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End-User Trends in the Electrical Industry

End-User Trends in the Electrical Industry. by Mike Eby, Editor-in-Chief EC&M magazine. www.ecmweb.com. It’s all about global expansion and diversification. What’s Going on in the Engineering Community?. EC&M ‘s Top 40.

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End-User Trends in the Electrical Industry

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  1. End-User Trendsin the Electrical Industry by Mike Eby, Editor-in-Chief EC&M magazine www.ecmweb.com

  2. It’s all about global expansion and diversification What’s Going on in the Engineering Community?

  3. EC&M ‘s Top 40 • We conduct an annual survey of the largest electrical design firms in the country (completed in 1st quarter) • We rank them based on annual sales • We create a special report for the magazine based on the answers they provide to the survey (published in April/May issue)

  4. EC&M ‘s Top 40 • Year-over-year overall design revenue for the 28 firms present on last year’s list averaged an 11.1% increase • When drilling down, design service revenue specifically tied to electrical work revealed a year-over-year increase of 4.4%

  5. EC&M ‘s Top 40 • Many of the firms on the list are cautiously optimistic regarding the speed of the economic recovery • However, despite growing backlogs this year, most firms don’t expect real economic recovery to occur until 2012

  6. EC&M ‘s Top 40 • When asked what challenges they faced for the remainder of this year and into 2012, many identified the need to retain and recruit well-trained engineers and project managers as a key factor. • Other concerns include: • Pressure from clients to lower fees • Meeting faster project delivery times

  7. EC&M ‘s Top 40 • More firms offering construction management services • More firms looking for projects outside the U.S. borders • More firms reporting Design/Build and other turnkey project delivery methods continue to grow in popularity

  8. EC&M ‘s Top 40 • When asked about the future technologies that would most likely change future design practices, firms mentioned the following: • Building Information Modeling (BIM) • Energy efficient products • Intelligent building products

  9. Architecture Billings Index (ABI) • Serves as a leading indicator of construction activity (any score above 50 indicates a growth phase) • October score was 49.4, following a September score of 46.9 • Overall, business conditions remain negative Source: American Institute of Architects

  10. What Does All of This Mean for Young Engineers? • Rise of the business-minded engineer • Today’s engineering graduates are expected to step right off campus armed with the skills for organizing projects, leading teams, and dealing with difficult supervisors and co-workers • Engineering programs are modifying their curriculums to meet these needs

  11. It’s all about surviving hard times What’s Happening on the Contractor Front?

  12. EC&M ‘s Top 50 • We conduct an annual survey of the largest electrical contractors in the country (completed in 3rd quarter) • We rank them based on annual sales • We create a special report for the magazine based on the answers they provide to the survey (published in September/October issue)

  13. EC&M ‘s Top 50 • Total sales for electrical and datacom services dropped yet again • A 6.3% year-over-year drop on top of a 4.5% drop the prior year • Some companies reluctant to participate (assume they didn’t want to inform the world of their poor performance)

  14. EC&M ‘s Top 50 • Wild swings seen among this elite group • +63.1% to –49.3% • Surprisingly, nine companies reported a percentage gain of more than 20% • However, nine other companies reported a drop in sales of more than 20%

  15. EC&M ‘s Top 50 • Nearly 75% of the companies reported using the design-bid-build project delivery method to complete projects • Design-assist is the second most popular method of delivery • The most active market sectors they worked in included: • Health Care • Education and Institution • Power (Utilities and T&D)

  16. EC&M ‘s Top 50 • What are they thinking as the year comes to an end? • 83% of the group expect to meet or exceed their sales goal this year • 77% plan to implement lean construction practices into their projects • 55% expect to maintain or reduce current staffing levels • 58% do not plan on purchasing major construction equipment

  17. EC&M ‘s Top 50 • What are they thinking as the year comes to an end? • 59% expect to increase their use of BIM • 45% expect to build more projects to Leadership in Energy and Environmental Design (LEED) standards • A whopping 70% do not expect the construction economy to improve until 2013!

  18. How does all of this relate to employment levels?

  19. General Construction • Added 18,000 jobs in the last 12 months • However, lost jobs for a second straight month (shed 12,000 alone in November) • Overall construction industry unemployment rate remains high at 13.1% • But this is down from 18.8% a year earlier Source: Bureau of Labor Statistics

  20. General Construction (cont’d) • Residential construction employment decreased by 3,000 in November • -400 jobs as compared to same time last year • The resi specialty trade contractor subsector added 3,000 jobs for the month • +20,800 jobs year-over-year Source: Bureau of Labor Statistics

  21. General Construction (cont’d) • Non-resi building construction employment dropped by 1,200 in November • +9,900 jobs as compared to same time last year • The non-resi specialty trade contractor subsector lost 3,500 jobs for the month • -9,900 jobs as compared to same time last year Source: Bureau of Labor Statistics

  22. Electrical Contractors • Electrical contractor employment level held steady in September, down 0.6% from the previous month (according to Dept. of Labor) • However, it is up 2.3% year-over-year • Annual average level for all of 2010 was around 723,000 • However, as a point of reference, this figure was slightly higher than 900,000 in early 2007

  23. What About the Buying Power of Electrical Contractors? • Electrical contractors account for an estimated 36% of all electrical products sold through electrical distributors • Each employee at an electrical contractor makes $43,880 in purchases, annually Source: Electrical Wholesaling magazine

  24. What Do Contractors Think About New Technologies? Source: Electrical Wholesaling (proprietary survey)

  25. Are You Making Money Selling Energy Efficient Products?

  26. The Time is Now • Renewed Energy Consciousness Among Consumers • Utility Rebate Programs are Abundant • Energy Performance Service Contracts • New Federal Energy Legislation and State Regulations • LEED Certification and Green Building Guidelines • Rapid R&D in the Lighting Market

  27. Points to Ponder • Are the electric utilities in my market offering rebates? • Do I have the on-staff expertise to be a player in the energy market? • Which distributors & energy-service companies (ESCOs) are the key players in this business?

  28. Incentives Being Offered • Lighting equipment (CFLs, LEDs, daylighting and occupancy sensors) • HVAC equipment (installation of higher efficiency units) • Motors & drives (installation of premium efficiency products)

  29. PECO Smart Home Rebates

  30. PPL Rebate Programs

  31. PennPower Rebate Programs

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