Utility System Construction

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 17,500 utility system construction firms in the US are specialty contractors that develop buildings, structures, and distribution networks associated with water, sewer, petroleum, gas, power, and communication systems. Firms provide new construction, reconstruction, rehabilitation, and repair services. Companies may specialize in a utility sector or offer services across multiple utilities.

Difficult Work Site Conditions

Utility construction projects can involve complex site conditions, including difficult to reach terrain and underground locations.

Seasonality and the Weather

Seasonal demand for utility system construction services creates uneven cash flow.

Industry size & Structure

The average utility construction firm employs 31 workers and generates over $9 million in annual revenue.

    • The average water and sewer line construction firm employs 14 workers and generates $4 million annually.
    • The average oil and gas pipeline construction firm employs 103 workers and generates about $27 million annually.
    • The average power and communication line construction firm employs 44 workers and generates about $12-13 million annually.
    • The utility system construction industry consists of about 17,500 companies that employ 543,700 workers and generate about $158 billion annually.
    • Water and sewer construction firms account for about 28% of industry revenue and 60% of firms. Oil and gas pipeline construction firms account for about 31% of industry revenue and 11% of firms. Power and communication line construction firms account for 41% of revenue and 29% of firms.
    • The utility system construction industry includes several large players with national to near-national scope, regional firms, and many small independent firms that often serve as subcontractors to larger firms and operate within a limited geographical market.
    • Large companies include MasTec, Dycom Industries, and Layne. Some large firms have international operations.
                      Industry Forecast
                      Utility System Construction Industry Growth
                      Source: Vertical IQ and Inforum

                      Recent Developments

                      Mar 16, 2023 - US Solar Industry Awaits IRS Clarifications
                      • While the Inflation Reduction Act (IRA) is expected to unleash a wave of domestic solar manufacturing capacity investment that many never thought possible, full implementation will take time, according to Utility Dive. Since the IRA was signed, 18 new solar manufacturing projects have been announced, according to the Department of Energy’s Solar Energy Technologies Office (SETO). However, some manufacturers and financiers are waiting for the IRS to finalize implementation details about the law’s tax credits, such as the percentage of domestic content required for a product to qualify for the full credit. Striking the right balance will be critical, according to solar trade group Solar Energy Manufacturing for America Coalition (SEMA). If the IRS standard for US content is too stringent, it could stifle investment. However, an ambitious domestic content requirement could spur development of production capacity for components further up the solar supply chain.
                      • The nascent US offshore wind industry does not yet have enough skilled workers in the pipeline to meet the Biden administration’s goal of having 30 gigawatts of offshore wind generation capacity installed by 2030, according to recent remarks by Jeremy Stefek, a researcher at the Department of Energy’s National Renewable Energy Laboratory (NREL). The NREL suggests that training and apprenticeship programs could help bring more people into the industry, but building the programs and training the workers would take several years. To meet near-term labor needs, the NREL said offshore wind projects could recruit workers in adjacent industries, such as offshore oil and gas.
                      • The Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) are helping to fund water projects through the Department of the Interior to improve water supply reliability and conservation projects in the Upper Colorado River Basin, according to WaterWorld Magazine. The IIJA provides $278 million for seven rural water projects in Iowa, Minnesota, Montana, New Mexico, North Dakota, and South Dakota. The Bureau of Reclamation is also allocating up to $125 million through the IRA to relaunch the System Conservation Pilot Program in the Upper Colorado River Basin, which will support water management and conservation efforts to protect the short-term sustainability of the Colorado River System.
                      • US efforts to foster a domestic solar equipment supply chain could run into trouble from a proposed plan by China to limit exports of some solar equipment, according to The Wall Street Journal. China may add the technology to make ingots and wafers used in solar panels to a group of products that are subject to export restrictions. China presently controls nearly all of the global manufacturing capacity for solar ingot and wafer production and a significant portion of the market for the equipment used to manufacture them. China’s market control is particularly tight for the large panels holding a dominant market share. If the controls go into effect, Chinese solar manufacturers would have to secure an export license from the local provisional government. China has not indicated when it will make a final decision on the restrictions.
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