What is it they say about too much of a good thing? I’m fairly certain that expression doesn’t apply to the current electrical construction climate as it relates to the good fortune of most of this year’s Top 50 Electrical Contractors. If you follow our annual survey results, which I know so many of our readers do based on the number of inquiries I get about when the list is coming out and the traffic driven on our website as a result of this content, then you know that the key players have basically been on a roll for the last several years. In fact, starting with the 2015 Top 50 list, which is based on the previous year’s numbers as they relate to electrical and voice/data/video work, revenue for the collective group jumped from $15.7 billion in 2013 to $21.8 billion in 2014. Since that time, the total has continued to skyrocket, shattering the previous year’s performance again and again. This year’s 2019 Top 50 is no exception. Bringing in $28.8 billion for all 50 firms combined, this figure is 10% higher than the prior year’s revenues ($26.2 billion in 2017) and 20% above the 2017 Top 50’s total of $23.8 billion, based on 2016 numbers. How long can this prosperity continue? Depending on whom you ask, you may get a very different answer.
That’s what Freelance Writer Tom Zind concludes in this month’s special report, starting on page 10. Aptly titled “Business Booms, Uncertainty Looms,” this piece takes an in-depth look at what’s been driving the growth spurt for so many of these electrical contractors as well as examines the feasibility of maintaining that level of success. Zind likens the scenario to the analogy of a moving car, advising contractors to keep their eyes on the busy road ahead while making sure they’re ready for the long haul and changing road conditions.
Based on the input of several executives interviewed for this year’s special report, this seems like sound advice. Since the Great Recession ended in June 2009, the country has enjoyed the longest period of economic expansion in American history. In July of this year, the U.S. economy recently hit a milestone of 121 months of consecutive growth, breaking the previous record of 120 months set between March 1991 and March 2001, according to data from the National Bureau of Economic Research. Is another recession on the horizon? Most economists say yes, but the exact timing of a downturn as well as the extent to which it may negatively impact certain sectors are much less clear.
Nearly half (48.1%) of chief financial officers in the United States believe the economy will enter a recession by the second quarter of 2020, according to the Duke University/CFO Global Business Outlook, and 69% expect one by the end of next year. “The numbers may fluctuate slightly, but this is the third consecutive quarter that U.S. CFOs have predicted a 2020 recession,” said John Graham, a finance professor at Duke’s Fuqua School of Business and director of the survey, in a recent release on the report. “It’s notable this quarter how strongly recession is being predicted in other parts of the world.”
Based on the results of a June 2019 survey from the National Association for Business Economics (NABE), the outlook is less dismal. It says the odds of a recession are generally low over the next 12 months but rise late in 2020. “Panelists put the odds of a recession starting in 2019 at 15%, with a 35% probability of recession starting by the middle of 2020,” notes the NABE report. “Overall, panelists put the odds of a recession starting before the end of 2020 at 60%. This compares with odds of 35% in the March survey.”
Despite a general consensus that the good times continue to roll for most of the electrical contractors on this year’s Top 50 list, fears linger. “Worries persist that the nation’s long economic recovery may be running on fumes, and that slowing growth or even a recession is on the horizon,” Zind writes in the cover story. “For now, though, business is seemingly good in the electrical contractor space, and most are trying to squeeze as much out of the good times as they can — leaving worries about what the future may hold in terms of demand for their services, at least, on the back burner.”
