2023 Electrical Contracting Industry Report

Electrical contractors are a vital component of the construction industry and support broader economies. These businesses employ many workers and generate billions of dollars annually by providing essential services that power societal infrastructure, includingdesigning, installing, and maintaining electrical systems that power residential, commercial, and community functions. As economies continue to grow and the demand for electrical services increases, the electrical contracting market expects continuous growth in future years.

Electrical contractors rely on construction activity as well as demand for renovation. Regarding services, electrical contractors focus on telecommunications, fire & security, electrical control, and lighting & signal. End-use electrical includes outside, inside (residential, commercial, and industrial), and integrated building systems.

By 2030, global construction volume is forecasting to grow at a solid compound annual growth rate (CAGR) of 85% to $15.5 trillion, creating more opportunity and demand for electrical contracting in emerging markets. The three largest construction markets (U.S., India, and China) expect to account for 57% of global growth.

Market Drivers

Advancements in digital technology in the electrical contracting market are driving more efficient production, expanding portfolios, improving operational maintenance, and supporting sales monitoring. Like most industries, there is a rapidly growing demand for decentralized networks, innovative storage, data centers, and automation. Other significant factors driving the electrical contracting industry include the expansion of 5G technology, shifts toward clean energy, and the need for electrical vehicle (EV) charging stations. 

Growth is also stemming from infrastructure development and increased renovation activities. Home renovation is rising, resulting in higher sales of building materials and appliances, as trends indicate that homeowners would renovate their homes instead of moving into new ones. Rental housing also creates opportunities for remodeling and renovation demands. These factors will continue to support growth in the electrical contracting market.

Regarding market challenges, the primary issues include labor shortages and volatile pricing for raw materials. As electrical contractors try to find ways to cope with the skilled labor shortage, it restrains the electrical contracting market.

In the United States

The United States is a leader in North America's electrical contracting market, and most of the population is tech-savvy. Therefore, the nation’s adoption rate of electrical contracting services is high.

The electrical contracting industry in the U.S. includes over 75,000 establishments with a combined annual revenue of more than $170 billion. The U.S. electrical contracting market forecasts a value of $283.74 billion in 2028, growing at a CAGR of 3.94% from $225 billion in 2022.

The U.S. is a major economy and is among the most technologically advanced countries, leading the way in deploying 5G technology commercially. The top telecom companies continue to roll out and expand their 5G network services. To deploy 5G, existing cell towers must be upgraded to expand cell networks to bring technology closer to users. 5G deployment also benefits contractors by bringing connectivity to smart cities, transportation, construction projects, public spaces, and workplaces. In the coming years, living standards among Americans expect to rise and drive market growth.

As advanced as the U.S. may be, its infrastructure needs to catch up to other countries. This creates an opportunity for upgrades, hiring, and demand for more transmission equipment to support 5G networks across the country. As a result, electrical contractors are needed to build faster networks using underground fiber optics, antennae, and transmission nodes. 

In the Midwest part of the U.S., the residential construction sector has been declining as residents relocate to other states. Slowing construction demand in the area resulted in lessened orders for electrical contractors. However, increased tourism in Florida, Texas, and California have boosted the hospitality industry in these states, resulting in the new construction of more hotels, especially premium hotels. This has provided more opportunities for the U.S. electrical contracting market.

M&A in Electrical Contracting

The electrical contracting market needs to be more cohesive. Yet, the market is slowly seeing more consolidation. Areas in which companies compete include service offerings, price, customization ability, a skilled workforce, and technological capability. Many of these contractors offer assistance portals and assistance management services. They work with other companies in the electrical space to create assistance programs, such as transmission, distribution, substation, and building information modeling (BIM), as well as technology companies.

Recently, the electrical contracting market has seen the entrance of several external players. These players include in-house services provided by large companies that offer discounts to boost their market share. Mergers and acquisitions are happening regularly within the sector as companies look to expand their size and their offerings. Many vendors are consolidating to merge two platforms. Pricing remains a top focus, followed by flexibility in approach and the ability to customize solutions.