This category covers special trade contractors primarily engaged in electrical work at the site. The construction of transmission lines is classified in SIC 1623: Water, Sewer, Pipeline, and Communications and Power Line Construction, and electrical work carried on in repair shops is classified in SIC 7622: Radio and Television Repair Shops; SIC 7623: Refrigeration and Air-Conditioning Service and Repair Shops; or SIC 7629: Electrical and Electronic Repair Shops, Not Elsewhere Classified. Establishments primarily engaged in monitoring of burglar and fire alarms with incidental installation are classified in SIC 7382: Security Systems Services.
561621 (Security Systems Services (except Locksmiths))
235310 (Electrical Contractors)
The electrical contracting industry in the United States is made up of a few large firms doing business in many regions and a large number of small companies that generally serve customers in their local vicinities. Many of these smaller firms are family owned. Most work in this industry depends on intense competitive bidding, and the obtaining and completing of contracts makes for fluctuating needs for skilled electricians. Most electrical contract work companies are nonunion, but there is a strong union that is influential in some parts of the industry.
In 2002 the industry had approximately 61,400 establishments with 642,000 electricians. After experiencing growth in the mid-and late-1990s, due to nationwide economic improvement and a boom in housing construction, the bottom fell out of the commercial and industrial building industry. Although residential building continued, fueled by low interest rates, commercial development projects fell during 2002 to the lowest levels since 1996. After peaking in 2000 at 66,800 firms with 698,000 employees, the number of electricians and electrical firms declined over the next years to reflect 1997 employment levels. Although the industry stabilized slightly in 2003, many electricians are diversifying their skills and their client base to adjust to the changing economy. New focuses include home networking and security system installation.
While the wide range of company sizes and large number of firms in electrical contracting make for diversity of operations, there are certain patterns relating to the types of customers and jobs, internal functions, costs, union and nonunion conditions, trade associations, training, and governmental regulations and standards.
Customers and Jobs. Electrical contracting firms, as well as other trade contractors, generally do their work at the construction or facility site, though some specialty work may be done in their own shops. When a new building is constructed, these trade contractors are retained by a general contractor who is responsible for the entire building's construction. The specialty contractors, however, are sometimes subcontractors of other subcontractors and, at other times, especially with repair and maintenance jobs, may deal directly with the facility's owners. The ultimate customers are individual homeowners, businesses, institutions, and governmental agencies, each of which has its own manner of dealing with contractors and subcontractors.
Size of Operating Units. About 10 percent of electrical contracting establishments in 1997 had 20 or more employees, and these establishments controlled 60 percent of all business. Only 9 establishments had 1,000 or more employees. Establishments are considered to be generally permanent places, where estimating, procurement, and management of work is done for one or more sites. Larger firms may have a number of such establishments.
Internal Functions. Whether an electrical contracting firm is an individual or a company with 500 employees, it performs the necessary business functions of marketing, estimating, planning, scheduling, purchasing, accounting, and training. The estimating function is especially important in the electrical contracting industry because many jobs are obtained on the basis of competitive bids. Jobs bid too low result in losses, and bids that are too high result in business lost to lower bidding competitors.
Costs. Principal costs are materials and labor. In 1997 the cost of materials and supplies amounted to 36.6 percent of the total value of electrical contractors' work, and their payrolls came to 33.5 percent of that total. Other costs included subcontracted work, rentals for machinery and facilities, fuel, and other overhead and administrative costs.
Unions. The International Brotherhood of Electrical Workers (IBEW) is an American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) affiliate that dates back to the 1890s. Generally, the electrical contractors in larger cities have had larger numbers of union employees. The number of nonunion shops increased during the 1980s, and the IBEW launched a campaign to strengthen its membership. Membership is still down from its high of more than 1 million. In the late 1990s, the IBEW counted 750,000 members in more than 1,100 local unions in both the United States and Canada.
Standards and Regulations. The National Electrical Code (NEC) was established to provide electrical work guidelines to assure avoidance of hazards. The code was fostered by the American National Standards Institute and by the National Fire Protection Association. The code is revised and updated every three years to meet changing technology and improve safety features. In 1996 the National Electrical Contractors Association introduced the National Electrical Installation Standards (NEIS) for electrical products and systems. Not intended for regulatory use, they are voluntary standards intended to create a more specific definition for what is meant by the "neat and workmanlike" standards that the NEC refers to, creating a baseline level for quality and workmanship in electrical construction. Other specifications under development by NEIS at the end of the 1990s included standards for electrical symbols, industrial lighting systems, motor control systems, raceways, cables, hazardous locations, industrial heat tracing systems, and telecommunications.
Regulation. Local and state authorities generally require adherence to code, and most have set up their own supplementary procedures and regulations to monitor its enforcement. Most localities require that electricians performing commercial and industrial work be licensed as journeymen, and some localities provide a "residential wireman's" license for residential work only. Work permits and inspections are required for new construction, and most cities require yearly code inspections for commercial buildings. In addition, the Underwriters Laboratory has provided a service to manufacturers of electrical and other products to analyze and certify approval to those products that the laboratory has determined meet its minimum safety standards.
Commercial use of electrical products and services developed rapidly in the late 1880s after Thomas Edison's invention of the incandescent lamp and other applications. Electrical products and service businesses grew along with related organizations, associations of electrical contractors, and electricians' unions. Although growth has been quite continuous, there have been cycles with downswings, as in the early 1990s.
One measure of the continuing growth in the electric industries is the fact that the amount of electricity used in American homes tripled in the four decades after 1950. Other data showed growth and change in the structure of the electrical contracting industry in the years between 1972 and 1999. The number of employees reached an all-time high in 1999, and the number of establishments continually increased.
Electrical contracting firms, however, like all construction businesses, have always been subject to significant up and down cycles according to economic conditions. The late 1980s and early 1990s were a period of decline in new construction, and electrical contractors were affected accordingly, as the specialty contracting business in general had lower revenues than in prior years. Most recently, the addition of "limited energy systems," such as voice-data lines and fiber optics, has expanded the work of electrical contractors.
Unions and Associations. The National Electrical Contractors Association was founded in 1901 and by 1999 boasted 118 local groups and 4,000 contractor members. It has traditionally worked with union leaders in developing training programs and negotiating relationships. Independent Electrical Contractors, Inc. (IEC), formed in 1958, represents primarily open-shop electrical contractors and also administers apprentice training activities. By the year 2000, the IEC grew to a 76-chapter association representing more than 3,500 electrical contractors and nearly 70,000 electrical workers. The International Brotherhood of Electrical Workers (IBEW), founded in 1891, is an affiliate of the AFL-CIO.
During the second half of the 1990s, an ever increasing number of electrical contractors branched into the quickly expanding systems work, which included low voltage applications, such as building alarm systems, automatic building controls, and voice-data communications lines. An increasing number of customers hired electrical contractors solely for their installations of telecommunications wiring and infrastructure. By 1999 standard electrical work accounted for only 60 percent of industry sales, with systems work accounting for 33.5 percent, and the remaining 6.5 percent classed as other.
To stay competitive, many firms sought business in the adaptation of old facilities to meet current and future computer needs, such as installation of systems for new technologies. More and more firms also offered design services to customers. Moreover, a large percentage of homes built before 1970 had electrical systems that were inadequate for their current and future needs, indicating continuing business potential for electrical contracting firms in that area. Maintenance and building modernization accounted for nearly 25 percent of industry sales by the end of the 1990s.
During the economic recession of the early 2000s, electricians were buoyed by strong residential construction, although industrial and commercial new starts were hit hard by an economic downturn. The electrical contracting sector remained flat during 2002, which was taken as a rather strong stance, considering the state of the economy. Slight improvement was expected for 2003, but the industry expected to see no widespread growth until at least 2004.
In an effort to insulate themselves against downturns in the construction industry, electricians are adding new skills to their resumes. Two top trends for electricians in the early 2000s are home networking and security system installation. Home networking provides a user-friendly interface that connects residential subsystems, such as computer networks, telecommunications, entertainment, and security systems. Electricians can obtain additional training to receive certification as a home technology integrator. According to In-Stat/MDR, as reported by EC&M Electrical Construction & Maintenance, the home networking equipment market nearly quadrupled in size from 1999 to the end of 2001, growing from $150 million to $585 million. The journal also reported that the magazine Archi-Tech predicted that the number of U.S. networked homes would jump from 650,000 in 2000 to more than 1.7 billion by 2005.
Another fast-growing market for low-voltage applications is security systems. In the wake of the terrorist attacks of September 11, 2001, Americans have become increasingly concerned regarding the matter of monitoring physical access to facilities. Although special government contracts will obtain a large portion of the federal push to update security systems at government facilities, electricians will benefit from an increase in security installations across the board, from schools, hospitals, small businesses, and corporate and industrial facilities, as well as residential installations. Digital and remote monitoring are the established standards in security maintenance, but more widespread use of many new applications could be on the horizon, including iris scanning, retinal scanning, hand scanning, and face recognition.
Most electrical contracting firms were quite small and were limited to a specific geographical area. Also, most such firms provided electrical contracting services only, whereas other outfits engaged in additional contracting work, such as carpentry or masonry. Quite a few construction companies specializing in other fields performed electrical work as well. In the late 1990s, the top three electrical contracting firms in terms of revenue, according to Electrical Contractor Magazine, were EMCOR Group Inc., Integrated Electrical Services Inc., and Building One Services Corp.
EMCOR Group. Based in Norwalk, Connecticut, EMCOR Group reported $4 billion in revenue in 2002, resulting in a net income of $62.9 million. The EMCOR Group acquired several large industry leader firms, such as Dynalectric. EMCOR boasted 70 subsidiaries and more than 26,000 employees, with more than a third of its business outside the United States. The company worked with a wide variety of industries and offered complete project design and construction in all phases of mechanical and electrical construction.
Integrated Electrical Services. Based in Houston, Texas, Integrated Electrical Services grew rapidly since going public in January 1997. With 2002 sales of more than $1.5 billion, it was ranked second in the industry. Integrated Electrical managed rapid growth by acquiring a large number of smaller companies, totaling approximately 170, and by offering services in every aspect of electrical contracting, including commercial, industrial, residential, service, power line and information technology.
The principal technicians in the electrical contracting industry were journeyman electricians who had the skills, training, and experience to perform the demanding work. The union status of a contractor had a significant effect on the relationships between management and the electricians, as well as the individual firms' apprentice training approach. Wages varied with job requirements and were influenced significantly by the wage levels in the locality. Jobs for electricians were found in all areas of the country and at all times of the day.
Approximately 50 percent of electricians were employed in the construction industry, and 10 percent were self-employed. The remaining 40 percent worked in a wide variety of other industries and provided a broad rage of business functions, including estimating, engineering, planning and scheduling, purchasing, material control, and accounting.
Unions. The share of construction work undertaken by union shops has decreased. In 1997 approximately 18.6 percent of construction workers were represented by unions, according to the U.S. Bureau of Labor Statistics. The International Brotherhood of Electrical Workers (IBEW) began a campaign to increase union membership among electrical contracting firms that had been open-shop firms. This campaign was part of an AFL-CIO construction-worker crusade called COMET (Construction Organizing Membership Educational Training). It was expected that the members of Independent Electrical Contractors (IEC), which are open-shop firms, would carry on various efforts to maintain their open-shop status. Union membership was heaviest among larger firms and in the major urban areas.
In the union apprentice training program, contractors and the union collaborated in organizing and administering training courses. IBEW and the National Electric Contractors Association had a joint committee that established training standards for the local groups' guidance and promoted journeyman and apprenticeship training. In open-shop localities, training programs were run by the IEC.
Pay. The rates of pay for electricians varied considerably, affected by supply and demand, union presence, and historical wage levels in particular geographic regions. In 2001 the average income for full-time electricians was approximately $43,300, according the U.S. Bureau of Labor Statistics. Electricians' helpers earned a mean annual income of $23,390.
The various elements of the American construction industry increasingly looked to international opportunities since around 1980. Despite difficulties gaining entry into foreign markets, demand grew most strongly in the Pacific Rim. The largest market for U.S. contractors was Europe. American-based design firms received $7 billion in international billings in 1997, and American general contractors received $25 billion in foreign contracts that same year, according to the U.S. Department of Commerce. In 1997 the United States held the largest percentage, slightly less than 25 percent, of the international contractors market share. U.S. construction exports were predicted to continue to grow by 2 to 5 percent in the coming years, despite the downturn in the Asian economy.
Electrical contractors, as well as construction firms in general, continued to rely on computer programs, such as computer-aided design (CAD), for a variety of functions. According to a survey conducted by the Electrical Contracting Foundation, from 1995 to 1996 the use of CAD for design and development in the electrical contracting industry rose 8 percent and continued to rise. Through the use of CAD 3-D modeling, construction companies could now detect design interferences and problems earlier in the development of a project. Also, the rapid development of the Internet dramatically increased the need for systems work involving upgraded building wiring and fiber-optic cable work.
Deregulation. Since the passage of the Energy Policy Act of 1992, the door opened to deregulation of the electric utility industry. Various states passed legislation that required deregulation in the late 1990s and early twenty-first century. Industry analysts predicted nationwide deregulation of the utility industry, and it began in several states. While the majority of the impact of this regulation would be felt by utility providers, it remains to be seen how this would effect the status of electrical contractors.
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