The electrical industry is undergoing significant transformation. As demand for data centers, critical infrastructure, and electrification projects accelerates, contractors are facing a unique opportunity to expand beyond installation services and create new revenue streams through equipment manufacturing.

In this episode, Mary Derrick, Vice President of EOEM and Power Applications at Schneider Electric, discusses how electrical contractors can evolve into Electrical Original Equipment Manufacturers (EOEMs) and capitalize on one of the fastest-growing segments of the power industry. Mary shares insights from her work with contractors, OEMs, distributors, and partners across North America, highlighting the market trends driving demand for custom-engineered electrical equipment, including switchboards, power distribution systems, and mission-critical infrastructure solutions.

The discussion explores why contractors are uniquely positioned to succeed as EOEMs, leveraging customer relationships, installation expertise, and market knowledge to expand their capabilities. Mary also discusses the critical success factors for entering the market, including engineering expertise, UL 891 competency, supply chain resilience, and strategic partnerships.

Listeners will learn how the growth of hyperscale data centers and other electro-intensive industries is creating new opportunities for contractors, what separates successful EOEMs from the competition, and how Schneider Electric is helping partners grow through innovation, support, and collaboration. Whether you're exploring manufacturing for the first time or looking to scale your existing business, this conversation offers practical guidance for navigating the future of the electrical industry.

Full transcript below:

Ellen Parson: Hello, and welcome to the EC&M Magazine podcast, EC&M On Air, produced by Endeavor Business Media, a division of Endeavor B2B. This show shares industry intelligence, insights, and opinions on all topics electrical. Join us as we explore trending topics and go behind the scenes and into the minds of our extraordinary authors and subject matter experts. I'm Ellen Parson, Head of Content at EC&M. Thanks for joining us today for this special bonus episode of EC&M On Air, sponsored by Schneider Electric, in which we're going to be diving into a very important and timely conversation on powering growth EOEM opportunities for electrical contractors; and that's short for Electrical Original Equipment Manufacturers. It's clear the electrical industry is undergoing significant transformation, that's no secret. So, as the demand for data centers, critical infrastructure, and electrification projects accelerates, electrical contractors are facing an opportunity to expand beyond installation services and create new revenue streams through equipment manufacturing. The goal for today is to explore why some contractors are expanding into equipment manufacturing, what advantages they may bring to the EOEM space, and what contractors, our listeners, should consider before deciding whether this opportunity makes sense for them.

Ellen Parson: So, I'm joined today by an industry expert from Schneider Electric, Mary Derrick. Mary, welcome to the podcast, thanks for being here.

Mary Derrick: Thank you, Ellen, and hello, everybody.

Ellen Parson: Mary, could you just take a minute before we get started to introduce yourself and go over your role at Schneider and how that ties into today's topic?

Mary Derrick: Sure, first of all, thanks for having me. Honored to be able to join you today. As a bit of background on myself, I lead our EOEM and power applications organization here at Schneider Electric. And so what that means is, the part of Schneider Electric that is focused on helping equipment manufacturers deliver better solutions to their customers through a mix of software, services, and components. I've been with Schneider about 16 years, in various roles across strategy, sales, marketing, and digital transformation. But longer than that, have been in the industry for quite some time, and also spent some time at Gartner focused on B2B sales strategy. So, a long, winding path that has really culminated in this opportunity, and an incredible opportunity in the industry, actually, around transformation in equipment manufacturing. And I think if those of you on the line aren't familiar with Schneider Electric, Schneider is really a global leader in energy management and automation technology. We help customers make their operations more efficient, resilient and sustainable; and that ranges from industrial facilities and data centers all the way through to buildings, homes, and infrastructure. Back to you, Ellen.

Ellen Parson: Okay, great. Thanks, Mary. I'm excited to hear about this topic. I know our audience will be too, so that electrical contractors can find out how can they evolve into electrical original equipment manufacturers, and then capitalize on one of the fastest growing segments of the power industry, sharing insights from your work with contractors, OEMs, distributors, and partners across North America. I know our listeners are eager to hear the latest market trends driving demand for custom engineered electrical equipment, and that includes switchboards, power distribution systems, and mission-critical infrastructure solutions.

Ellen Parson: So, that's enough of that. Let's get to the good stuff. We want to pick Mary's brain on the trends here, so let's jump right into the discussion. I wanted to start with, Mary, you have a unique view across the electrical equipment ecosystem. So, what market shifts are creating the biggest opportunities, in your opinion, for contractors today?

Mary Derrick: And I think you touched on it a little bit in the beginning, Ellen. There's clearly several shifts that are really converging all at once, and as you mentioned, it's no secret, especially when we think about the data center and critical infrastructure demand that has skyrocketed. And it's really increasing, I think, this need for custom, high-reliability electrical equipment. A point of transformation in our industry like we've never seen before. And at the same time as this huge demand spike, customers are placing even greater value around responsiveness, flexibility, and speed to market. And the interesting thing here is that contractors really are uniquely positioned, because they already know the customer, the application, and the realities and challenges of installation. So this concept of also looking at equipment manufacturing really allows contractors to build on their strengths and start to participate in more of the value chain, more of the customer solution than just installation. And a key point here is that the market does not simply need more capacity, it really needs capable partners that can engineer, manufacture, and deliver solutions around those specific customer requirements.

Ellen Parson: Okay. Well, that's really interesting, and have you seen this in the last few years? Why do you think this conversation, the EOEM conversation, has become so important more recently?

Mary Derrick: Yeah, and maybe I should say, I know we keep using the term EOEM, and what we're really talking about here is any company that has electrical equipment manufacturing capability, whether that's switchboards, panelboards, prefab, across low voltage and medium voltage, honestly. And so, you might hear EOEM, you might hear the word panel builder, but honestly, this concept of an EOEM is one who can manufacture custom engineered electrical equipment, and why it's so important now, or why we might think it's so critical for contractors at this point in time, is because of the convergence in the industry around needing responsiveness, needing that engineering configuration and manufacturing all together. We're seeing in data centers, but also in grid solutions, when the manufacturing solution is not well tied off with the installation or contractor solution, it's a disaster. So, for contractors, this creates a huge opportunity to really expand beyond installation, and now provide a much more complete solution to the customer whose needs are more different than they've ever been in the past, and who requires such a high level of integration that we just haven't seen in the past.

Ellen Parson: Okay, great. Well, thanks for that overview there, that makes sense. What role is the growth of data centers that you mentioned earlier, and other electro-intensive industries playing in reshaping the market?

Mary Derrick: You know, of course, as we talked about, data center growth is not only increasing the demand for highly reliable and really application-specific solutions. It's also challenging us all to rapidly increase the innovation cycle in our solutions, meaning data centers demand for energy is causing manufacturers to have to constantly innovate and bring new solutions to them, and it's changing in a 12-month cycle, which, historically in our industry, that hasn't been the case. And so, the need for electrical contractors and manufacturers to be constantly changing, constantly shifting, is reshaping the market. It's reshaping what offers are brought, it's reshaping how contractors are serving these customers, and especially if you think about traditional EOEMs who might have focused on oil and gas. But now, or expanding more into data center, we need faster response time, faster innovation cycles, and equipment that's much more custom designed around operating requirements, and that's not just one product category, that's the thing. This is across UL 891 switchboards, 1558 switchgear, control panels, PDUs, RPPs, e-houses, skidding, any prefab, medium voltage, you name it. I think data centers is causing all of us to say, we're no longer in silos. We have to work together, this has to be an integrated solution, and we're not talking about a single product. We're talking about a truly integrated solution, especially in the prefab space, where again, manufacturing and installation and services have to become one.

Ellen Parson: Wow, that's a lot to consider. Thanks for that perspective on that. That's so interesting. So you did mention earlier, many contractors are evaluating ways to expand their business models. So why do you think the EOEM path is attracting so much attention now?

Mary Derrick: As we've discussed, it's this opportunity for the contractor who wants to. Again, I don't think this is necessarily every electrical contractor, but those who are really looking to extend their business model. This is a great opportunity for them to expand on relationships that they already have by bringing more value to the customer, because as we noted earlier, contractors really understand how equipment is applied, installed, commissioned, and maintained. They're close to the end user, they recognize the changing requirements, and so adding in additional capability around engineering, manufacturing, prefab, certification. It really lets those contractors get into a finished solution and system all under their own brand. And that creates not only broader relationships with existing customers, but I think it creates new project opportunities, and this concept of creating repeat work through retrofit upgrades and service across the board.

Ellen Parson: Well, that's a great way to transition into our next question, honestly. I wondered if you could speak on what you've seen in the field, the examples of contractors who are doing this. What advantages do they bring when they move into this equipment manufacturing, from what you've seen?

Mary Derrick: And we touched on it a little bit; of course, contractors can leverage their biggest advantages they already have. Customer intimacy and installation know-how. They leverage those base foundational capabilities and can then fully bring the full consequences of design decisions to the customer by helping them engineer equipment that's easier to install, aligned to the application, and much more responsive, hopefully, to the customer's schedule. So, again, I think it's, "what are the benefits"? It's allowing electrical contractors to become more of a hybrid solution to their customers. They're no longer just operating in one silo. They can really bring the broader capability to those customers, and then create repeat business around modernization and upgrades that lengthen the life cycle of those relationships.

Ellen Parson: Okay, perfect. So, along those same lines, what have you seen that separates the successful EOEMs from those who maybe struggle to gain traction?

Mary Derrick: It's a great question. I would note a couple of points. One, it's a really important decision that needs to be weighed around, do we feel like we have true differentiation? So, do we have a clear vision for our target customer, the target application, and how we'll be differentiated in this space? The winners are able to say that clearly. Those who have struggled have just said, "hey, I'd love to get into this manufacturing space". But they don't have the clear value proposition and differentiation, because it's a crowded space. There's a lot of folks in this space right now. So the winners are really able to clarify that value proposition, and then build the technical capability to deliver that consistently. And it's not going to be one size fits all, and it's not going to be all capabilities. It's really got to be custom-tailored to what the contractor's strengths are. Two, I think the winners are able to really separate this business and recognize that it needs to be treated completely differently than the traditional contracting side of the business, meaning they're setting up entirely different silos or different parts of their company, and that means different procurement teams, different service teams, whole new sets of capabilities in engineering. It's not a case of sharing headcount or sharing resources, it's really a case of realizing that this is a different business model and has to be treated as such. And a lot of that comes with, making sure you have the right competencies, especially if you're looking at UL 891 and switchboards. Are you hiring the right engineering competency? Do you know how to secure the component supply? And procurement in manufacturing is very different than procurement in electrical contracting. So the winners are able to recognize those differences, and then hire and treat those businesses differently.

Ellen Parson: Okay, that makes sense. So it's very important for these contractors to have that engineering expertise, and then you mentioned UL 891 competency, so that's all critical.

Mary Derrick: Yeah, absolutely, and again, you may say, "hey, I'm gonna go into this not necessarily in UL 891, I might start in the skidding space". And so it's different by what area of the market you're trying to tackle, but no matter what, the engineering expertise and the UL relationship is critical. And that means an in-house team of engineers that, are really able to interpret the UL requirements, and then administer and deploy compliant designs. And so again, this is a different skill set than a lot of electrical contractors have had in-house. And those who are succeeding are really taking a customer-first approach, understanding the customer requirements. And then designing with the right electrical engineering expertise. And I would note here that a lot of electrical contractors are partnering with one of the original OEMs, one of the manufacturers, whether that's Schneider Electric or others, because we also can help, as you know, putting on my Schneider hat just for a second here, we can come in and work with an electrical contractor around what are the right UL relationships, how do we partner around design? And what does supply look like from, a component standpoint, whether that's breakers or surge protective devices, metering, relays? Part of this is also having very strong relationships across the supply chain.

Ellen Parson: Well, that's really important. So, speaking of the supply chain, that's another question I had; how can contractors succeed in today's market with these supply chain challenges? And, they really need to be resilient, obviously, to succeed.

Mary Derrick: Yeah, and this is a very difficult time, as everyone likely knows, because of the huge demand across the market, there are a lot of upstream constraints, and we're all feeling it, across the board, no matter what electrical component or equipment you're talking about. And so resiliency is critical, and it's part of the value proposition. I think building that relationship with the OEMs, with the manufacturers, making sure you understand what is the right lead time, what is the right quality, and you have a really deep partnership where there's trust and a high level of transparency, is critical. And so I think if you're a contractor who's thinking about entering this space, or maybe recently has, having that very strong practice around planning, as we call SIOP (Sales, Inventory & Operations Planning) internally, but building those relationships from a manufacturing standpoint is critically important. And that's where it does help, again, to go in it with a manufacturer who's already in the space to help you, not just from a design standpoint, but from a supply standpoint.

Ellen Parson: Definitely. That's definitely going to be important. Thanks for explaining that. I did want to get into another area of growth opportunities. Where do you see the greatest growth opportunities within power distribution and critical infrastructure?

Mary Derrick: You know, clearly, one of the biggest opportunities in custom power distribution solutions is around data centers, and often, you might think about those Tier 2 data centers, COLOs, that have still electro-intensive applications, but maybe aren't being served by one of the big four OEMs in the space. And again, I'm not just talking switchboards, I'm talking the full spectrum of needs that they may have. Now, it's not just data centers, of course. We also see huge opportunities in infrastructure, in buildings, across the board. And the question I would ask a contractor is, "what is your installed base? What is your strength? Where do you already play well?", and then build off of that, so it doesn't have to be data center by any means. Of course, data center is a great opportunity, as well as critical infrastructure, but the key is where you are going to differentiate, where you have strength and capability that already exists today, and that's going to absolutely vary by company.

Ellen Parson: So many possibilities, too.

Mary Derrick: Yeah, absolutely.

Ellen Parson: Depending on the customization.

Mary Derrick: 100%. I think the key is really selecting the market where you have, or where the contractor has customer access application knowledge, and then a real credible reason to win.

Ellen Parson: Right, okay, that makes sense. I wanted to circle back to something you already mentioned about the relationship. I know our audience, this will resonate with them. How do you think the relationship between manufacturers, distributors, contractors, and end users is evolving as these customer expectations continue to change?

Mary Derrick: You know, it's definitely evolving and becoming much more collaborative, and honestly, the lines are blurring. You know, what used to be a manufacturer, or what used to be a distributor, or what used to be a contractor, there used to be very clear lines. Thatt's no longer the case. Really, we're looking at truly a hybrid model where, distributors may be in the panel buildings, panelboard space, or manufacturers may be looking at service, or contractors are looking at manufacturing. And honestly, the reason we see this divergence is because end users need highly responsive partners that understand the full spectrum. They understand the application, the configuration of the right solution, and the support execution and installation. So, all of us - manufacturers, distributors, contractors, - we all need to be clear on the value that we are bringing, and how we collaborate together, and that's why relationships are so important in this point in time. Because you have to have a high volume or high level of trust and shared access to these opportunities, so that we're constantly communicating, we're collaborating on the technical solution and the execution support, we're transparent around supply, we're transparent around the customer solutions, and we can work together to go solve those.

Ellen Parson: So, would you say that collaboration is one of the most important points as far as what capabilities do organizations need to develop to stay competitive over the next 5 years? Because that's what everybody's looking at, "what am I going to do this year, next year? How can I get into this?", for our listeners who are interested in this topic.

Mary Derrick: Absolutely, collaboration is there. I think for any contractor that's already in this space of, let's say, prefab or equipment manufacturing, or those thinking about it, yes, strong levels of collaboration across the value chain are critical. I'd also focus on a couple other areas. I would say application and engineering depth. And not only expertise, but also the ability to translate customer requirements into compliant and optimized designs. That's really critical, and that's going back to the point we made around the importance of engineering expertise, and engineering expertise that is based on customer need. I'd also say, supply chain, as we mentioned, the strength of relationship with your upstream supply and the discipline around planning together is critical. I also think just a commercial model where, like we said before, the relationship between a manufacturer, a contractor, a distributor, we're all sharing around what works to succeed in winning the opportunity. And that may be sharing leads. It may be thinking about what part of this job are we gonna do, and what part are you gonna do, and how do we work through it together. So, I think that last point is really coming back to the start of this note around collaboration. The key is no single capability is enough, and at Schneider, we're highly interested in working with electrical contractors on this journey, supporting them across the journey and figuring out how we make this ecosystem work.

Ellen Parson: Definitely, and that's going to be really important for our listeners to remember, so thanks for that overview. I did want to ask you, as an expert in this space, what's maybe one misconception that you wish the industry understood about the EOEM opportunity, if you had to just pick one?

Mary Derrick: I think a lot of people, even just around the concept of the definition, a lot of people might think that, "oh, I can become a EOEM just by assembling or reselling equipment", and that's really not the model that our customers need, or that we're really talking about here. We're really talking about someone who is adding meaningful engineering, configuration, or integration value add, and doing that under their own brand. And the second misconception might be that, "hey, we have the customer relationship, and that's all we need to guarantee success". Not truly the full picture, right? Those relationships are a major advantage, but they have to be supported by the right engineering competency, certification discipline, quality. Quality is huge here. A lot of our big end users are getting frustrated with the quality of, let's say, e-houses or prefab solutions that they're getting. So quality, reliable supply, consistent execution, those are critical.

Ellen Parson: Those are definitely all great points. I think as we wrap up here, I wanted to ask you one more question; our listeners are always interested in advice from the subject matter experts. So, Mary, what advice would you give business leaders who are evaluating whether this market is right for them?

Mary Derrick: It's a great question, because it's not right for everyone. Adding manufacturing capability into your company is not an easy path, and it really needs to start probably with an honest assessment of what is your right to win. Do you have differentiation? Do you have a clear target of what customer and application you're gonna go after? And that includes asking yourself some questions, right? Which customers and applications do we understand better than others? What problems can we solve that the market is not solving well today? Do we have the investment and the discipline, operationally, to separate out this business and build the engineering capability that's required. You know, can we secure the upstream components? Do we have a relationship with a manufacturer that can help us do that? Are we prepared to operate, frankly, with, as we mentioned earlier, the quality discipline that is going to be required from these end users? These are all the different types of questions I would ask as you start this journey, and I would encourage you, again, partner with one of the large OEMs to help you at least consult through this process. Consult around what kind of engineering do we need, how do we build the UL relationship, etc. There's a lot of companies out there, and I would put my Schneider hat on for a second and say, "we are one of them", and probably I'd like to think the best out there in terms of helping you think through these types of questions.

Ellen Parson: Well, Mary, thank you so much. This is just a fascinating subject, and we definitely had the right subject matter expert to talk about this today. Just such a great conversation. I know I learned a lot, and I know our listeners did too. It does look like we're out of time for today. Thanks so much to Mary for sharing her insight, industry knowledge, and expertise with us today, and thanks to Schneider Electric for sponsoring this important conversation. This podcast is produced by Endeavor Business Media, a division of Endeavor B2B. Thanks, and have a great day.