Sitting in front of my keyboard in contemplation as I do every September, pondering which parts of our comprehensive Top 50 Electrical Contractor survey results to share with you, I can’t seem to shake the uncanny predictions of several of last year’s respondents. Aptly titled “Uncharted Territory,” last year’s special report examined how key players in the electrical contracting arena were navigating the pandemic. Using phrases like “trying times,” “unprecedented challenges,” and “cautious optimism,” many Top 50 sources accurately described the business landscape in 2020 as grossly unpredictable due to the fluid nature of the situation unfolding. I think one respondent characterized it best when he said: “Our biggest challenge will be learning what our new normal looks like.” Looking back, the level of insight in this statement blows me away. One year later, can any of us say exactly what this new normal looks like? Unfortunately, I think the answer is no — that definition is still a work in progress.
Despite the fact that Top 50 companies responding to this year’s survey posted an overall revenue increase of approximately $1 billion in 2020 from last year (surpassing $34 billion as a collective group) — thanks to more than 30 firms that saw revenues grow a little or a lot — there’s no question uncertainty remains for many electrical contractors when it comes to a recovery. This uncertainty comes in many forms and depends on numerous factors, which include: when and if the federal infrastructure bill will pan out; what the new vaccine mandate will mean for contractors who do business with the federal government; and how inflation will affect the market going forward. Calling out “delays with material delivery and logistics” as their single biggest challenge to finishing jobs on time and within budget, Top 50 respondents will likely have to deal not only with material supply shortages, but also with ongoing material price hikes (especially for wire and cable as well as conduit, raceway, and wireway, which were identified as the most impactful). Lastly, the labor shortage is taking its toll. When asked if they were feeling a strain when it comes to hiring certain types of electrical professionals, 75% of respondents this year said “yes” (up from 51% last year), citing “electrical foreman” as the most difficult position to fill followed by “electrician” and “journeyman.”
Looking at the analysis from this year’s survey data, I see things two ways. You can definitely pinpoint certain challenges facing electrical contractors that will undoubtedly trickle over into 2022. However, at the same time, some overwhelming positives also jump out as a result of overcoming obstacles. First of all, the fact that 42% of Top 50 companies this year consider their business “already back to normal,” compared to 11% who saw it as such at the same time last year, is a good sign. Another bright spot is only 17% of this year’s Top 50 indicated they expect a shortfall in revenue for 2021 (compared to 44% in 2020), suggesting the recovery is already underway. The number of companies expecting profit margins to at least stay the same surged from 56% last year to 73% this year. Looking at overall electrical revenue expectations, last year only one company forecasted more than an 11% increase; this year, that number spiked to 11, suggesting a substantial increase in optimism. At this same time last year, 50% of respondents planned to lay off employees, a trend we’ve never seen before in the Top 50 results. This year, the tides are turning, considering only 2% of respondents suggest they are planning to reduce head count in 2021.
As far as coping with any long-term effects of the pandemic, Top 50 firms are undeniably adaptable. Reinventing new and creative ways to get work done more effectively and branching into new niches in search of additional revenue streams are just a few of the ways electrical contractors are pushing forward. In closing, last year I predicted that electrical contractors would “weather the storm and come out on the other side much better than expected.” A year later, I’m proud to stand by that projection. Read the full cover story, “Hanging Tough,” written by Freelance Writer Tom Zind. As a whole, I believe the electrical industry’s resilience will continue to shine through even under the most difficult of circumstances. So this year, I believe we’re bound for a rebound.
