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As electrical execs develop their 2022 sales forecasts, they have a new array of market drivers to consider that weren’t in the mix this time last year. Here are the drivers that came up most often in conversations during my recent travels to industry events.
Historic price increases for electrical products
The price increases in the electrical market haven’t shown any signs of slowing down in recent months. Electrical Marketing has published a monthly Electrical Price Index for more than 20 electrical products since 1990, and eight of the 10 largest monthly price increases have occurred over the past two years. No surprise that wire and cable has seen some of the largest increases, with year-over-year variances topping +30% through Oct. 2021. With inflation raging and shortages driving up prices, it’s tough to say when prices will return to anything near what we used to consider normal.
Shipments of semiconductors tripped up in supply chain snags
The delays in chip deliveries make business news headlines every day, and in the electrical industry they are being felt most acutely by manufacturers of industrial and lighting controls and LED lamps that incorporate them into their products. At last month’s LightFair, any manufacturer with a direct source of semiconductors, most often from China or other Pacific Rim nations, was very quick to promote that fact to attendees. Some economists believe supply chain challenges will ease up by the second half of 2022.
The multi-billion dollar question: What will the office construction market look like — post pandemic?
Every business is managing the work-from-home and remote office phenomenon differently. But there’s little doubt that once all COVID restrictions are in the rear-view mirror, for many companies the days of most or all employees working five days a week from company offices are over, and that the era of the three days in/two days out will be woven into the fabric of corporate culture. One would think that long term, this would eventually cut down on the need for new office construction, but many construction execs think it will spark demand for renovation to reconfigure existing inventory to meet new work patterns.
The 2022 construction forecasts for office construction are all over the place, with the Consensus Construction Forecast published annually by the American Institute of Architects (AIA) coming in a -0.1% decline, but the eight construction forecasts offering predictions ranging from a +11.7% increase to a -10.6% decline. Dodge Data & Analytics expects a +10% increase to $49.7 billion, according to its 2022 Construction Outlook.
Trade shows and conferences are back
Although the number of attendees and exhibitors at the trade shows I recently attended were down from past events, attendees enjoyed reconnecting with old business contacts and making new ones. This industry is still a people business where relationships count.
Helping contractors build new businesses in lighting control
This is a concept that you may want to kick around at your next strategic planning session. There’s a ton of chatter right now about how contractors can capitalize on lighting control from lighting manufacturers marketing products that are easy to commission, monitor and upgrade. LEDs still account for a comparatively small fraction of the installed lighting base in commercial and industrial facilities, and the retrofit opportunities for contractors who can install and program these controls will be huge.
EV charging stations for the home
While EV fans are all charged up about the $7.5 billion that the Biden Infrastructure Bill has carved out to build out a national network of EV charging stations, I think the opportunities in the EV niche will actually be much bigger in the installation of residential EV chargers. Owners will quickly see that being able to charge their EV overnight in their own garage will beat scouting around for an available public EV charger.
That’s my take on the biggest opportunities and challenges for 2022. Let me know if I missed any at [email protected]
