Organization and Structure

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.

Background and Development

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.

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.

Standards and Regulations. The National Electrical Code (NEC) was established to provide electrical work guidelines to assure avoidance of hazards.  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.

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.

Current Conditions

New construction accounts for the lion’s share of work done by concrete contractors. although firms also engage in reconstruction, maintenance and repair. Building construction includes work on single-family houses. Nonbuilding construction includes work done on private driveways and parking areas, as well as work done on projects such as highways and streets.

Ready-mixed concrete producers in South Africa numbered more than 2,700 in 2002. A total of 13 S.A. concrete contracts secured more than R1 billion in sales in 2002.

Throughout the early 2000s, the R90 billion construction industry grew rapidly as the nation experienced a surge in housing starts. The construction boom happened in spite of a sluggish economy, due in large part to historically low interest rates. For the residential building industry, 2003 was one of the best years on record. The economic conditions of the early 2000s proved to be a mixed blessing for the concrete industry. While residential construction reached levels not seen since the 1970s, commercial and industrial construction, as well as in nonbuilding sectors such as transportation, saw significant slowdowns. These declines were reflected in the growth rate of portland cement consumption, which dipped from 5 percent in 1999 to less than 1 percent in 2001. Although consumption increased by 1.4 percent in 2002, growth remained well below the 1999 level.

Workforce

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.

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.

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.