Every September, EC&M reveals the highly anticipated results of its annual Top 50 Electrical Contractors survey, a benchmark our readers look forward to because it serves as a historical gauge to measure business conditions in the industry. For the last couple of years, as electrical contracting companies have fought their way to survive (and some even figuring out how to thrive) during the pandemic, the economic outlook has been cautiously optimistic at best. In 2020, respondents consistently dropped buzzwords like “trying times” and “unprecedented challenges” to describe the business landscape. One even admitted his firm’s biggest challenge was “learning what the new normal will look like.” In 2021, that mindset shifted slightly to more of a “hang tough” mentality. After studying the 2022 survey results, there’s still one unanswered question in my mind: Is this what the new normal actually looks like? According to this year’s data, Top 50 companies don’t see eye to eye on that point. Nearly half (49%) indicated it would be at least the end of 2022 before “business as usual” comes back. However, as of June when the survey went out, 37% maintained it was already “back to normal.” Collectively, 91% anticipate a revenue shortfall of no more than 10% due to the lingering effects of the pandemic. What’s causing this disconnect? I suspect it’s a matter of how deeply they’ve been affected by factors like rising inflation, supply chain delays, and labor shortages.
Last year in this column, I discussed how a return to normalcy would depend on many circumstances, most of which were outside contractors’ control, including how and when the federal infrastructure bill would pan out, what the new vaccine mandate would mean for contractors doing business with the federal government, and how inflation would affect the market. Fast forward to today — to say a lot has happened is an understatement. The Infrastructure Investment and Jobs Act was signed into law in November 2021. This piece of legislation is poised to filter $1.2 trillion into the market over the next five years, including funds earmarked for the buildout of a national electric vehicle charging station infrastructure, updates to the grid, broadband, and more. Despite this development, 66% of respondents expect no more than a 5% revenue increase in new project revenue tied to these federal funds. Although it initially appeared the government would enforce Executive Order 14042, which required all parties contracting with the federal government to enforce COVID-19 vaccine mandates on their employees, as of early September, the government announced it would no longer take action to implement or enforce this requirement. And as for inflation, considering the fact that it hit a 40-year high in June 2022, there are definitely still a lot of unknowns. Although there was a modest slowdown in inflation numbers in July and August — and some analysts believe passage of the Inflation Reduction Act will help — it is yet to be seen how the economy will respond to the Federal Reserve’s key interest rate hikes in an effort to curb inflation.
Despite these obstacles, EC&M’s 2022 Top 50 Electrical Contractors pulled in an unprecedented revenue gain (based on numbers from 2021) of more than $40 billion, up 20% from the $34 billion posted the previous year and marking the biggest year-over-year jump in at least 15 years. This growth is even more impressive when you consider all of the challenges they overcame to reach this milestone. Survey results revealed factors having the most negative impact on business growth were by far “difficulty finding and retaining quality employees” followed closely by “supply chain problems.” “Delays with material delivery and logistics” also emerged as their greatest obstacle to finishing jobs on time and within budget. They also felt the pain of material price hikes, especially for wire and cable and distribution equipment. Not surprisingly, the ongoing skilled labor shortage continues to be a thorn in electrical contractors’ sides — 81% of Top 50 companies indicated they were experiencing worker shortages in 2022 with “electrician,” “journeyman,” and “electrical foreman” identified as the most difficult positions to fill. Read the full 2022 Top 50 Electrical Contractors special report, written by veteran freelance writer Tom Zind (starting on page 16), for more details on how this year’s top electrical contractors are securing their success in an unpredictable business climate. Last year, I closed this column with this opinion: “I believe the electrical industry’s resilience will continue to shine through even under the most difficult of circumstances. So I believe we’re bound for a rebound.” Based on this year’s revenue performance, I’d say that prediction was right on. This year, I’m reluctant to speculate on what’s to come. As we move forward, I do feel strongly about one thing. Electrical contractors have proven to be an exceptionally resilient group. They’ve done it before; they’ll do it again — even in the face of some of the most difficult circumstances. Until next year.
