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FORECASTING THE FUTURE

Jan. 1, 2003
Don't utter the "R" word just yet. You can count on steady but unspectacular growth in the 2001 electrical construction market.Electrical distributors

Don't utter the "R" word just yet. You can count on steady but unspectacular growth in the 2001 electrical construction market.

Electrical distributors are job-driven. To survive, they must simultaneously quote jobs for their customers, win bids, service the jobs at hand and then move on to the next job quotes.

But every once in a while, you should take a step back and look at the market drivers that mold the electrical construction industry to see what troubles - or opportunities - are down the road for your company.

If construction work is drying up in your market, you need to know that as quickly as possible. On the flip side, if a flood of new project work is going to start coming into town, that's equally as important to know. Industrially oriented distributors must be equally in tune with plant expansions or cutbacks.

You have a better read on what's happening today in your market than any construction economist. But we can all use a little assistance in looking around the next bend. To help our readers get a sense of what may be in store next year for the electrical construction industry, this month's ElectroForecast 2001 on page 28 offers a good snapshot of what leading market forecasters in the construction business see for this industry. In Part 2 in the February issue, Electrical Wholesaling will offer the insights of industry insiders from all areas of the electrical construction industry.

While forecasters expect the market to slow down some from the wild ride that we have been on for the last few years, overall growth in 2001 should remain sure and steady. That's because several key demographic trends, market demand for low-voltage wiring across virtually all market segments and some positive economic drivers are in place to keep most segments of the construction market humming right along.

As the year 2000 drew to a close, the stock market's slide, recent declines in computer purchases and weakened consumer spending have dampened the optimism that some economists have for this year's economy. But most economists predict that unemployment will remain low, oil prices will be within reason and inflation will stay in check in 2001.

However, we must keep a close eye on consumer spending, which began to sag at the end of 2000. It's an economic driver that has an effect on many areas of the construction market.

For example, consumer spending has a major impact on the housing market. With mortgage rates expected to remain low, you can expect housing construction to stay at a healthy but lower level than over the past few years.

Longer term, the housing market is bound to slide some, because of the demographic reality that as Baby Boomers age and move on through retirement age, not as many people will be in the prime home-buying years.

However, electrical contractors are in a great position to cash in on some of the new low-voltage work in homes that seems poised to explode in the near future. As the market softens for the installation of traditional power wiring products in the residential market, hopefully, contractors will still be able to enjoy the additional dollars in cabling work for high-speed Web access, home networks and security systems.

Demographics also have a surprisingly direct effect on the amount of new construction and retrofit work in elementary schools, secondary schools and colleges and universities. Elementary school enrollment is just off its peak year, and the amount of new construction and retrofit work in elementary schools has been at near-record levels. As this population bulge moves to the high school and college years, you can expect the construction opportunities in this market segment to follow.

Despite some recent softening in the overall economic climate, Electrical Wholesaling's editors expect the electrical construction market in 2001 to keep our readers quite busy next year. Now, if you can just find enough good help to keep up with all of these new orders...