Electrical Equipment Distributors

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 7,500 electrical equipment and parts distributors in the US consolidate products across many manufacturers to offer customers wide selections, reasonable prices, and a single point of contact. Major product categories include switchgear and switchboard apparatus; wiring and cable; lighting fixtures; industrial controls; conduit, raceway, and fittings; power and distribution transformers; and motors and generators.

Competition from Alternative Channels 

Electrical products are available through a wide variety of channels, including manufacturers, retailers, energy service companies (ESCOs), product specialists, niche service distributors, and distributors of other trades.

Counterfeit Electrical Products

Counterfeit electrical products, often produced outside the US, have infiltrated the supply chain and are raising distributors’ liability risk.

Industry size & Structure

A typical electrical distributor operates out of a single location, employs about 24 workers, and generates about $17 million in annual revenue.

    • The electrical distribution industry consists of about 7,500 companies which generate $132 billion annually and employ 182,000 workers.
    • Most electrical distributors are small, independent operations - 56% of electrical distributors have a single location and 68% employ fewer than 10 workers.
    • Customers include building contractors (29% of sales), other wholesalers and distributors (24%), industrial businesses (10%), retailers (8%), businesses for their own use (19%), and government (4%).
    • Large companies include International Electric Supplies, Rexel (Gexpro), Sonepar USA, WESCO Distribution, Graybar Electric, and Consolidated Electrical Distributors.
                                  Industry Forecast
                                  Electrical Equipment Distributors Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Mar 27, 2024 - Producer Prices Rise Amid Falling Wage Growth
                                  • Producer prices charged by household appliance and electrical goods distributors were up sharply in Q4, year-over-year, according to the Bureau of Labor Statistics (BLS). BLS data show that industry wages decreased slightly over the same period, signaling wholesalers may successfully be passing on their higher equipment costs to customers. In Q4, industry employment growth was steady compared to the same time in 2022, according to the BLS.
                                  • Steady government investments in infrastructure, and building and transportation electrification are expected to drive robust growth in utility system construction spending in 2024, according to construction consultancy and investment banking firm FMI. Grids expect strong electricity load growth in the coming years amid increased investments in manufacturing, data centers, and the electrification of transportation and buildings. Power project spending is forecast to rise 11% in 2024 over 2023 levels. Population growth and funding from the Infrastructure Investment and Jobs Act are boosting spending for sewage and water systems. Construction spending for sewage and waste disposal projects is expected to rise by 11% in 2024, and water supply expenditures will grow by 8%.
                                  • 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. That is likely going to require leaning more on fossil fuels, namely natural gas, which complicates tech and utility firm industry commitments to reducing their emissions. 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.
                                  • The total value of nonresidential building construction starts decreased a seasonally adjusted 16% in February from January, according to Dodge Construction Network. The drop was led by a 28% decrease in manufacturing projects. Commercial construction starts were off by 3% in February amid fewer warehouse starts, and institutional projects saw a 19% decline in starts amid weakness in the transportation and education buildings segments. Dodge Construction Network chief economist Richard Branch said, “Construction activity was hit hard by higher rates and more restrictive credit standards. Starts struggled over the past several months as the lagged effect of higher rates impacted projects moving forward through the planning process. Additionally, the significant deficit of skilled labor led to further delays – especially in the manufacturing sector. While optimism should prevail in the second half of the year as the Federal Reserve begins to cut rates, some sectors like commercial, will make little headway over the remainder of the year.”
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