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 72,100 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 13 employees and does $2-3 million in annual revenue.

    • Overall, the electrical contractor industry has $173 billion in annual revenue and 952,000 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
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 11, 2022 - Nonresidential Building Construction Outlook Improves
                                • The Dodge Momentum Index (DMI) increased 9.6% in October 2022 to 199.7 (2000=100), up from the revised September reading of 182.2. The DMI 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 increased by 13%, and institutional rose by 2.9%. An increase in office and lodging projects boosted the commercial planning pipeline. The institutional sector was mixed amid a growing pipeline of recreation and education projects, but the number of healthcare and public planning projects declined. Developers and project owners continue to see healthy demand, despite recession concerns, although continued inflation, high interest rates and materials costs, and labor shortages have the potential to blunt the flow of new projects.
                                • New single-family home sales decreased 10.9% month over month and declined 17.6% year over year in September 2022, according to the US Department of Commerce. On a year-to-date basis, new home sales were down 14.3% in the first nine months of 2022 compared to the same period in 2021. According to Freddie Mac, on November 3, 2022, the US weekly average rate on a 30-year fixed mortgage was 6.95%. A year ago, the rate was just over 3%. Industry watchers expect new home sales to remain weak as the Fed uses interest rate hikes to bring down inflation.
                                • US housing affordability fell to its lowest point since the Great Recession in the third quarter of 2022 amid rising mortgage rates, inflation, low housing inventory, and high home prices, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI). Only 42.2% of new and existing homes sold between July 2022 and the end of September were affordable for households with a median income of $90,000. The third quarter of 2022 marked the second consecutive quarterly record low for housing affordability in more than 10 years. According to the HOI, the median home price in Q3 2022 was $380,000, down from the all-time high of $390,000 set in Q2 2022.
                                • Inflation’s impact on materials deliveries and project budgets in 2023 is top-of-mind for commercial real estate developers, according to a recent report commissioned by real estate development software firm, Northspyre. About 60% of project managers surveyed said they expect inflation will have a “moderate to major” impact on their business. More than two-thirds said they anticipate inflation will cause them to think more strategically about their purchasing decisions, and 52% plan to be more selective when purchasing materials and selecting vendors. However, inflation grew more slowly in October, which may be a source of developer optimism, according to Construction Dive. October’s consumer price index rose 0.4% compared to the prior month and 7.7% from a year earlier, down from 8.2% year-over-year growth in September.
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