The overall average year-over-year gain for EC&M’s Top 50 electrical contractors measured 26.7 percent for a total of $12.4 billion in sales for electrical and datacom services in 2006 — well over last year’s $7.3 billion record. More than two-thirds of the firms described the 2006 business climate as “strong.”
Only four of the Top 50 firms missed their sales goals in 2006: three by 5 percent or less and one by 6 percent to 10 percent. More than one-third of the firms exceeded their sales goals by more than 10 percent. Even more astounding were the net profit numbers. Out of the 26 firms that reported that figure, eight firms claimed a net profit of more than 5 percent, with three in that group reporting a net profit of more than 9 percent. The net profit in 2006 averaged 5.4 percent, with the lowest at 1 percent and the highest at a whopping 15 percent.
In this competitive market, the Top 50 firms were forced to look for ways to retain experienced project managers and supervisors. Many implemented training programs or added incentives, such as extra time off or bonuses. While the firms have yet to report an actual shortage of workers, with more than two-thirds of companies on the Top 50 list hiring additional labor to complete projects, it appears to be only a matter of time before this prediction comes true. Most firms have already encountered fierce competition for experienced project managers.
The value of private nonresidential construction soared in 2006. According to the U.S. Census Bureau’s Construction Put-in-Place, some markets experienced year-over-year increases in double digits. This was good news for the majority of Top 50 firms that reported being active in the industrial, commercial, institutional, and health care markets. But even those in other markets experienced a rise in revenue figures, as well as difficulty finding an experienced workforce. The Top 50 also reported that, on average, 68.1 percent of their projects are new construction versus retrofit.
Looking to the future, more than two-thirds of the firms on the Top 50 list expect an increase in sales in 2007. The firms seem more cautious about the coming year than they did the year before. Although some harbor concerns that the scandals plaguing the subprime mortgage lenders may eventually have a negative impact on lending for nonresidential construction, the outlook remains optimistic.