Demand for Security
Services to Drive
Growth in Access
Rising crime rates and heightened security will drive an 8.3% annual growth rate in the world security services market, according to the Freedonia Group, Inc. The Cleveland-based industrial market research firm forecasts that the world market for private contractual security services could reach $120 billion by 2006. Contract guarding will account for more than 40% of total revenues due to increased outsourcing of guard operations. As closed-circuit television and access controls become more affordable, however, electronic security equipment could also grab a larger share of the market.
Electrical Contractors' Profit Margins Get the Squeeze
The dollar value of sales for the electrical contractor market grew at a compound annual rate of about 10% through 2001, according to Standard and Poor's. But times have changed. Now electrical contractors can expect to receive margins in the 3% to 6% range. To adapt to changing market conditions, electrical contractors are focusing more on maintenance and retrofit work than new construction. Standards and Poor's found that in 1999, MRO accounted for about half of an electrical contractor's business. As a result of consolidation and the slowing economy, the number of electrical contractors has also dropped from 84,000 to 70,000 in the past five years. Only a dozen of the electrical contractors have sales above $200 million. To boost the bottom line, many electrical contractors are now cutting back staff, analyzing their overhead, and trying to stabilize their margins. Some contracting firms have racked up debt or filed for bankruptcy protection in order to survive in the slow marketplace. While the future is uncertain for many of the country's largest contractors, some firms are still acquiring companies in order to compete in the $95 billion electrical market. To learn more about the top players in the electrical construction industry, look for the upcoming story on the Top 50 electrical contractors in the September issue of EC&M.