Whenever you ever want to get a feel for the health of a local electrical market, the latest electrical contractor and industrial employment data are two pretty good indicators.
Along with providing a measure of the employment situation in specific industries, this contractor and industrial data (available on a monthly basis from the U.S. Bureau of Labor Statistics (BLS)) can also be used to estimate potential sales on a sales-per-employee basis. Electrical Marketing publishes this information for its subscribers on a regular basis for these two important verticals, which typically account for a combined total of between 70% to 75% of the average full-line electrical business.
EM calls this combined total the “Core Electrical Potential,” and our estimates for the 50 Metropolitan Statistical Areas (MSAs) with the largest Core Electrical Potential are in a chart on page 2. The latest data for all 300-plus MSAs and 50 states is available at www.electricalmarketing.com by clicking on this link.
As you can imagine, employment in these two important customer groups is way off in 2020 because of the COVID-19 crisis. As a point of comparison, let’s look at them on a national basis first, before delving into the local data. On a national basis, electrical contractor employment was down -11.2% year-over-year (YOY) at its low point in April to 842,300 employees. Since that time, it’s improved dramatically, averaging a -2.9% decline for the June. 2020–Aug. 2020 period. Industrial employment followed a similar pattern, dropping to a low of -10.5% in April to 11,432,000 before recovering to -5.8% for the same period.
While a surprising number of local markets were tracking much better than the percentage declines in the YOY national data basis through August, Electrical Marketing’s editors found several MSAs being hit by a painful “double whammy” – YOY employment declines of more than -10% in both electrical contractor and industrial employment. These markets included the Youngstown-Warren-Boardman OH-PA MSA, with declines of -10.7% and -40.4% in industrial and electrical contractor employment, respectively; the Springfield, IL, MSA with an industrial decline of -20.2% and contractor decline of -29.7%; and the Burlington-South Burlington, VT MSA, with declines of -10.8% and -27.5%, respectively.
When we sorted the employment data by state, some definite regional patterns emerged, with many — and in some cases most — MSAs in the Louisiana, Massachusetts, upstate New York and Pennsylvania faring the worst. Texas’ oil patch was also deep in the red with MSAs suffering through double-digit year-over-year declines in both contractor and industrial employment, and large areas of Michigan and Iowa also well below the national averages for these metrics.
However, our analysis revealed that the news wasn’t all bad on the electrical contractor employment front, and that six MSAs are actually enjoying double-digit increases in employment: Walla Walla, WA; Niles-Benton Harbor, MI; Fond du Lac, WI; Sante Fe, NM; Panama City, FL; and Springfield, MO. On the industrial side, the five fortunate markets with double-digit employment increases were El Centro, CA; Wilmington, NC; Fairbanks, AK; Coeur d’Alene, ID; and Ithaca, NY.
When you use employment data along with the sales-per-employee multipliers provided annually in EW’s Market Planning Guide, you quickly realize the importance of tracking employment in the key electrical contractor and industrial niches. Every 100 employees working for electrical contractors in a local market area represent $6.56 million in market potential, and every 1,000 employees represents $65.62 million. When measuring a market’s MRO potential, every 100 employees represents $80,100 in sales potential and every 1,000 industrial employees can potentially account for $801,100 in sales.