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 75,400 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.
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.
Liability for Damages
Oftentimes builders or general contractors will try to cut corners, directing ECs to take shortcuts that violate code.
Industry size & Structure
An average electrical contractor has 12 employees and does $2-3 million in annual revenue.
- Overall, the electrical contractor industry has $173 billion in annual revenue and 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
Apr 16, 2024 - Wage Growth Outpaces Pricing Growth
- The electrical contracting industry is expected to see almost flat sales growth this year, but demand is projected to improve in the following four years. The industry’s year-over-year sales increased by 10.6% in 2022 before dropping to 3.2% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to fall to 1.1% in 2024, then rise by 6.9% in 2025. The industry will then see steady average annual growth of about 6.8% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
- The housing construction industry continues to experience a significant labor shortage, according to a recent report by the National Association of Home Builders (NAHB). In the March NAHB/Wells Fargo Housing Market Index Survey (February data), more than half of home builders reported shortages of electricians. While immigration has helped to ease worker shortages in some trades, others – including electricians, plumbers, and HVAC technicians – require substantial training and licensing and attract fewer immigrants.
- The boom in artificial intelligence (AI) - and the data centers needed to power it - are expected to drive a significant increase in electricity demand, according to The Wall Street Journal. Power industry experts suggest renewables won’t be able to come online fast enough to support the appetite for electricity created by the coming wave of data centers to support AI. Electricity demand has grown slowly for years, but consulting firm Grid Strategies recently doubled its five-year electricity demand outlook from what it was projecting just last year. Hunger for electricity to power data centers is global. The International Energy Agency estimates worldwide electricity consumption from AI, data centers, and cryptocurrency could double by 2026.
- Total nonresidential building construction spending is projected to rise 9% in 2024 over 2023, according to FMI’s second-quarter 2024 North American Engineering and Construction Outlook. With growth of 19%, manufacturing will lead 2024 nonresidential building construction, followed by lodging (14%), public safety (12%), and transportation (10%). Some other segments of the nonresidential building sector face headwinds, including high interest rates, inflation, and tighter lending standards. These pressures and high vacancy rates will limit office project spending to 2% growth in 2024. Led by a weakening warehouse segment, commercial project spending is forecast to decline by 2% in 2024. High interest rates will also challenge the housing market. Single-family construction spending is forecast to be flat in 2024 after falling 14% in 2023. Spending for multifamily is expected to decline 8% in 2024 after projects in development peaked at 1 million units in mid-2023. Home improvement project spending will rise 2% in 2024 after falling 5% in 2023.
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