Here's how to find the market numbers you need online, on paper--and on deadline.
Five years ago, EW ran what proved to be one of its most popular features in years: an article packed with ideas on the best sources for inexpensive (read free) regional economic and demographic data. The article was a hit because it helped electrical distributors, independent manufacturers' reps and manufacturers find useful regional market data that complemented the electrical sales forecasts available annually in EW's Regional Factbook. They didn't have to hire an expensive management consultant to do the research; all they had to do was invest a few hours at a good business library.
How times have changed! Since "Hitting the Hot Spots" was first published in November 1993 (p. 18), something called the Internet has revolutionized the world of economic and demographic research. The unwired can still hit the bookstacks in a well-stocked business library and find the numbers they need in a few hours. But while researching this article, EW's editors discovered much of the marketing data that was available in 1993 only on paper is now online. In that research project we ran through a few rolls of dimes at photocopying machines at our local library to photocopy the necessary research data. This time around, in many cases all we had to do to get the same information was find the Web page we needed, right-click our computer mouses, click on "Select All," move up to "Edit," click on "Copy" and then paste the selected information into an open word-processing document. No fuss, no muss-and less chance of some erroneously keyboarded data. And no more nasty glares from librarians for putting reference books back in the wrong places or tying up the copying machine. In the comfort of our own offices and homes, we surfed the Web to our heart's content to find new sources of data for this article. We have returned unscarred and want to tell you about what we have found, and hopefully in the process will help you avoid some dead-ends and detours in your next market-research project.
We hope our picks for the best sources on the Internet for regional marketing data will make your next research mission a bit more fruitful and a whole lot less time-consuming. As in the first "Hitting the Hot Spots" article, in the next few pages, we used the best economic data we could find to help us write market profiles on the fastest-growing areas in the U.S.-and the ones that provide the greatest sales opportunities for electrical products.
Where to find economic and demographic data:
On Paper:
Rand McNally Commercial Atlas and Marketing Guide. This book offers a ton of easy-to-find demographic information, as well as the maps of all Metropolitan Statistical Areas (MSAs) in the U.S. If your local library doesn't have a copy, contact Rand McNally at 800-284-6565.
1998 Survey of Buying Power. Published by Sales and Marketing Management magazine, this is one of the bibles in the demographics field. It's packed with local market data, including five-year population growth forecasts. Look for it in the library or call 800-443-2155 to buy a copy.
State and Metropolitan Area Data Book. This handy resource is packed with demographic information. It's available through the U.S. Census Department for $24 by calling 202-512-1800.
U.S. Housing Markets. Produced by the U.S. Housing Markets Division of Hanley-Wood, Inc., Canton, Mich., this is the best source around for analysis of local housing markets. Call 800-755-6269 for more information, or go to www.housingUSA.com for a taste of what's available.
Online:
U.S. Census Department. The U.S. Census Department tracks the numbers of housing units authorized by permits, started, sold or completed. You can also find the dollar value of various types of construction in select market areas. www.census.gov/ftp/pub/const/www/index.html
Other Federal statistics. More than 70 Federal government agencies, including Census, can be searched in one stroke from a site called "FedStats" maintained by The Federal Interagency Council on Statistical Policy. www.fedstats.gov
Bizsites' State and Region Reviews. Developed by Plants Sites & Parks magazine, this Web site packages information on the business climate in different regions of the U.S. for companies considering relocation or new facility construction. You may also want to check out the magazine's site at www.bizsites.com/index.htm. www.bizsites.com/Toolkit/stateregreviews.html
American Community Network. ACN is an elegant and extremely easy site from which to gather the most important statistics. On just about any metropolitan market in the U.S., it gives you government statistics, city maps, development incentives and lots more. www.acn.net
Inc. magazine's Local Business News. This section of the Inc. magazine's Web site offers a good list of business resources on 26 U.S. cities and the articles that the magazine has published on each city. www.inc.com/news
Yahoo's U.S. states information. A few clicks off of Yahoo's main page will lead you to a treasure trove of information on the state of your choice. Just click on "US States" under the "Regional" category heading. Choose your state, and you will soon find a solid list of business-information links for that state. www.yahoo.com
The nearest Federal Reserve Bank. These banks often have excellent regional economic data. The Web sites of the San Francisco and St. Louis Federal Reserve Banks are particularly good. To find the Web site of the nearest Federal Reserve, go to the address listed below and click on the map in the appropriate region. www.ny.frb.org/links.html
Other good resources online, on paper and on the telephone:
Departments of economic development. Any state actively courting new businesses usually has a Web site with some basic economic information.
Chambers of commerce. While some chambers of commerce offer little more than the phone numbers of the local Welcome Wagons, others may have the information you need. It's worth a shot, but don't get your hopes up.
Local union chapters. When looking for employment statistics on the number of electrical contractors in your area, don't forget to check with the local union hall.
Local home builders' associations. These groups often have statistics on housing starts or building permits. The local Board of Realtors may also have this information.
Business department of a college or university. You may be surprised with the amount of data business schools collect on the local economy. It's a mixed bag as to how to access this data. Sometimes it's available for free on the Web; at times it may be a for-pay proposition. It's also often available at the nearest college or university library.
Banks. You have a decent chance of finding some free statistics at good-sized banks in your area. Some of them may even offer this information online.
Local newspapers. Many newspapers do a real nice job of archiving business articles of interest to the local community. Sometimes there is a per-article fee to access a newspaper's database.
Manufacturers. Hopefully, your friendly suppliers are loaded with exactly the type of market data you need. Don't bet on it, but some electrical manufacturers invest a lot of time into researching end-user market potential.
Customers. Your salespeople's Rolodexes are probably the best reference sources for forecasting future sales. Good salespeople always keep an ear to the ground for leads on expansion plans or new bids. For sales potential estimates, they should also find out the number of employees a customer has, and then use the sales potential multipliers for this issue of Electrical Wholesaling (page 8).
Roll on Atlanta
1998 population: 3.68 million in metropolitan Atlanta 2003 population forecast: 4.13 million-A 12.2% increase from 1998 1997 households: 1.33 million, a 20.6% increase since 1990 Job forecast: The Atlanta area is expected to add 60 thousand new jobs through 2000, and to grow at a 2.25% annual rate through 2002. Unemployment: 3.5% Building permits issued per 1,000 residents: 14.2 Building permits (first-half 1998 compared to first-half 1997): 27,191-up 14% and the most of any market in the U.S. 1999 forecast for electrical distributor sales (Atlanta MSA): $1.979 billion, a 9.53% increase over 1997 1998 Customer employment: Electrical contractors-14,890; Manufacturing employees-221,000; Employment in finance, insurance, real estate, services and retail trade-1,082,300; Government-260,400. 1998 electrical market potential: $686 million. Large projects planned or now underway: $5 billion expansion of Hartsfield-Atlanta International Airport for the construction of two new runways; $18 million Federal Express distribution center; and a $100 million Nisshinbo automotive facility.
The thousands of automobiles crawling along Route 285 as it winds through the pine forests and red clay of northwest Georgia epitomize the explosive population growth that has accelerated Atlanta's economic boom.
A mind-boggling amount of residential construction has forever changed (some would say scarred) the region's piney forests over the past decade, but it's not over yet. Not too far over the horizon are the 450,000 new residents expected to move into the Atlanta metropolitan area over the next five years. It's like all of the residents of Des Moines, Iowa, moving to Atlanta by 2003. While the surge may slow some over the next few years, the proper economic and demographic elements are in place to fuel an economy that's sure to outpace the growth of most metropolitan areas anywhere else in the U.S. next year and beyond.
While Atlanta's booming residential market attracts a lot of attention, it's not the only construction market seeing tremendous growth, says Randy McDaniel, branch manager, Hughes Supply, Inc., Chamblee, Ga. "You can drive around Route 285 and count the crane-tops on either side of the expressway," he says. "It's kind of across the board. I have 12 outside salespeople and I don't hear any of them talking about how slow it is at electrical contractors, and the plans are coming in by the droves for them to bid on jobs. The engineering and architectural firms in Atlanta are still busy with their work."
While the growth of Atlanta's northern suburbs gets much of the ink, there's also a lot happening in downtown Atlanta, as young professionals renovate existing housing stock. "There is a resurgence in downtown Atlanta, cleaning up some of the old areas," says McDaniel. "It's in-town upscale condos for the young crowd that wants to be there."
One Atlanta-based electrical contractor says all of the contractors in town that are members of the Independent Electrical Contractors (IEC) are quite busy. "We don't see anything but really growth in Atlanta," says Todd Tibbetts, director of finance and administration, Tibbs Group, Decatur, Ga. "There's no reason why we shouldn't grow at anything but 15%-20% a year. We have doubled our size in the last three years and now have over 50 employees. I have hired about 16 people in the last six months."
He says because of the sheer amount of construction underway in Atlanta, hiring good people is his biggest problem. "It's a full-time job even for a company as small as ours to have somebody that handles human resources."
McDermott of Hughes Supply says a lot of the uncertainty in the U.S. economy isn't at all apparent in Atlanta, and that business should remain excellent for several years. "Our business is very strong here at Hughes in Atlanta. We are up over last year. I don't see the same things that the world is looking at right now. The next couple of years, with the things going on with the electrical contractors that we deal with, business looks pretty doggone good. We could be rocking along for 10 more years with a strong economy if people wouldn't panic."
Phoenix on Fire
998 population: 2,796,000. In 1997, Maricopa County led the nation in actual population growth with 82,789 new residents, according to the U.S. Census Bureau. 2003 population forecast: 3,336,200 1997 households: (Phoenix/Mesa metro area): 1,057,000 Job forecast: Arizona Department of Economic Security projects the creation of 180,000 jobs statewide during 1998-1999. It expects construction to be the state's fastest-growing industry this year with a 6.5% increase in the number of jobs. Close behind construction is the service industry, growing at 6.2%, with trade following at 4.4%. An average of 70,000 jobs have been created each year in Arizona since 1990, a growth rate of 33%. Total personal income in Arizona rose 7.5% from 1995 to 1996, well above the U.S. average of 5.4%. Unemployment through July 1998: Metro Phoenix 2.5%; 3.7% statewide and expected to remain below 4% through1998. Single-family home construction in Phoenix area: 42,959 in 1997, with a total value of $5.1 billion, according to the Arizona State University College of Business. According to the Meyers Group, a California-based real estate research firm, 1998 home closings are on track for a 42% increase over 1997. Building permits first quarter of 1998: $1.9 billion in Maricopa County; $510 million within Phoenix proper. 1999 forecast for electrical distributor sales (Phoenix- Mesa): $794 billion, an 11.8% increase over 1997. 1998 employment:Electrical contractors-8,170; Manufacturing-215,100; Services-1,164,200; Government-341,300. 1998 electrical contractor market potential: $478 million Recent business expansions: Avnet corporate headquarters: 500 jobs; Green Tree Financial's western regional headquarters, 1500 jobs; and Vanguard Group, 1,200 jobs, Scottsdale. Large projects planned or now underway: New federal and municipal courthouses in Phoenix; new facilities at the Arizona Heart Hospital; and a $21 million prison expansion in Florence, Ariz.
If you hear that Phoenix, Ariz., is hot, hot, hot, the topic may not be about the weather. Sizzling economic growth and a blazing construction boom have made this desert local one of the hottest markets in the nation.
Maricopa County's population has increased an estimated 21% during the 1990s. In response, retail, service and construction industries have all expanded to meet the needs of the growing community. Building permits were valued at $1.9 billion in the first quarter of 1998. James E. Morlan, president of Electric Supply, Inc., Phoenix, says a lot of the construction is being fueled by an interest in restoring or renovating older and historic buildings in downtown Phoenix, and a growing interest from out-of-state developers. He explains that builders either have to develop new areas on the outskirts of town, which makes a long commute to work for homebuyers, or they can renovate existing properties in town. The fact that Phoenix has a lot of unused or underdeveloped property in the heart of the city makes the second option the more appealing one. "We're seeing a lot of developers from out of the area coming in and creating mixed housing developments," he says. "It's everything from affordable housing, to supported housing, all the way up to luxury apartments in the same development."
Additionally, a growing number of companies are relocating or expanding in Phoenix, Tucson and Yuma to take advantage of their strategic location near Mexico's markets and to be within a day's drive of the Pacific Coast, facilitating access to Asian markets. From 1993 through 1997, export growth in Arizona was more than three times greater than the national average, ranking second among all states.
But there are other, and perhaps more immediate, advantages for businesses to locate in the Valley of the Sun. Arizona is a right-to-work state, so labor's muscle is negligible, and manufacturing wages are competitive, averaging $11.83 an hour, compared to $12.92 nationally in 1996. The state provides business incentives, such as an aggressive accelerated depreciation schedule to encourage new capital investment and reduce a company's personal property tax liability, and low-interest loans for the acquisition of land, buildings, equipment and improvements for companies considering relocation or expansion in the state.
Of particular interest to electrical distributors and their customers is the state's revolving energy-loan incentive. This program provides low-interest loans for the acquisition and installation of energy-saving equipment and fixtures up to $500,000. The receptive and encouraging business environment plus a relatively low cost of living-at least when compared to other major metropolitan areas-and the lure of Arizona sunshine keep the area attractive to employers.
Sunshine State
1998 population: 15,012,000 2003 population forecast: 16,134,400-a 7.5% increase 1998 households: 6,012,000 Job forecast: 2.5% growth per year over the next three years. Unemployment rate: 5.0% Building permits issued per 1,000 residents: 9.2 Total building permits for single-family and multi-unit dwellings (first-half 1998 compared to first-half 1997): Jacksonville MSA-4,386 total units (-11%); Naples MSA-3,163 total units (+17%); Orlando MSA-12,210 total units (+34%); Sarasota-Bradenton MSA--3,215 total units (+3%); Miami-Ft. Lauderdale CMSA--11,053 total units (-17%). 1999 forecast for electrical distributor sales in Florida: $5.06 billion (+11.26%) 1998 Customer employment: 35,470 electrical contractors; Manufacturing employees--492,000; Employment in finance, insurance, real estate, services and retail trade--4,163,700; Government--971,100. 1998 electrical contractor market potential: $1,634 million. Large projects planned or now underway: Shopping malls in the Orlando area, expansion of Kennedy Space Center, Orlando International Airport and Universal Studios.
While Florida's economy will not race along at quite the same rate as the past few years, there's still a tremendous amount of growth in many of the state's fastest-growing market areas, particularly the Gulf Coast and Orlando.
Tourism remains a big part of the state's economy, and this year the state expects to draw 49.25 million tourists to its beaches, theme parks and other attractions. Electrical distributors see a piece of this action in the construction and electrical maintenance of hotels, motels and other lodging. Indeed, the thousands of hotel rooms within a 10-mile radius of Cinderella's castle in Disneyworld's Magic Kingdom represent one of the largest concentrations of hotel rooms anywhere in the world, and these facilities have an insatiable appetite for replacement lamps and other MRO electrical products.
The Orlando metropolitan area is seeing solid growth on other fronts, too, and it's not all related to the mass of development near Disneyworld, Universal Studios and SeaWorld. Downtown Orlando is in the midst of an office construction boom not seen since 1980s, retail mall developers have plans on the drawing board for the expansion and construction of several ever-more colossal shopping centers and Kennedy Space Center will soon be expanded to accommodate a new launchpad for communications satellites. George Meadows, branch manager for Rexel's location in Sanford, Fla., says the residential construction market in metropolitan Orlando should remain hot well into next year.
Florida's Gulf Coast from the Tampa-St. Petersburg metropolitan area and south about 120 miles to Naples and Fort Myers is seeing a lot of residential construction, and population forecasts indicate this region will see 187,000 new residents in the next five years. While locals joke about white-haired snowbirds driving 35 mph in the fast lane with their blinkers on, these retirees are supporting much of the housing market with their purchases of second homes and retirement residences in the area. Indeed, the white-hot housing markets in Naples and nearby Fort Myers are two of the most active in the entire nation. Because of all of this growth, Gulf Coast contractors are scrambling to find enough skilled tradespeople.
Across the state, the Miami-Fort Lauderdale market is also seeing a huge influx of new residents. By 2003, the Miami/Fort Lauderdale CMSA will add 302,000 new residents, the most in the state, according to population forecasts. Despite all of this growth, Florida's business community wants to diversify the state's economy to include more industry, and the various economic development agencies are actively courting manufacturers from out-of-state and overseas to set up shop in the Sunshine State.
Vegas Blazes
1998 population: 1,192,200 2003 population forecast: 1,633,900 1997 households: 1,057,000 Unemployment through August 1998: 4.3% Job forecast: (Las Vegas has America's fastest-growing employment base, racking up a 16.5% increase in jobs between 1994 and 1996. No other major metro did better than 14.7 %.) Single family home construction in Las Vegas area: 5,879 Building permits 1997: 28,814 (In a study of building permits issued in 54 metro areas, Las Vegas had the fastest-growing housing base.) 1999 forecast for electrical distributor sales: $390.4 billion, a 9.2% increase over 1998. 1998 employment: Electrical contractors--5,790; Manufacturing--22,800; Services--438,200; Government--69,800. 1998 electrical contractor market potential: $297,612,200 Large projects planned or now underway: A $200-million expansion of Harrah's casino/hotel; 15.6-mile monorail; and the construction or expansion of these casino/hotels--The Venetian (approximately 6,000 rooms); Mandalay Bay (3,700 rooms); The Aladdin (approximately 3,600 rooms); The Paris Resort (approximately 3,000 rooms); The Resort at Summerlin (approximately 600 rooms); and The Hard Rock (approximately 350 rooms).
Once known for cheap buffets, cheap drinks and as a glitzy entertainment hot spot, Las Vegas is reinventing itself as a destination resort, not just for swinging singles, but for families. The city has placed an emphasis on providing visitors with quality shopping and dining experiences, successfully marketing itself as a family destination. Las Vegas is going upscale, placing an emphasis on building luxury resorts.
There are planned expansions of existing shopping malls and construction of new malls in and around the city that could provide three million square feet of new retail space by 2001. The city also wants to cash in on the convention business to fill in the projected 21,000 new hotel rooms coming on board by the end of 2000. Already the top convention city in the United States according to Tradeshow Week magazine, Las Vegas has nearly two million square feet of additional meeting space planned for the next two years.
Many people are surprised to find out that over the past five years, Las Vegas was one of the fastest-growing housing markets in the U.S. New-home sales in Las Vegas, one of America's fastest-growing cities, has accelerated from 12,000 a decade ago to 27,000 last year to more than 23,000 in the first nine months of this year. The blistering pace has earned Las Vegas a nickname change from "Sin City" to "the City on Steroids."
State economic developers are also courting high-tech companies such as telecommunications equipment manufacturers and environmental technology firms with business incentives such as business, property, sales and use tax abatements, and with the Train Employees Now program, which pays up to 75% of training costs for instructional personnel, materials and up to 30 days of on-the-job training.
Texas Nexus
1998 population: 19.8 million2003 population forecast: 21.2 million 1997 households: 6,986,600 Job forecast: Austin, Dallas and Houston all have been adding jobs at about a 4% annual rate over the past year. The McAllen area is at 5.8%. Unemployment: 5.7% statewide; Austin 2.9%; Dallas 3.5%; Houston 4.5% Residential permits issued per 1,000 residents: 7.3 Building permits first half 1998: 78,406 Change from first half 1997: +31% Estimated 1998 electrical distributor sales: $6.1 billion 1999 forecast for electrical distributor sales: $6.7 billion 1998 customer employment: Electrical contractors--46,700; Manufacturing--1.1 million; Finance, insurance, real estate, services and retail--4.5 million; Government--1.5 million 1998 electrical contractor market potential: $2.2 billion Large projects planned or now underway: Dell Computer is building a 570-acre manufacturing complex in Austin, the first building of which--a 300,000-sq-ft plant for work stations--is now under construction. There's a $55 million retail and residential village planned for downtown Dallas. ABB Lummus is building a 500,000-sq-ft building in western Houston.
The Lone Star state may not be the lone star in the electrical market, but by combining sheer size with rapid growth, it is one of the brightest stars in the blazing sunbelt. With an estimated $6.1 billion in sales through electrical distributors in 1998, Texas is surpassed only by California in total volume, and Texas electrical distributors are predicting growth of more than 9% for the next year.
Austin, Dallas and Houston, as well as smaller cities such as McAllen along the Mexican border, are enjoying robust growth in all construction sectors for a variety of reasons. On the commercial and industrial side, that growth comes from expansions by Texas firms and an influx of new companies seeking the ideal locale for serving the central U.S. and emerging markets in Mexico, the Caribbean, Central and South America. Primarily on the strength of commerce following the North American Free Trade Agreement (NAFTA), the once-little town of McAllen is looking at a 24% increase in population from 1996 to 2000.
The oil and petrochemical business continues to be a huge factor in the Texas economy, but high tech is capturing a growing share of the attention, particularly in Austin, which is experiencing a renaissance as a high-tech hub.
Austin is the hotbed for commercial expansions in the state. The capital city has weathered hard times to become a magnet for high-technology companies, and now about one-fifth of the area's workforce employed in that sector. With Dell Computer Corp. headquartered in nearby Round Rock, computer component suppliers have massed to Austin, giving the area an enormous boost that only recently has begun to slow. Dell itself is still adding workers at a rate of thousands per quarter, but semiconductor makers such as Motorola, whose billion-dollar chip plant was Austin's biggest employer until Dell beefed up, are now laying off workers. With unemployment below 3% and commercial vacancy rates around 7%, finding workers and places to put them is one of the biggest challenges for most Austin employers, which should drive construction and population growth for some time to come.
The Dallas/Ft. Worth metroplex is not far behind Austin in demand for commercial and residential space. Most of the new construction is to the north of the city, where greenfield spaces and proximity to Dallas/Ft Worth airport have attracted several large commercial and industrial facilities, but as demand drives up prices in the north, some companies are beginning to look more closely at the downtown area as well. There are about 10 million sq ft of office space currently under construction. Builders say buyer demand for housing is relentless, particularly in the suburbs of Plano, Highland Village, Colleyville and Southlake, and financing is plentiful. The metroplex employment base has grown nearly 100,000 in the past four quarters and by about 225,000 in the past eight.
Houston got a later start in the economic boom than the rest of Texas' large cities, but it has made up for lost time, posting a breathtaking 52% increase in total residential construction permits in the past year, and an increase of 92% in multi-family units. The hottest housing markets are inside the I-610 loop and in the city's northern suburbs. In the first half of this year, Houston developers filed more residential permits than in the two years from 1995-1996. Houston still considers itself the energy and petrochemical epicenter of the known universe, but research companies and electronics, computer hardware and software, biotechnology, and aerospace manufacturers are easing the city's exposure to energy's volatility.