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
Recent Developments
Mar 15, 2023 - Electrification Efforts Highlight Shortage of Electricians
- The Inflation Reduction Act includes tax incentives for consumers to transition to electrification, such as electric cars and heat pumps. However, as the incentives are poised to kick in, some electrical contractors are worried they won’t have enough workers to meet the uptick in demand, according to The Wall Street Journal. The lack of qualified electricians is part of the larger US labor shortage. It is mainly being felt in parts of the country with state and local government incentives for renewables adoption, such as California and the Northeast. However, higher demand for electricians is expected to spread across the country as more consumers are incentivized to install heat pumps, electric car chargers, and other green technologies.
- A robust labor market and wage growth combined with steady investments in equipment, IT, and factory construction could help the US economy avoid a recession in 2023, according to Associated General Contractors of America (AGC) chief economist Ken Simonson. Manufacturing and infrastructure investments stemming from the Infrastructure Investment and Jobs Act and the Chips and Science Act are expected to be key pockets of growth for the construction sector. In the manufacturing sector, projects are being driven by EV battery plant and carbon capture projects. However, Simonson noted that high materials, labor, and financing costs could cause a slowdown for other types of commercial construction categories, including warehouse, retail, office, lodging, and multifamily.
- The Dodge Momentum Index (DMI) increased 1.9% in February 2023 to 203.0 (2000=100), up from the revised January reading of 199.3. 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 rose by 1.4%, and institutional increased by 2.9%. Commercial planning got a boost from an almost 20% rise in office planning and stronger data center project planning. In the institutional sector, education and healthcare planning saw gains, with research laboratories being a noted bright spot. Dodge’s associate director of forecasting said, “The continued elevation in the DMI should provide hope that construction activity will grow in 2024. Owners and developers tend to put projects into planning until well after economic conditions weaken. During the Great Recession, for example, the DMI did not substantially decline until 2009. Therefore, the anticipated mild economic growth in 2023 could cause the DMI to moderate over the year, but it is unlikely to fall below historical norms.”
- Mortgage rates dipped slightly after the collapse of Silicon Valley Bank, but housing industry watchers are uncertain if lower rates will persist long enough to provide much relief from the affordability issues that have slowed the US housing market, according to Yahoo Finance. The average 30-year mortgage rate fell to 6.57% on March 13, down from 6.67% the previous Friday, according to Mortgage News Daily. Some financial market watchers note that the banking sector's jitters could slow the Federal Reserve’s strategy of taming inflation with rate hikes. Redfin chief economist Daryl Fairweather told Yahoo Finance, “There's still a lot of uncertainty but in the near term, I do expect mortgage rates to drop. And I expect buyers to take advantage of those mortgage rates because we've seen buyers be incredibly sensitive to those interest rates.” However, some industry insiders suggest that to lure more buyers into the market, rates would need to drop and stay low for a sustained period.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.