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Despite the collapse of the U.S. financial market and the U.S. auto manufacturers, most electrical contractors don't have a dim view of their business climate for 2009, according to the Electrical Contracting Products Annual Reader Survey. The survey found that 41 percent of respondents believe their business in 2009 will be about the same as in 2008. Of particular note, more electrical contractors (33 percent) believe their business will be better in 2009 than those who believe it will be worse (26 percent). In fact, it's interesting to note that those surveyed are a little more optimistic than those surveyed last year when 34 percent expected a softening business climate while only 28 percent expected their business to improve. About the same number expected their business to stay the same for 2008 as those in 2009.

Slightly more than half of the respondents expect business to grow in 2009. One-third expect their business to increase by up to 5 percent in 2009, with 10 percent expecting business to grow 6 to 10 percent and another 10 percent predicting business to increase by better than 10 percent. However, that still means 47 percent believe their business will decline in 2009 from 2008. Of those who have a bleaker view, 24 percent expect business will fall by as much as 5 percent, 12.5 percent believe business will decline by 6 to 10 percent, and 11 percent expect business to decline by better than 10 percent. In contrast, only about one-fourth of respondents last year predicted business to decline in 2008. While more contractors—by 5 percent—expect business growth in 2009 compared to those who expected business growth in 2008, nearly twice as many contractors expect business to falter in 2009 compared to those who expected losses in 2008.

It is an interesting dichotomy and one may question if too many contractors are overly optimistic given the economic situation. However, contractors generally have a pretty keen insight into their business and are generally conservative economically. And the following numbers seem to support many contractors views for 2009.
In regard to predictions and reality, 25 percent of respondents said business in 2008 was up by as much as 5 percent over 2007. Eighteen percent said business increased from 6 and 10 percent in 2008 from 2007, and 12 percent said it increased better than 10 percent. That still meant 45 percent said business will fall short in 2008 compared to 2007. But the fact that 55 percent of respondents said business was up in 2008 is good considering the economic circumstances. And 53 percent said they expect their business to grow in 2009 from 2008. The following paragraph may explain some of the optimism.

We asked electrical contractors how they plan on handling the economic downturn and many said they would be aggressive in their business ventures. One-half of the respondents said they will seek more job opportunities and business in an effort to tackle the economic downturn. Thirty percent said they will hold the line until the economy improves and 17 percent said they may be forced to lay off workers. But the fact that 80 percent of respondents said they will either seek other business opportunities or hold the line is encouraging news.

It stands to reason that the general economy was cited the most in regard to issues that contractors are worried about. Furthermore, it was listed as the THE top worry of all contractor worries, with 41 percent. The 2008 election results came in second as contractor's greatest concern at 20 percent. Other top concerns include the slowdown in the housing market as well as commercial and industrial business, rising costs in general, and rising health care costs in particular.

Growth areas

Lighting and lighting controls continue to rule as to where contractors see business growth, with 30 percent citing that segment. Alternative power came in second at 19 percent, which continues to rise in the rankings as more businesses seek "green" or alternative products and as contractors focus more on green. Power quality systems came in third.

As far as what is the "hottest" business segment, lighting and lighting controls still came out on top at 29 percent. Alternative power was a very close second, with 27 percent. Again, this strongly reflects the dual desire of customers and contractors to go "green." Power quality systems came in as the third hottest.
About 30 percent of respondents listed various VDV systems as growth areas, with data/networking leading the way at 10 percent and security following closely behind at 9 percent. Those two segments were also neck and neck when it came to which market respondents saw as "hot" markets in 2009, with 10 percent and 9 percent, respectively.

It is important to note that while lighting, "green" products and power quality systems remain constant as growth possibilities for electrical contractors, low-voltage systems in general are growing as well. It is further proof that more electrical contractors are looking to branch out into other services and to seek more business opportunities.

In regard to "green" products, 70 percent of respondents said they offer green-friendly products and services. This is up sharply from last year's 52 percent who said they offer green-friendly products and services. In addition, 57 percent of respondents see business growth for them with green technologies and only 9 percent do not. Fifty-two percent said their customers are receptive to green technologies and products compared to 11 percent who say their customers are not receptive.

Finally, 37 percent of respondents said rebuilding/modernization/retrofits will play a key role in their current and future business and another 37 percent said service and repair will consist of the bulk of their business. With the slow down in the construction market, only 26 percent of respondents cited new construction as playing a key role in their current and future business.

More about you

It's not surprising that a bulk of Electrical Contracting Products readers are electrical contractors, with 81 percent. The other 19 percent cited low voltage, VDV contractor; electrical contractor, low voltage; engineering, consulting, architecture; systems integration or systems consulting; wholesale/distributor; and the ever-popular "Other." More than 60 percent of ECP readers are presidents/owners/CEOs of their firms. More than 25 percent cited either supervisor/team leader/project manager or vice president/general manager. In other words, nearly 90 percent of ECP readers are top leaders and in positions of purchasing power. The bulk of the 12 percent consisted of electrical engineer/staff engineer, designers or technicians/installers.

About 60 percent come from firms that employ 10 employees or less, with 13 percent coming from companies that employ 11 to 25 employees and 7 percent employing 500 or more employees. The other 20 percent come from firms that employ 26 to 500 workers. Forty-one percent said their businesses do about $500,000 in sales a year. About 42 percent come from firms that do in excess of $1 million in sales a year, with half of those belonging to firms that do more than $5 million in sales.

About 38 percent of respondents said their firm does commercial work, with slightly more than 27 percent citing residential work and 26 percent do industrial work. About 8 percent cited utilities as their source of business. Nearly half, though, said commercial work was the bulk of their business, followed by nearly 30 percent citing residential work as their leader and about 20 percent citing industrial work as the bulk of their business.

Price continues to be the leader as to what influences purchasing decisions, with 30 percent citing that factor. Quality came in second at 28 percent. Past experience with vendor and availability followed at 17 percent and 16 percent, respectively.

As a sign of the times, 90 percent said they buy and/or research products, equipment and materials online. Eighty-four percent said they use software programs to help run their business for scheduling, planning and bookkeeping.