Electrical Contractors See ‘Disrupting’ Forces in 2016
Surging revenue for firms generating power, light and building communication technologies charged up record attendance for the 2016 National Electrical Contractors Association convention in Boston. But officials and members of the trade group for the $130-billion construction-industry sector pointed to business uncertainty on several fronts, including workforce gaps, impact of disruptive technology and changing government regulation.
|CEO John Grau|
Among the convention’s 5,242 attendees were 584 local electrician apprentices who attended educational sessions and tool demonstrations. Despite having approximately 35,000 apprentices across several specialties nationwide, NECA sees a need for 16,000 new craft entrants a year to replace retirees. “That doesn’t account for new work or additional improvements in the economy, and we are probably adding in the area of [only] eight to 10,000” workers a year, said association CEO John Grau.
NECA also has combatted its labor deficiencies by investing $1.25 million in an existing program to identify and train people with prior experience who don’t need a full five-year apprenticeship. “They could be people who were maintenance electricians or they could come out of the military—anybody who had some electrical training,” Grau said.
One technology that was disrupting many conferees is “power over ethernet,” known as PoE. Systems using the approach bypass traditional electrical infrastructure by channeling electric power and data through a single ethernet cable. The technology approach that uses category-5 wiring eliminates additional costs for cabling.
One market forecast predicts the sector will rise to more than $1 billion by 2022 from $451 million in 2015, growing at more than 12% per year. Skip Perley, CEO and president of Thompson Electric Co., Sioux City, Iowa, said the technology is “really exciting but also scary” because, in many states, it doesn’t require licensed electrical work. “That work can be done by basically anybody,” he says.
But with an estimated 50 billion to 200 billion devices to be connected to the internet by 2020, the “internet of things” also is a boon to electrical contractors, including the recent boom in data center construction. Market-sector growth is providing opportunities for contractors to supply owners with a wide range of solutions, such as BIM coordination for power systems and prefabricated circuits and lighting systems. “Our contractors can also perform load bank testing on the new data centers as a preventative maintenance measure,” said Marco Giamberardino, NECA executive director for government affairs.
But Giamberardino also worries that next month’s presidential election could have dire consequences for the construction industry. NECA, whose political action committee collected nearly $1.8 million during a two-year election cycle, doesn’t officially endorse presidential candidates. But Giamberardino said, “If [former] Secretary Clinton gets elected, we’re going to be prepared to keep dealing with some of the same regulatory issues that we’re dealing with.”
Such issues include the Cadillac and alternative minimum and estate tax rates as well as the authorization of changes to the 2014 Pension Reform Act—changes that would allow multi-employer pension plans to voluntarily combine elements of defined benefit plans that pay fixed monthly amounts with variable benefits based on employee contributions and investment results.
The new format, known as a “composite plan,” is being championed in planned legislation by Rep. John Kline (R.-Minn.), chairman of the House Education and Workforce Committee. In a hearing last month, contractor and union witnesses testified in favor of the approach to keep industry pension plans solvent, but the boilermakers’ union and some retiree groups opposed it, citing concerns that benefits could be reduced more easily.
Giamberardino said, “We’re hoping to see this as part of the activity when Congress returns from the election recess.”