Last year, the 2017 Top 50 Electrical Contractors pulled in record revenues from electrical work, hitting a total of $23.8 billion and marking the second year in a row of more than 4.4% growth. As a group, the 2018 Top 50 shattered that number, bringing in a combined $26.2 billion, a 10% increase from the previous year! But what prompted that number to soar in two years? According to Freelance Writer Tom Zind in this month’s cover story, many factors are at work here, making specific drivers difficult to pinpoint. In the special report, Zind reveals that although many of the key players have enjoyed good fortune for years, the challenge going forward will not necessarily be on how to grow but rather on how to effectively manage that growth.
Operating in growth mode may seem like a good problem to have, but based on feedback from this year’s Top 50 survey, most electrical contracting firms agree it’s not as simple as it seems. Some recent industry stats help explain the current business climate. According to analysis of new government data by the Associated General Contractors of America (AGC), construction employment increased by 23,000 jobs in August (reaching a total of 7,259,000 — the highest level since May 2008) and by 297,000 jobs over the past year, reaching a 10-year high, while the industry’s unemployment rate stood at an all-time low. Even as companies continued to expand, a new survey recently released from the association finds most construction companies struggling to find enough workers to keep up with demand.
Three-quarters of respondents to the AGC survey indicated they will boost head count in the next year, despite the fact that 80% of them report having trouble filling hourly craft positions. Data from the EC&M survey yielded similar results — with 87% of respondents expressing they are having issues with worker shortages. Almost unanimously, the Top 50 named “recruiting and retaining qualified skilled labor” as their single biggest business challenge. Specifically, respondents named “project manager” as the most difficult position to fill, followed by “electrician” and “journeyman.” That reality isn’t dissuading them from adding employees, though. A total of 69% of respondents expect to add workers in 2018. The Top 50 also overwhelmingly cited “on-the-job training and shadowing” as their leading method of transferring knowledge between veteran workers and their newly hired counterparts, and named “competitive wages” and “company culture” as the two factors influencing employee retention the most.
What’s being done to successfully sidestep the skilled labor shortfall? In addition to efforts from individual contractors to overcome hiring and retention obstacles, AGC recently released a new Workforce Development Plan, which calls on federal officials to double funding for career and technical education programs over the next five years, reform immigration, and improve federal workforce training programs. “There is little doubt that construction firms would have added even more new workers if the pool of available, qualified workers was larger,” said Stephen E. Sandherr, the association’s chief executive officer, in a recent news release. “By making a few common-sense changes to our current education and workforce training approach, federal officials can help place significantly more people into high-paying construction careers.” Have ideas on how to navigate this situation? If so, we’d love to hear from you. What may have seemed like an isolated staffing issue for individual businesses a few years ago has grown into an industry-wide issue that’s not going away any time soon.
