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1. Energy Efficiency/Alternative Energy
Just a few years ago, "green" was still being widely considered a fad by many in the distribution sector. Now, energy efficiency and alternative energy are viewed by many as a key growth opportunity – particularly in the electrical sector. Several MDM Market Leaders, including Independent Electric Supply in San Carlos, CA, and McNaughton-McKay Electric, Madison Heights, MI, introduced initiatives in these areas in 2010.
"Energy efficiency in particular is a continuing opportunity in the electrical sector, and it's not going to be just this year," says David Gordon, president of Channel Marketing Group. "But the ones who are doing better are the ones who are going out and creating demand rather than just bidding."
LEDs continue to be a hot product category to meet the growing demand for energy efficient lighting, while solar continues to dominate the alternative energy headlines – primarily due to government regulations surrounding alternative energy and rebates supporting the installations. Price, however, may be keeping these areas from growing more rapidly, says Prudence Thompson, director of electrical distribution at Egret Consulting Group, Mundelein, IL.
Contractor interest in wind projects appears to have diminished over the past year, leading to less demand for wind related products from distributors, according to the 2011 Contractor Insights report released by Channel Marketing Group and Allen Ray Associates. The report surveyed electrical contractors on their expectations for 2011. Contractors continue to rely heavily on distributors to meet their purchasing needs.
2. Hiring Focused on Specialization
Hiring is beginning to pick up once again, though companies are being more particular about who and how they hire. "Companies are looking to hire people with specific skill sets in solar, wind and energy management to meet the continuing demand in these areas," says Thompson.
In addition, Egret is seeing more demand for bringing professional consultants and designers in-house, says Ted Konnerth, CEO and president, Egret Consulting. They're seeing a need to have this type of worker on staff rather than on contract, he says.
Distributors are expected to provide more training in specialized areas, as well, providing a significant opportunity for growth. "If you can position yourself as the expert on something, if you have the special knowledge on how to navigate the rebates available to contractors around alternative energies, you will be in demand," says Jim Filanc, a director at Southern Contracting Company, San Marcos, CA.
3. Industrial, Public Markets Driving Growth
"If you're focused on the residential market this year, you are S.O.L.," Gordon says. Industrial markets are leading the pack, primarily because of the drive for energy efficiency, and the government continues to invest in projects. Multifamily construction may offer some opportunities, Gordon says, but it will be highly dependent on the geographies in which you operate.
Government spending and regulations will also drive growth as new buildings will have to meet new requirements, depending on the geography. For example, in California, demand is strong for new health care facilities and to upgrade existing infrastructure to meet new seismic requirements, according to Mike Baker, vice president of marketing and vendor relations at Independent Electric Supply, San Carlos, CA.
Average growth for companies on list: 11.3%
Confidence in the electrical market was positive at the end of 2010, with the Electroindustry Business Confidence Index (EBCI) for current North American business conditions climbing to 68 in December, its highest level since June 2010. A reading above 50 indicates more panelists than not reported conditions improved during the month. The report is released monthly by NEMA, the association of electrical and medical imaging equipment manufacturers.
The intensity of change in current North American conditions also edged higher in December increasing to +0.4 from +0.3 the previous month.