Prices for electrical contracting services are expected to continue as input costs and demand rises
Los Angeles, CA (PRWEB) August 27, 2014
Electrical contracting services have a buyer score of 2.7 out of 5, indicating a moderately favorable purchasing environment for vendors over buyers. This score reflects future pricing trends that will limit the buyer's ability to negotiate, in particular historically high labor rates. Other factors that negatively affect buyer power include a limited availability of substitutes and the risks involved with switching contractors during the project. “However, low market share concentration and forecast low price volatility will positively affect buying power,” according to IBISWorld business research analyst Erick Delgado.
The highly fragmented nature of this market encourages price-based competition among suppliers, which benefits buyer negotiating power. However, as the economy continues to recover, demand from key downstream markets like residential construction will increase, which will give contractors more flexibility to increase prices. Volatile copper prices and a shortage of skilled labor will continue to pressure electrical contractor's profitability in the three years to 2017. “As a result, service prices are anticipated to rise in the three years to 2017, weakening buyer power,” says Delgado.
While demand volatility from the construction sector is high, price growth is anticipated to stabilize during the three years to 2017, due to rising demand for electrical services from major downstream industries, particularly new construction. Heightened demand from new buildings, combined with continuous demand for maintenance and repair services on existing buildings, will reduce price volatility. Low price volatility promotes a stable purchasing environment for buyers by allowing them to accurately budget and evaluate prices over time. Also, steady demand for repairs contributes to a low risk of bankruptcy among contractors, allowing buyers to feel more secure in planning extensive projects.
Because electrical work is labor intensive, and safety is important, there are no viable substitutes for a licensed electrical contractor. Additionally, buyers that switch contractors mid-job will face high switching costs due to delays in project completion and new start-up costs. These factors negatively affect a buyer's ability to negotiate. Major vendors include Bergelectric Corporation, Cupertino Electric Inc. and Integrated Electrical Services Inc. For more information, visit IBISWorld’s Electrical Systems Construction & Installation procurement category market research report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Like IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of electrical systems installation and repair services. Contractors provide on-site installation, alteration, design, maintenance and repair of electrical systems and equipment for commercial, institutional and residential buildings. Services include indoor and outdoor lighting and power, photovoltaic systems, emergency power, switchgear, subpanels, generators, on-site transformers and related devices. It also includes low-voltage work such as climate controls, fire alarm and security systems, and fiber-optic, data and telecom cable installation. This report excludes high-voltage electrical work such as the construction of transmission lines, cogeneration plants, substation facilities, utility-scale solar projects and other utility infrastructure.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.