Overall business optimism improves but WA contractors concerned

The National Electrical and Communications Association’s (NECA) Market Monitor 2016–17 has found that businesses in the electrical contracting industry are more optimistic about the future, with nearly half believing there are increased opportunities for work in the coming years.  

“While contractors in NSW are the most positive, in Western Australia our electrical contractors feel the most concerned about the future. Labour costs and overheads continue to rise,” said NECA in a statement.

The study, conducted every two years, covers a wide range of issues facing the industry, from general sentiment and business confidence to the purchase process — including decision-making, ordering and the channels and methods used to purchase materials — through to feedback on the major wholesalers and manufacturers.

NECA received 900 responses for the study with stronger representation from small business, with more owner/independents answering than in past years. The study was open from December 2016 to April 2017. Below are the highlights.

Residential/commercial work

Overall, the study found that residential and commercial projects provide the mainstay of work for most businesses, regardless of size. Small players are getting much of their revenue through residential work, whereas commercial work is more prominent for larger companies. A great deal of revenue comes from maintenance and renovation projects, regardless of business size. 

Renewables

Batteries and solar are predicted to be the big emerging technology, closely followed by the Internet of Things/smart technology, going into the near future. In this study, more businesses were working and specialising in automation; as a result, there is a desire for more skilled employees and support in learning and training in this space.  

Compliance 

“There are some interesting trends emerging from this year’s research and we are particularly pleased to see the awareness level of the issues around only using ‘compliant products’ so high on the agenda of electrical contractors,” said Suresh Manickam, NECA CEO. “And none of this would be possible without the support of our sponsors. So a special thank you to L&H, Rexel, MMEM and CNW, and Philips, 3M, HPMLegrand, Gerard Lighting and Hager.” 

Contractors are much more aware now than in 2015 of the importance of using products that are compliant to Australian standards. Three-quarters of respondents rated it as very important when choosing a product to use. However, contractors take cues from either compliance markings (52%) or trust that if it is being sold in an Australian wholesaler or is a leading brand (44%), it will be compliant. Only 20% conduct further research to ensure the product is compliant. A compliance mark on products would help contractors navigate product choices in this regard. Contractors believe non-compliant products to be of a different quality and understand the consequences of using non-compliant products to be a liability (51%) and risk (44%). 

Competition

“Despite the optimism, electrical contractors see general economic conditions and increased competition for work as likely business impacts over the next two years. This is a change from the last survey, where concerns mainly related to internally managing their business (controlling costs and cash flow). Red tape and legislative changes are also a worry for electrical contractors, as well as a perceived rise in unlicensed/unskilled workers undercutting them on price,” said NECA in a statement. 

Connectivity

While relationships are still central to how business is done, younger electrical contractors expect better digital connectivity from their business partners. As in other industries, being able to conduct business online is increasingly important and prevalent. From research and ordering to training and product information dissemination, there is a need for wholesalers and manufacturers to use digital to better meet their customers’ needs.