Hot markets and a robust economy characterized 2000 for many of the nation’s largest electrical contractors.
“We’re coming off a good year...the best ever,” said Walter Parkes, president of O’Connell Electric Co., Victor, N.Y.
O’Connell’s sales jumped up 21% from $54 million in 1999 to nearly $66 million in 2000. Overall, contractors’ sales increased an average of about 30% across the board.
Profits were steadily climbing and companies had more work than they could handle in 2000, intensifying the demand for qualified workers. Not only the labor shortage, but also the economy proved to become an issue for contractors. The first quarter of 2001 delivered flat sales due to a rapid economic slowdown, a dip in the stock market and a drop in high-tech and data-center work.
“We’re seeing the economy slow a little bit just due to the natural gas prices, which affect everything,” said Thad Rispone, business development coordinator for Industrial Specialty Contractors Inc. “A lot of the major projects have been pushed back a little bit due to the changing economy over the last several months.”
The economy may be experiencing a slowdown at the moment, but it will rebound over the next two to four years, Rispone said.
“I think if you look at the whole picture over the last 10 years, we still doing great. I don’t think it’s so much of a ramping up as it has been over the last three to four years, but I think it’s staying the same or could keep increasing.”
Along with the slowing economy, another trend on the minds of the largest electrical contractors in the land—as either active acquirers or potential acquisition candidates—is consolidation. At least five companies from last year’s listing in CEE News were acquired, including Capital Electric Construction Co., Leavenworth, Kan.; Continental Electrical Construction Co., Skokie, Ill.; Fisk Electric, Houston; Hunt Electric Corp., St. Paul, Minn.; and Inglett & Stubbs Inc., Mableton, Ga. Two other electrical contractors on the 2000 Top 50 listing merged—Building One Services Corp., Dulles, Va., and Group Maintenance America Corp. (GroupMAC), Houston, and that new entity, Encompass Services Corp., Houston, is now the largest electrical contractor in the United States, with $1.856 billion in electrical sales.
It wasn’t only industry consolidators like Encompass; Integrated Electrical Services Inc., Houston; Quanta, Houston; or Bracknell Corp., Minneapolis, Minn.; that acquired companies in 2000. Capital Electric was acquired by MDU Resources Inc., an electric utility based in Bismark, N.D., and Tyco International, Hamilton, Bermuda, an industrial conglomerate, purchased Fisk Electric.
It was actually a comparatively quiet year on the acquisition front for the consolidators, who on the whole spent much of the past year integrating the dozens of electrical contractors that they had acquired over the past few years into their operations. An interesting side note is that with the exception of Integrated Electrical Services, which is 100% electrical, for the other consolidators, such as Quanta and Bracknell, electrical services is just one market segment.
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