsized influence on nonresidential planning activity in recent months, more momentum is building across many other major sectors and diversifying the story behind July’s growth. The potential Fed rate cut in September is becoming increasingly more likely, alongside slower inflation and weaker labor market conditions. This is likely driving owners and developers to remain optimistic about 2025 market conditions and pushing more projects into the planning queue.”
- Total nonresidential building construction spending is projected to rise 6% in 2024 over 2023, according to FMI’s third-quarter 2024 North American Engineering and Construction Outlook. With growth of 28%, public safety will lead 2024 nonresidential building construction, followed by manufacturing (21%), educational (7%), and religious (7%). Some other segments of the nonresidential building sector face headwinds. Commercial construction spending is expected to decline 7% in 2024 amid weaker demand for warehousing space, high interest rates, and tighter lending standards. Lodging construction spending is forecast to drop 6% as consumer budgets tighten and hotel occupancies wane, especially near the market's lower tier. Stubbornly high office vacancies will continue to weigh on new office construction, which is projected to see flat spending in 2024. Despite high interest rates, single-family construction spending is forecast to rise 7% in 2024 as homebuilders reduce home sizes to improve affordability. Spending for multifamily is expected to decline by 1% in 2024 after projects in development peaked at 1 million units in mid-2023. Home improvement project spending will rise 4% in 2024 as homeowners primarily focus on maintenance and repairs amid high materials costs and interest rates.
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