Like many other electrical contractors, Swartz Electric took any job that came its way when the business was first beginning — whether it was in the residential, commercial, or industrial sector. Eight years later, the company began specializing almost exclusively in residential service, and President Greg Swartz hasn’t looked back.
“When we got hammered with commercial projects not being profitable, we switched to the service side,” says Swartz of the Colorado Springs, Colo.-based company, which experienced a 36% increase in sales from last year. “We like the service aspect of electrical because our customers are mostly homeowners, and each day is a new adventure.”
Swartz, a licensed master electrician and electrical engineer, says about 90% of the firm’s current workload now comprises electrical service work. For example, its electricians specialize in service upgrades, hot tub installations, kitchen remodels, and basement finish work. In addition, its team works on air-conditioning and electric vehicle hook-ups, generator transfer systems, home warranty and insurance claims, post-lightning strike projects, and additional garage wiring to name a few.
Rather than having a separate residential division, all the electricians now work for the service division, and they are cross-trained to work on everything from a simple upgrade in a home to a service upgrade at a big box retail building.
“We really like to avoid the new construction market altogether,” Swartz says. “We have watched several companies go out of business due to the new construction market. In the service sector, our electricians work more than 40 hours per week, and we book our work an average of three weeks out.”
Serving Single-Family Customers
Electrical contractors nationwide are discovering new work opportunities in the residential market. After recovering from a slowdown, the residential market rebounded to an 11-year high in housing starts in May, per the U.S. Census Bureau.
Dodge Data & Analytics recently reported a 2% gain in single-family housing in June. For the first six months of this year, the Western region was up 11%; the South Atlantic was up 5%; the South Central was up 4%; the Northeast was up 2%; and the Midwest was up 1%.
In Romeo, Mich., Metro Electric has been involved with the residential service market for the last five years. Bill Wilson, the residential service manager (who has been with the company for the last 19 years) says the improving economy is boosting the single-family residential market.
“People are willing to remodel their kitchen or invest in recessed lighting,” Wilson says. “Now that the American dollar is starting to get back in their pocket again, they are starting to be able to spend.”
Metro Electric, a large commercial contractor that focuses on school construction and renovation type work, primarily focuses on whole-house generators through its residential division.
“Whole house generators have been a big thing for us,” Wilson says. “With the amount of power outages, they have become more popular. When the lights go out for our rural customers, they may also lose their access to water if they are on well, rather than city, water.”
Beyond generators, customers also hire Metro Electric to make electrical repairs and install recessed lighting and ceiling fans, he says.
Meanwhile, Herring Electric in Riverside, Mo., is often called upon to perform residential service projects and lighting upgrades. For example, Cody Herring, president of the company, says homeowners often call his company to retrofit incandescent can lights and bulbs with LED replacements, or install LEDs for under-cabinet or exterior landscape lighting.
Gaining Efficiency in the Multi-Family Market
In addition to serving the single-family market, Herring also works for property management companies that handle multi-dwelling units (MDUs). So far this year, the multi-family market has proven to be surprisingly resilient, says Robert Murray, chief economy for Dodge Data & Analytics. Following an 8% decline in 2017, the multi-family market is now gaining near-term support due to several factors, he says.
“The U.S. economy is currently moving at a healthy clip, with steady job growth bringing new workers into the labor force,” Murray says. “The demand for multi-family housing by millennials remains.”
Another factor boosting multi-family construction is the start of several large projects, valued at $100 million or more, including the $213 million Aston Martin multi-family tower in Miami.; the $195 million multi-family portion of the $260-million Essex Crossing mixed-use building in New York; and the $186-million multi-family portion of a $215-million mixed-use tower in Boston.
For the first six months of this year, New York; Miami; Washington, D.C.; Boston; and Seattle ranked as the top five metropolitan areas by the dollar amount of multi-family starts. San Francisco and Los Angeles; Dallas-Forth Worth; Philadelphia; and Atlanta rounded out the top 10.
California has proven to be a hot market in multi-family construction for Power Design, an electrical contractor that operates in 21 states. The company has focused on the multi-family market since it began nearly 30 years ago and became licensed in California in 2008.
“We love California and have more than 20 active projects there,” says Lauren Permuy, vice president of business development. “This was a strategic target for us because some of our large development partners who we work with in other geographical markets were looking for our level of expertise and support on the West Coast.”
Power Design focuses on MDU projects, including apartments, condos, hospitality, student living, and senior housing. The contractor specializes in design-build projects and has an in-house design team, who understands constructability while focusing on its clients’ needs from the beginning to the end of the project. In addition, Power Design has a SmartSpaces division that focuses specifically on low-voltage technology.
“Our general contractor clients value that we are a one-stop-shop,” says Permuy, “and more of our developer partners are looking to provide these amenities to their condo buyers.”
A team of 150 systems specialists offer everything from security and fire alarm to full home automation including lighting control, motorized window treatments, and audio/visual upgrades.
“Today’s condo owners are looking for fully customizable, easy-to-use options; they want to be able to control all systems in their homes with the swipe of a touchscreen or push of a keypad,” Permuy said. “Some apartment developers are also looking into paired-down versions of this technology.”
Swartz says smart devices may have changed the residential market, but they aren’t as prevalent in the part of the country served by his company.
“While it is nice to have programmable lights and wireless switches, we don’t see them as a huge impact in the El Paso county region,” Swartz says. “It is nice, however, when you can put a wireless switch in a place where you would have needed to cut concrete in the past.”
Herring agreed, saying that in his region, he’s not seeing as many automated controls, except for in the higher-end homes valued at $500,000 and up. Oftentimes, some of the basic, off-the-shelf lighting control and security systems are installed by the homeowners themselves, he added.
Finding Qualified Labor
In the residential market, electrical contractors are facing not only opportunities, but also challenges. For example, many electrical contractors are universally facing the same challenge: a lack of skilled labor.
To overcome this obstacle, Power Design puts employees first and offers extensive training and growth opportunities from the apprenticeship level up. The company focuses on a corporate culture that fosters a healthy work-life balance in hopes of attracting and retaining the best in the business.
To get more youth interested in the trades, Power Design leads with technology when recruiting. For example, the company has discovered that young
talent is particularly interested in the use of virtual and augmented reality in Power Design’s training and QA programs. In addition, the company has incorporated more prefabrication into its construction practices, cutting down on the time required to rough and trim a unit and decreasing waste.
Despite this focus on training and development, Power Design, as well as many other electrical contractors, struggle with finding workers — and they are not alone.
“We are seeing that some of our trade partners are not as strong, impacting everyone on the project,” Permuy says. “The labor shortage is a huge problem that needs to be addressed.”
In Missouri, Herring Electric is also looking for electricians who are well-rounded and are proficient in their knowledge of the National Electrical Code.
“For every five or six guys I hire, only one sticks around,” says Herring, a master electrician with four years of schooling, several years of continuing education and a decade of in-the-field training. “There’s a huge demand, and it’s hard to find the workers. The future growth of my company is contingent on being able to hire more electricians.”
Metro Electric is also on the hunt for good quality labor. A handful of electricians shifted to the residential service division from the commercial division, but to recruit more employees, the contractor has invested in advertising and relies upon word-of-mouth.
“It is very busy, and we are struggling to find people,” Wilson says. “The market is very good in the metropolitan Detroit area, business is booming, and all the electricians are working. I wish we could find more people, because it makes it harder for us to expand.”
When hiring new electricians for its residential division, Metro Electric is looking for employees whom homeowners can trust. As such, the contractor performs drug tests and background checks on all its residential electricians.
“We are picky about who we will hire and send into someone’s house,” Wilson says. “We need the peace of mind that we are sending someone who looks good and checks out.”
For example, all the residential service technicians must wear identification badges and uniforms consisting of light-blue shirts with a button-down collar. To ensure that the electricians are wearing clean-cut uniforms, Metro Electric launders and presses the garments for the electricians.
“You have to please the customers,” Wilson says. “Customer service is everything. Because our electricians are interfacing with the public, we want to know exactly who is working with us, and we want them to portray a good image for our company.”
Once the electrician is on the way to a customer’s home, the company’s dispatching software emails a photo of the electrician to the homeowner. That way, when the customer opens the door, he or she knows who to expect. Once inside, the electricians put on “floor saver” shoe covers, and they are expected to treat the home with respect, Wilson says.
Focusing on Customer Service
Good customer service is the key to success in the residential market, Swartz says. In his view, however, many electrical contractors have no clue how to handle residential or service customers.
“They treat it like a lowest bidder job, get in, get out, and move on to the next customer,” Swartz says. “We approach it from the opposite standpoint. The customer is the focus. We want to perform quality work and make the customer happy, and there is a premium for that.”
When working with a homeowner, the electricians first examine the problem, and then they tell the customer how the work will be performed, how many electricians will be required and how long they will stay at the home. Next, the electricians follow up with an on-site estimate and show the homeowner the company’s 500-plus five-star reviews.
The contractor, which has been named “Best of the Springs” for five years in a row, also tells the homeowners about this award, which builds goodwill, trust and confidence in the electricians’ abilities, Swartz says.
While the contractor may charge more for its services, the company treats the customers better, and the electricians perform a better job, Swartz says.
“Consequently, we have a significantly higher close rate, sometimes closing more than 70% of our estimates,” he says.
One of the challenges, however, is that in the residential service market, Swartz says another newcomer always pops up who is willing to work for lower wages. For that reason, the contractor must focus on properly educating the homeowners.
“We have to educate the customer that someone who is charging them $30 to $50 per hour may not have all the proper licensing and insurance,” Swartz says.
Herring has noticed the same trend. While it’s possible to find workers, it’s more challenging to hire good quality electricians, Herring says.
“In any residential scenario, you find handymen or one-man bands, who work out of a pickup truck,” Herring says. “They may be a jack of all trades and charge a lower rate, but some of the work that they do as far as plumbing or electrical may be sketchy or not up to code.”
Herring, who ran a residential division for another company prior to starting his own business a year ago, says in the residential trades, a focus on service should be a top priority.
“People call an electrician to make a bid, review a job or get a service completed, and they get a no show, bad service or a rude response,” Herring says. “I saw a need for it, and that’s why I decided to get into the residential market.”
At his company, he demands superior customer service from his electricians. He and his team are always on time or 15 minutes ahead of schedule.
“If we say we will be there, we will be there,” he says. “We don’t call a day ahead of time to reschedule an appointment. We just focus on being on time.”
Also, the electricians focus on cleanliness.
“One thing that sets us apart is that we are mindful of a homeowner’s space,” he says. “The only reason that the homeowner knows that we are even there is that the task is completed. When we leave, they don’t need to deal with a mess.”
While they are performing the task at hand, however, electricians must remember that they are invading a homeowner’s privacy, and as such, they must be as respectful as possible.
“A housewife may be home alone with her children, and she needs to be able to trust our electricians and feel safe and secure,” Herring says.
Also, residential electricians must be able to be flexible and work around homeowners’ schedules.
“When I was trained in the trade, I started my day at 6 a.m. or 7 a.m.,” Herring says. “Now that I have my own business and we are focused on service, the customers want us to start at 8 a.m. That way, they have their kids off to school, they have their morning coffee, and they’re ready to go.”
While he describes his last year in the residential business as a “roller coaster of a ride,” Herring says he and his team have been able to help homeowners upgrade their electrical and lighting systems and solve wiring issues. Now that homeowners are starting to invest in a facelift to their properties, he and his electricians can help customers build up some additional value.
“They feel more comfortable to spend money due to the economy,” Herring says. “They are now paying for upgrades to a house that they not just need to live in, but want to live in.”
Fischbach is a freelance writer and editor based in Overland Park, Kan. She can be reached at [email protected].
Sidebar: Seven Strategies to Upgrade a Home’s Electrical and Lighting System
As more homeowners invest in improving and upgrading their homes, they are turning to residential electrical contractors. For example, Aaron’s Electrical Services in Spring, Texas, has noticed the following trends in the residential market.
Home automation. With home automation going mainstream, homeowners can install many devices by themselves, but they often need to have electricity wired in certain locations to take full advantage of most home automation programs.
USB outlets. Homeowners often have phones and tablets, but they may not have convenient outlets to charge them. Outlets with USB ports, however, do not require the use of an adapter.
Hinge-covered outdoor outlets. Rather than running extension cords down the side of a home when lighting it up for the holidays, homeowners can have GFCI-protected and waterproof covered outlets installed by an electrician. These outlets, which can hide under the edge of a roof, can be controlled by a single switch.
Recessed outlets. In tight spots, such as small bathrooms, electricians can install recessed outlets, which sit deeper into a wall. Thus, they don’t have protruding cords. They can also be installed above a fireplace mantle for a flat-screen television.
Hidden outlets. Rather than sticking out like a sore thumb, outlets can now blend in with tile, pop out of a countertop or be placed in kitchen drawers or in storage closets.
Closet lighting. Ceiling track lighting and under-shelf lighting can illuminate a homeowner’s wardrobe much more than a single overhead light.
Wall-mounted bedside lights. Electricians can hard-wire wall-mounted lamps, freeing up a nightstand and providing a cleaner, cord-free look, according to the company.
Source: Aaron’s Electrical Services
