Electrical Equipment Manufacturers

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 1,700 electrical equipment manufacturing firms in the US produce goods that generate, control and distribute power. The industry manufactures a wide range from products including light fixture components; electric motors, generators, and components; power substation transformers; electrical panels and components for buildings; and electrical controls used in machinery.

Reliance on Construction Spending

Electrical equipment manufacturers’ sales are affected by the health of the construction sector.

Electric Grid Modernization

The need to modernize and expand electric grids is a positive for electrical equipment manufacturers.

Industry size & Structure

A typical electrical equipment manufacturer employs 77 workers and generates about $22 million annually.

    • The electrical equipment manufacturing industry consists of about 1,700 companies which employ about 134,300 workers and generate about $38 billion annually.
    • Most companies are small, independent operators - about 84% have a single location.
    • The industry is concentrated: the 20 largest firms represent 53% of industry revenue.
    • Customer industries include electric power generators and distributors, lighting equipment manufacturers, industrial machinery manufacturers, motor manufacturers and repair services, electrical component wholesalers and retailers, and electrical contractors.
    • Large companies include General Electric, Honeywell, Schneider Electric, Emerson, and Eaton.
                                  Industry Forecast
                                  Electrical Equipment Manufacturers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Mar 21, 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.
                                  • US manufacturing activity, a demand indicator for electrical equipment, contracted in February 2022 for the fourth consecutive month, according to the Institute for Supply Management (ISM). The ISM’s Purchasing Managers Index (PMI) in February rose to 47.7%, up from 47.4% in January. A reading above 50% indicates manufacturing expansion. February’s New Orders Index rose 4.5 percentage points to 47%. The February Production Index fell 0.7 percentage points to 47.3%. Of the 18 manufacturing industries tracked by the ISM, only four reported growth in February: apparel, leather & allied products; transportation equipment; petroleum & coal products; and electrical equipment, appliances & components. Sectors reporting some of the most significant contractions in February included: printing & related support activities; paper products; wood products; textile mills; furniture products; nonmetallic mineral products; plastic & rubber products; food, beverage & tobacco products; chemical products; and primary metals.
                                  • 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.”
                                  • The total value of US power construction put in place increased by 0.9% in January 2023 compared to the prior month, according to the US Census Bureau. However, the value of power construction was down 4.6% compared to January 2022.
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