2015 Electrical Industry Projections

Last week Electrical Wholesaling released it’s 2015 Market Planning Guide.  This annual edition (November issue) is typically eagerly awaited for by many as it becomes a foundation for developing, or validating, 2015 objectives.  Additionally, this issue contains important customer revenue multipliers that help manufacturers, distributors and salespeople “guesstimate” end-user potential.  This baseline information, coupled with product mix information, can be used to determine account penetration performance, set objectives for salespeople and identify joint sales / target account opportunities between manufacturers and distributors.

The current 2015 thinking mirrors what we’ve heard from others and have seen in our preliminary survey.

• As we mentioned from the October AD North American meeting,
  • manufacturers “talked” about a 5-6% national increase
  • AD’s affiliate and manufacturer survey projected 6-6.5%
• EW’s projection is 6.2%, but ranges from 2.3% to 8.9% depending upon where you are geographically
• Herm Isenstein from DISC is projecting 8.9%, nationally.
• and our ElectricalTrends survey is projecting, thanks to your input, 6.2%. (click here to share your 2015 outlook and we’ll update the numbers closer to Jan 1 … responses are anonymous)

Unfortunately we do not know what IMARK, or IMARK members in aggregate, are projecting.

Regardless of which number you may subscribe to, the feedback from AD, our survey and the EW data all come from surveys.  DISC’s projection comes from Herm’s economic projections.  And no one knows what to project for Q1 and how it will compare against last year … as no one can project the weather.  Will it be similar to last year with lost work days and delivery issues or will it be a more “normal” winter, hence generating a Q1 increase compared to 2014?

And while there are other projections from various forecasters, all of them either focus on macro economic segments (i.e. housing) or the overall construction industry (vs solely electrical.)

Consider this … the National Association of Realtors (NAR) is projecting an increase in existing housing sales in 2015. And while this will be regional in nature (EW and DISC highlight top markets for 2015), the NAR forecast identifies potential opportunities … if you play in these markets … residential remodeling (could be lighting / lighting control upgrades, some electrical system upgrades), new home starts are supposed to increase to 620,000 units and there is projected to be an increase in multi-family housing (which usually then has some light commercial around it or the multi-family housing could be in urban areas).  The question then becomes, what are the economic drivers for your business focus?

But, with the various projections, I think we can say

The national average, at this point in time, is expected to be a minimum of 6%.

If the national average is 6%, it stands to reason that the minimum performance expectation for a national chains (let’s call it a benchmark) should be 6% without acquisitions for solely their electrical segment (perhaps something to help the analysts!)  Anything less infers that the chain lost share.

From an independent distributor viewpoint, national averages are “nice to know”, however, the industry has always been a local market subject to local economic conditions.  EW’s Market Planning Guide shares regional projections; DISCs data can be segmented by state, by county and even down to zip code and then further segmented by major segment (contractor, industrial, utility, institution) or by SIC – depending upon which service you subscribe.

Do these numbers correlate with what you are hearing? Are planning? What segments do you see growing?

And remember, these are “averages” for the industry. Some will nominally exceed, others will vastly exceed and some will fall short. There is still time to develop a plan that can be “worked” to generate above average growth. Perhaps we can help?