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Business Boom: EC&M's 2015 Top 50Electrical Contractors

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Fig. 1. Revenue earned by the Top 50 firms continued on a steady climb,boosted this year by large numbers from a couple of newly participatingcontracting firms.

Business Boom: EC&M's 2015 Top 50 ElectricalContractorsAmy Florence Fischbach | Electrical Construction and Maintenance

EC&M ranks this year's key players in electricalcontracting.

The economic expansion has ignited a flame below the electrical construction market,sparking an explosion of opportunities for the nation’s Top 50 electrical contractors.

“When the market appeared to be recovered, our clients held on as long as they could,”says John Boncher, president and CEO of Cupertino Electric, Inc. (No. 7), San Jose,Calif. “Once they realized that the recovery was real, they released the hounds, and therewas a building explosion.”

As such, many marketstook off like a bullet. Inturn, the total electricaland datacom revenuenumber for the nation’slargest electricalcontractors jumped from$15.7 million in 2013 to$21.8 million in 2014(Fig. 1).

Ten companies onEC&M’s annual Top 50Electrical ContractorsList (click here to seeTop 50 list in PDFform) posted at least a15% increase in revenues.In addition, 31% exceededtheir sales goal, and 55%met their revenue objectives (Fig. 2).

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Fig. 2. The number of Top 50 companiesexceeding their 2014 sales goals droppedfrom 42% last year to 31% this year.

For example, Sprig Electric (No. 29), San Jose, Calif., scaled nine spots in the listing thisyear when $20 million of work from two years ago spilled over into last year. Thecontractor was both stressed and humbled about exceeding its targeted growth rate of10% to 15%, says Mike Jurewicz, COO.

A look inside Syracuse University’s new School of Law, Dineen Hall. This collaborative working area isadjacent to the school’s main library. The luminaires represent flying books that create a unique look hangingover the tables. O’Connell Electric was the electrical contractor for the project, which spanned all of 2014. The200,000squarefoot facility features an open architecture design, collaborative learning spaces, and stateoftheart technology (Photo courtesy of O’Connell Electric).

“We are humbled that our customers have confidence in Sprig, and we’re grateful for ouremployees who teamed up to successfully complete every project on time,” Jurewicz says.“Posting a 46% revenue gain was never intended. It became a new challenge that theorganization had no choice but to manage.”

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Like onethird of the Top 50, Sprig was able toadjust its bids for greater profits in 2014. Aportion of its expected profit improvement,however, was eroded by two factors — thefinancial impact of California’s latest Title 24energy efficiency standards and the expense ofhiring and training new employees to handle theincreased workload.

“With a strong market, one would assume it’s aseller’s market, which is true for rental and realestate prices,” Jurewicz says. “Electrical bidmargins have improved, but only fromdownright stupid to almost reasonable. We arelooking forward to a continued shift in bidmargins — to reasonable or even to healthy.”

Roughly twothirds of the companies (65%)realized about the same profit margins as the

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Fig. 3. The majority of companies on the Top50 list realized about the same profit marginsas they did the prior year.

Fig. 4. More than half of the companies onthis year’s list expect profit margins to staythe same in 2015.

Fig. 5. Like last year, a very small number ofrespondents characterized the 2014 climate

year before (Fig. 3), while about 57% of the contractors expect their 2015 profits toremain close to 2014 levels (Fig. 4).

“The market has improved, but there are stillmany bidders on projects, which, in turn, keepsmargins lower than they were prior to theeconomic downturn,” says Doug Mertzlufft,president of Guarantee Electrical Co. (No. 37),St. Louis.

Fourteen of the Top 50 posted a decline inrevenues, including EJ Electric. Bob Mann,chairman of EJ Electric Installation Co. (No.17), Long Island City, N.Y., attributed the slightdrop in sales to increased competition, includingthat from smaller contractors.

“There is more and more competition cominginto the field,” Mann says. “They are going afterthe jobs that they never thought that they wouldbe able to pursue, handle, or manage.”

Business climate

Across the country, the nation’s Top 50 contractors were nearly equally split betweenworking in what they characterized as a “fair” and “strong” business climate (Fig. 5).Only three respondents considered the market to be weak last year.

On both the East and West Coasts, contractorsreported that activity ramped up tounprecedented levels. For example, CupertinoElectric posted a 10.3% increase due to thebooming geographical markets in the westernUnited States.

“There are twice as many towers and cranes inSan Francisco than ever before, according to thebuilding department,” Boncher says. “Themarket there is going extremely crazy. Also, Ihave not seen Silicon Valley this busy everbefore.”

The hightech market is driving the Bay Areabusiness climate, and he doesn’t see this areaslowing down, says Jurewicz of Sprig Electric.

“Hightech is not just gaining speed — it’ssprinting at a furious pace,” Jurewicz says. “SanFrancisco has joined the Silicon Valley inattracting tech’s brightest along with their bigdollar IPOs who are hoping to be gobbled up atpremium prices by the tech titans.”

On the East Coast, strength is also returning tothe construction market, Mann says. Forexample, in New York City, overseas investorsare pouring funds into the construction of highrise towers on “Billionaire Row,” where a singleapartment can run between $25 million to $95million. Mann is seeing a surge in constructionacross the board from transit to health care tostadium work.

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as “weak,” but the distinction between“strong” and “fair” was marginal.

Fig. 6. In 2014, nearly 70% of the contractorsin the Top 50 list added headcount.

“The economy has come back terrifically for thefirst time in ages, and it has helped the

construction industry to return,” Mann says.

Expanding operations. To handle all of these new work opportunities, a few of the Top 50opened up new branch offices, including Sprig Electric, which created an East Bay office30 miles east of Oakland, Calif.

Cupertino Electric employees installed a large number of solar panels at the Copper Mountain Solar 3 projectin Nevada (photo courtesy of Cupertino Electric).

“It’s so much more affordable, and now our employees can go to an office without havinga twohour commute,” Jurewicz says.

Contractors not only expanded geographically,but also internally. To handle the increasedworkload, 69% of the companies hired moreemployees last year (Fig. 6), and 70% plan toincrease their staffing levels this year (Fig. 7). Incontrast, only 8% of the companies laid offemployees in 2014, and a mere 6% plan toreduce headcount this year.

Contractors from coast to coast are hiring moreemployees to handle the rapid growth. Forexample, Pike Electric (No. 5), Mount Airy, N.C.,hopes to add close to 1,000 field positions in thefuture. With local talent tapped, however, thecompany expects to face challenges when itcomes to recruitment and retention due to thecompetitive environment.

Other contractors are also boosting staffinglevels, including USIS (No. 49), Pearl River, N.Y.,which has hired about 200 new employees overthe last three years. In addition, Parsons Electric(No. 24), Minneapolis, brought 147 new fieldand office employees on board, and EJ Electrichired more employees to work in the field and onits engineering, project management, andestimating teams.

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Fig. 7. The vast majority of Top 50 expect toadd workers this year (70%), whichsurpassed 65% last year.

Fig. 8. Compared to last year’s survey, moreTop 50 companies indicated they wereexperiencing worker shortages this year(75%) than last year (54%).

On the West Coast, Cupertino Electric is activelysearching for employees to work in variousoffices in Northern and Southern California.

“All those regions are booming, and we have ashortage of every single type of employee,”Boncher says. “There is far more work in front ofus right now than we have people to build it.Everyone is scrambling for people and fishingfrom the same pond, and it’s very competitive.”

As theTop 50look toincreasetheirfieldandoffice workforce, they are facing a stumblingblock — veteran workers are retiring, and notenough skilled workers are filling their workboots. In fact, 75% of the Top 50 say they arefacing a labor shortage (Fig. 8), and the mostdifficult positions to fill include foremen, projectmanagers, job superintendents, and journeymen(Fig. 9).

The labor shortage stems from the fact thatduring the last recession, the industry eliminated

a lot of jobs, and schools closed many entrylevel programs, says Joel Moryn, president ofParsons Electric. To recruit new employees, Parsons has executed successful internshipand entrylevel project engineer programs.

“We kept our training programs going, and we developed some robust training tools, butthe demand is high enough now that we still aren’t doing enough,” Moryn says.

Guarantee Electrical partnered with Mayers Electric to realize an ambitious technical conception — theelectrical and lowvoltage requirements of Belterra Park, formerly known as River Downs, PinnacleEntertainment’s new entertainment center in Cincinnati (Photo courtesy of Guarantee Electrical).

To battle the labor shortage, contractors are employing a number of different approaches.For example, Guarantee Electric is engaging outside resources, compensating employeesfor referrals, and training field personnel to move up into leadership positions.

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Meanwhile, Sachs Electric (No. 22), St. Louis, is using social media and recruiters to findexperienced personnel and is recruiting from universities for graduate engineers.

Fig. 9. Certain positions are proving to be more difficult to recruit and retain for Top 50 contractors than others— with electrical foremen and project managers topping the list.

To build up its field workforce, USIS, a thirdgeneration electrical contracting firm ownedand operated by the Lagana family, created a comprehensive sixyear apprenticeshiptraining program. Jimmie Bodrato, vice president of electrical services, says by giving theelectrical apprentices exposure to all aspects of its electrical contracting operation — fromestimating in the office and prefabrication in the shop — they can become future leaders.

Helix Electric provided the complete electrical infrastructure to power this building, which features more than1,500 colorchanging LED luminaires that illuminate the ETFE roof structure, a distribution system completewith emergency power generation, and uninterruptable power supply system for the protection of criticaltransportation processes (Photo courtesy of Helix Electric).

“We believe that three to five years from now, we will have one of the strongest and mostefficient workforces in the industry,” Bodrato says. “We provide diversified training acrossthe board, we integrate technology into the field, and we teach them how to work withtheir hands.”

Strong markets

For the second year in a row, the generalbuildings category ranked as the top area ofexpertise for the nation’s Top 50 (Fig. 10).

“The electrical market is booming throughoutthe different sectors we work in,” Bodrato says.“Construction managers and general contractorscan’t build buildings fast enough to keep up withdemand.”

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Fig. 10. The overwhelming majority ofcompanies on the Top 50 list work mostly inthe general building category, whichincluded commercial, institutional, healthcare, and housing work followed byindustrial.

Drilling down further, other hot markets lastyear include health care, data center, privateoffice, education/institution, power, andmanufacturing (Table 1). This year, the Top 50players also expect the highest volume ofprojects to stem from these market sectors(Table 2).

Within the health care market, Mann says hisfirm is seeing a resurgence of opportunities.

“Hospitals seem to be doing much better, and alot of hospitals that went out of business arecoming back — and coming back strong,” Mannsays. “They are spending money to expand theirfacilities and compete with each other in theirspecialties.”

Table 1. As they have for several years, health care and data center/mission critical construction took the toptwo spots as most active markets among Top 50 companies for 2014.

Table 2. The top three markets for 2015 mirrored the responses in 2014, keeping these sectors at the top of thelist.

Across all Cupertino Electric’s different divisions, Boncher says he doesn’t have a singledivision not booming.

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The 404unit Ascent project, located in Tysons Corner, Va.,earned Power Design a LEED gold certification and wascompletely engineered and designed inhouse (Photocourtesy of Power Design).

The iconic One World Trade Center is just one of several Five Star Electric projects at the World Trade CenterSite, including the 9/11 Memorial Museum, Transportation Hub, Chiller Plant, One World Observatory, andRetail Infrastructure projects (Photo courtesy of Five Star Electric; © Ellen Wolff 2015).

“There is a ramp up in employees across all divisions, and every segment in our business isexpanding,” Boncher says. “We have divisions for markets like renewable energy,transmission and distribution, and data centers — and all of them are very active rightnow.”

The data center market became asignificant portion of thecontractor’s business in the mid1990s. While this market still has asignificant amount of opportunity,Boncher says he is noticing a shifttaking place.

“It’s an interesting paradox — atremendous amount of data centerbuilders are acting like thedevelopers, and price is a majorissue,” he says. “For that reason,the risk of the projects is outpacingthe reward. It’s still my favoritesegment, but at Cupertino Electric,we are definitely being selective andprudent about the projects webuild.”

In addition to data center work, thepower industry also ranked as oneof the top markets for EC&M’s Top50. This can be evidenced by thehuge number ($5.2 billion inelectrical revenue) posted byQuanta Services (No. 1). New to theTop 50 list this year, Quantaprovides engineering, procurement,and construction services forcomprehensive infrastructure needsin the power and oil and naturalgas industries, a major portion of which is tied to the power sector. While this industrypresents certain challenges — such as securing expensive heavy equipment and forgingrelationships with electric utilities — it also offers opportunities due to the aginginfrastructure and need for emergency response and disaster recovery.

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TFS is proud of the dedication and support from its workforce to safelybuild hightech projects across the state of New York. Pictured above, amember of the team performs quality checks prior to system turnover(Photo courtesy of Total Facility Solutions).

This Rosendin Electric electrician is using mobile technology on the 10mile BART extension project intoSanta Clara Valley. The new line will connect the existing Fremont Station to a new station in Milpitas andterminate at the first San Jose BART Station, Berryessa (Photo courtesy of Rosedin Electric).

“While this market isn’texploding like the othersegments, it is slow andsteady, and we enjoyworking in this space,”Boncher says.

Within the powerindustry, Mann says highvoltage distribution andcogeneration remain hotmarkets. For example, EJ has a very activetransmission anddistribution operation,and its linemen work onmaintenance andrestoration projects.

Another market that isspringing back is theoffice sector. When theeconomy spiraled into adownturn, companiesbegan “rightsizing” theiremployees, and office expenditure was moved on to the backburner. Today, hightechcompanies are constructing singleuse corporate campuses with labs, data centers, andoffice space.

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Fig. 11. Mobile technology utilization isnearly ubiquitous among the Top 50companies.

Quanta Services linemen work on a transmission line in Texas (Photo courtesy of Quanta Services).

“Companies waited, and waited, and waited — until they were almost in dire straits inregard to space,” Boncher says. “All of a sudden, the market was flooded with new buildsfor office space, and most, if not all, of the Silicon Valley occupants have built a newcampus or a significant structure, or they are well underway with the design of projects.”

Tuning into technology

As the Top 50 pursue work opportunities inactive markets, many electrical contractors areinvesting in tools and technology for their fieldworkforce. Ninetyeight percent of the Top 50companies’ field workforce rely on mobile devicesto complete their jobs (Fig. 11).

“There are so many ways that technology hashelped us to become more productive,” says SamLamonica, chief information officer for RosendinElectric (No. 3), San Jose, Calif. “We now havetools to help us with everything from estimatingto modeling to prefabrication. The benefits arejust so wideranging.”

By equipping their field workforce with mobiletechnology, however, electrical contractors must

ensure their employees’ safety in the field. Many companies have written proceduresgoverning employees’ usage of mobile devices. Cleveland Electric Co. (No. 39), Atlanta,has a “no texting or talking with driving policy,” and Guarantee Electric’s employees mustuse handsfree Bluetooth technology while operating vehicles.

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Fig. 12. Among the respondents employingmobile technology strategies in the field, thetype of devices used were varied withsmartphones topping the list.

An EJ Electric employee cleans the enamel coating off a power cable in preparation of its termination (Photocourtesy of EJ Electric).

“We take a lot of pride in our safety record, which ties back to procedures put in placeover the years, including the utilization of mobile devices,” Mertzlufft says.

Guarantee Electric is one of the 33% of Top 50contractors that equips its field workforce withsmartphones, which were ranked the top mobiledevice followed by tablets and laptops (Fig. 12).Cupertino Electric, which has about 2,500electricians nationwide, also deployssmartphones to its field workforce. With thesedevices, the field workers can not onlycommunicate in the field, but also perform barcode scanning, snap photos, shoot videos, andsend emails to the engineering team back in theoffice.

Another mobile technology device that hasboosted productivity in the field is the tablet,which offers constructionspecific apps andeliminates the need to carry paper plans across ajob site. For example, Parsons Electric’smanagers and engineers review drawings, useBIM, and execute punch lists — all from a tablet.

At Rosendin Electric, theproject managers,superintendents, foremen,and general foremen relyon tablets for everythingfrom reviewing specs anddiagrams to clockingworkers in and out tomanaging the supply

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Motor City Electric worked on the Quicken Loans Technology Center, a66,000squarefoot data center and office complex in Detroit. MCE’s fabshop produced the conduit spacers for the duct bank, which helped cutcosts and increase productivity (Photo courtesy of Motor City ElectricCo.).

chain. Lamonica saysseven years ago, it wasnearly impossible for ageneral foreman orsuperintendent to eventouch a laptop. Thesesame managers, however,now covet their tablets.

“They really like the iPadtechnology,” Lamonicasays. “They are familiarwith it because it’s been inthe consumer world for along time, it’s an easyplatform to use, and it’slightweight.”

Rosendin Electric not onlyequips its field workforcewith the latest technology,but also focuses onproviding handsontraining on software andtechnology wheneverpossible. In addition, thecontractor also educatesits employees throughvideo clips, Webinars,documents, and onthejob training.

Sachs is performing the balance of the upgrade at Newton Power Station, including all electrical installations(Photo courtesy of Sachs Electric Co.).

“Training is especially critical when rolling out new software to the field workforce,” hesays.

For example, more than half of the Top 50 relyon fleet management software (Fig. 13) toobtain monthly reports on mileage, gasconsumption, and fuel efficiency. In addition,87% of the companies also rely on tool tracking

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Fig. 13. More than half of the Top 50 use fleetmanagement software in their dailyoperations.

Fig. 14. A much greater percentage of Top 50companies use tool tracking software (87%)compared to fleet management software(60%).

Fig. 15. Top 50 companies were evenly splitbetween expectations to meet or exceedrevenue goals in 2015.

software to manage their valuable assets out inthe field (Fig. 14).

To track utilization rates and flag strandedassets, Cupertino Electric is turning to GPStechnology. Using its tool management software,the contractor can track everything from a $150batterypowered drill to a $200,000 lineman’struck. With this technology, the contractor cantrack how it spends each penny on tools andequipment, how the assets move from job to job,and ensure that there is no tool waste.

“We manage our tool inventory the way a rentalcompany would manage its tool inventory,”Boncher says.

Prepping for future growth

By investing in the latest tools and technology,contractors can pump up the productivity oftheir field workforce, leading to higher salesdown the line.

As the contractors forecast their sales for thisyear, an equal percentage of companies (47%)expects to meet or exceed their sales goals (Fig.15). About onethird are forecasting more than a10% increase in revenue for 2015 (Fig. 16)including Parsons Electric, which has a strongbacklog in health care, sports and recreation,hospitality, and industrialtype projects and hasachieved success through market diversification.

“We arealso well into our lean construction journey,which has helped us to compete at a stronglevel,” Moryn says.

Cleveland Electric, which is active in the datacenter, pharmaceutical, and health caremarkets, anticipates revenues to stay about thesame this year.

“We were busy last year and expect to remainthat way going forward,” says John Cleveland,president.

Nine contractors anticipate a decrease in 2015revenues. For example, Sach Electric attributesits expected decline to several large projects thathave been secured but will be delayed into 2016instead of 2015.

As 2015 winds down, however, many of the companies expect the markets to continueheating up, or — at the very least — not fizzle out. For example, Jurewicz expects SprigElectric’s revenues to grow about 10%, and its current backlog supports this increase.

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Fig 16. A little more than onethird of respondents are forecasting more than a 10% increase in revenue for2015.

“Because we staffed up to service the projects we completed, we are well positioned togrow beyond last year’s revenue,” Jurewicz says.

Fischbach is a freelance writer and editor based in Overland Park, Kan. She can bereached at amyfischbach@gmail.com.

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