I guess it should come as no surprise that the average sales growth rate from 2002 to 2003 for EC&M's Top 50 Electrical Contractors was just barely in the black (1.4%). Many of these top tier firms projected a leveling off period in last year's survey. This view of stabilization was also shared by most of the economic pundits in the construction industry. But even though the average was a move in the right direction, there were still some pretty wild swings among this elite group.
Four of the five firms posting the biggest percentage gains in this year's survey come from the lower portion of the listing. Lake Erie Electric, Westlake, Ohio, (ranked 39th on the list) led the charge this year by posting a whopping 37.5% year-to-year gain in sales. They attributed their impressive growth to improved economic conditions in the Ohio area.
O'Connell Electric, Victor, N.Y., (49th) and Mona Electric Group, Clinton, Md., (48th) posted almost equally as impressive gains of 26.4% and 26.2%, respectively. Mona Electric contributed their success to the awarding of several larger construction projects and more diligent marketing efforts, which helps support the theory that there's no better time to increase your marketing efforts than in difficult times.
Interestingly enough, all three of these firms dropped off our 2003 listing, but made the cut once again based on their strong showing in 2003.
Cleveland Electric Co., Atlanta, (42nd) and Morrow-Meadows Corp., City of Industry, Calif., (15th) round out the five firms with the largest percentage increase in sales from 2002 to 2003. Cleveland Electric posted the fourth largest gain at 23%, followed closely behind by Morrows-Meadows at 22.4%. Morrow-Meadows is another firm that seems to be in the right place at the right time. They attributed their strong growth rate to a hot California construction market, especially the health-care segment.
But as with most things in life, you must take the good news with the bad. If the overall average was a mere 1.4%, then you know some other firms on the listing had a year they'd soon like to forget.
Tri-City Electrical Contractors, Altamonte Springs, Fla., (31st) took the biggest hit in the group, posting a 26.6% drop in sales from the prior year. Tri-City is working on reclaiming its identify as a stand-alone company, after having been acquired a few years ago by Encompass Services Corp. (which filed for Chapter 11 bankruptcy protection in October 2002) and more recently purchased back by its original owner. In the midst of this ping-pong action, the company lost its bonding, which left it with the inability to procure work. As you might imagine, growing a business under these circumstances is nearly impossible.
Guarantee Electrical, St. Louis (34th), Henkels & McCoy, Blue Bell, Pa. (4th), The Newtron Group, Baton Rouge, La. (29th), and Cache Valley Electric, Logan, Utah (41st) round out the five firms that suffered the largest percentage drop in sales — each posting a decline in the mid-teens range. The declines can be explained in part by looking at the type of work these firms perform.
Guarantee noted that more than 50% of its work is commercial in nature. Henkels & McCoy has a large presence in the electric utility market. The Newtron Group specializes in industrial construction. And roughly one-third of Cache Valley's work is in the industrial sector. As we all know, each of these market segments has suffered mightily in recent years.
So what does the future hold for the biggest players in the electrical construction industry? Many were cautiously optimistic in their forecast for 2004 and 2005. But if you ask me, I think the worst is over. I guess next year's survey will prove me right or wrong.