Largest Contractors Set Sales Records

Dec. 8, 2006
For the second year in a row, companies in Electrical Construction & Maintenance’s listing of the largest electrical contractors registered solid sales

For the second year in a row, companies in Electrical Construction & Maintenance’s listing of the largest electrical contractors registered solid sales.

The EC&M Top 50’s sales for electrical and datacom services grew in record numbers, totaling more than $7.3 billion. The average gain measured 16.6 percent, well above last year’s average gain of 11.6 percent. Almost half of the 50 firms reported a percentage change of more than 10 percent. More than three-fourths of the firms met or exceeded their sales goals for 2005 — only seven missed it, mostly by a very narrow margin.

The average net profit for Top 50 contractors providing data was 3.1 percent. Two firms reported net profits higher than 8 percent, an almost unheard-of number in an industry plagued with high overhead.

Many of the firms attribute their continued good fortune to increased productivity in the field, larger contracts, better pre-construction communication on the part of the engineers (leading to better quality plans and specs), improved project management, surety availability and successful branding and advertising campaigns. Several firms launched training programs for their rank and file as well as supervisors, which improved work practices in the field as well as safety numbers.

But despite impressive sales and record net profits, firms are concerned by rising costs — specifically fluctuations in materials, fuel and labor prices — and product availability that make putting together accurate project budgets and meeting tight schedules difficult. Ironically, the post-hurricane reconstruction efforts in the Gulf Coast that have provided almost unlimited work have also strained the nation’s fuel supply, workforce and material resources.

Increased competition among contractors also seems to be driving up the cost of business. Several firms blame general contractors, owners and developers that award projects based on lowest price rather than best value for cutting profit margins. In addition, rising interest rates have caused a downturn in the residential market, putting more pressure on other core markets to fill the gaps.

When asked to name their biggest challenges, an overwhelming majority of electrical contractors cited the shortage of skilled labor and experienced project managers and supervisors. Along with the increased costs of carrying benefits and pensions, firms are now investing more in workforce training programs to attract younger employees to the industry and teach them new skills and safety procedures.

Rounding out the list were increased competition, managing sales growth, implementing safety initiatives, a slowdown in field productivity, decentralization vs. centralization, long-term construction schedules, slow payment, rising fuel prices and weak vertical markets.