Remembering 2024

While historians will probably look back at 2024 as the year of Donald Trump's victory over Vice President Kamala Harris in the presidential campaign, we saw plenty of other big headlines and potentially profitable new market opportunities gain momentum in the electrical wholesaling industry.

Here are Electrical Wholesaling's picks for the headlines that generated the most buzz in 2024, and the new market opportunities that could have the most impact on the 2025 electrical market. 

#1. The Merger of Affiliated Distributors and IMARK Creates a Mammoth Marketing Force of 700 Independent Distributors with $43 Billion in Combined Sales Revenues

The A-D/IMARK merger gets Electrical Wholesaling’s vote for the biggest news story of 2024. Both A-D and IMARK have long and proud histories as marketing groups that worked toward serving the best interests of their distributors and manufacturer members. The merger will bring distributor member more purchasing clout to compete on pricing with the national chains, exposure to best practices and new networking opportunities.

#2. The March of Distributor M&As Continues to Consolidate the Electrical Wholesaling Market

The chart below lists the largest distributor M&As in 2024. The five largest distributors in the United States and Canada – WESCO, Sonepar, Graybar, Rexel and Consolidated Electrical Distributors – were active acquirers in 2024, with Sonepar leading the pack with seven acquisitions. Its largest purchase was Summit Electric Supply, Albuquerque, NM, and its 23 locations throughout the New Mexicio, Arizona, Texas and Louisiana.

The EW Top 100 electrical distributors acquired during 2024 included Summit Electric Supply; Dominion Electric Supply, Arlington, VA (Border States Electric, Fargo, NC); Parrish-Hare Electrical Supply (Consolidated Electrical Distributors, Irving, TX); Electrical Supplies Inc., Miami (Mayer Electric Supply/Rexel), Birmingham, AL; and Blazer Electric Supply, Colorado Springs, CO (Graybar Electric Co, St. Louis, MO).

Sonepar’s other Top 100 purchases included Echo Electric Supply, Council Bluffs, IA; Madison Electric Co., Warren, MI; Standard Electric Supply, Saginaw, MI; and Electric Supply Center, Burlington, MA.

U.S. Electric Services (owned by CED), Middletown, CT, was also an active acquired, buying Askco Electric Supply, Glens Falls, NY; and Desert Electric Supply, Palm Springs, CA, and Pomona Electric Supply, Pomona, CA, through its Walters Wholesale Electric business located in Brea, CA.

United Electric Supply, Wilmington, DE,  also bought a Top 100 distributor with its acquisition of Kovalsky-Carr Electric, Rochester, NY. Several other acquisitions of interest included the sale of Independent Electric Supply, Toronto, Ontario, one of Canada’s larger independents by EECO Electric Co./WESCO; and the Austin, TX-based Facility Solution Group’s acquisition of an ESCO, Greenleaf Energy Systems, Oxford, CT. Another active acquirer over the past few years, Green Mountain Electric Supply, Colchester, VT, bought Walsh Electric Supply Co., also based in Colchester.

This year WESCO made some purchases outside the core electrical market to bolster its position in data center supply services, with its acquisition of the St. Louis, MO-based Ascent, a provider of data center facility management services and entroCIM, Port Huron, MI, a developer of data center and building intelligence software. The company bought another data center player in 2022, Rahi Systems, Fremont, CA, which offers products, services and solutions for data centers. 

#3. NEMRA Integrates American Association of Independent Lighting Agencies (AAILA) New Lighting Division

The lighting business is going through a huge amount of change these days, with the commoditization of LEDs and all of the technological advances and acquisitions in the market. All of these changes are swirling around independent lighting reps, and the National Electrical Manufacturers Representatives Association (NEMRA) has launched a new lighting division to give them a louder voice in the lighting business and more access to lighting manufacturers. The new division incorporates the American Association of Independent Lighting Agencies (AAILA) (www.lightingagents.org). Leading the new NEMRA division is Jeff Bristol, who most recently served as senior VP of sales & marketing for MaxLite.

This move means a lot to NEMRA and its rep and manufacturer members. Lighting is part of the core of the electrical industry’s product portfolio that by some estimates can account for 20% or more of the typical distributor’s sales. NEMRA’s expansion into lighting is sure to help lighting reps, manufacturers and distributors collaborate more effectively.

#4. The Appointment of Wes Smith to Lead NAED Brings a Steady Hand to Guide the Association Through a New Era

#5. Continued Federal Financial Support of EV Plants, Battery Plants and Semiconductors Production Facilities is in Question

In the industrial market, dozens of semiconductor plants and EV or battery plants partially funded by federal IRA funds or other financial stimulus are underway or in the pipeline. Changes in the White House and on Capitol Hill could impact future funding for the Chips and Science Act, Inflation Reduction Act and Bipartisan Infrastructure Bill passed early in the Biden Administration. This legislation pumped billions of dollars in grants, tax breaks and other financial incentives into semiconduction plants, EV and battery factories renewables projects with wind farms, photovoltaic panels and battery storage systems. For individuals, federal legislation has provided tax incentives to consumers for the purchase of some electric vehicles and energy-efficient equipment for their homes, including water heaters and solar panels.

According to an Aug. 2024 White House press statement, since the beginning of the Biden-Harris Administration, companies have announced $900 billion in clean energy and manufacturing investments in the United States, including over $265 billion in clean energy investments since the Inflation Reduction Act was signed into law. On the residential front, the release said more than 250,000 Americans have claimed the IRA’s electric vehicle tax credit, saving these buyers about $1.5 billion total. 

Not all of the allocated funds for this legislation have been spent yet, and Donald Trump has said on the campaign trail that he would not allow unallocated funds to be spent on future green projects, and has called the IRA the “greatest scam in history.” It’s hard to know what campaign trail rhetoric on this legislation from President-elect Trump will become policy, in part because so many of the industrial projects funded by it is being built in states that voted for him.

James West, senior managing director at Evercore ISI, said about 75% of the job creation and the capital spending on new manufacturing and other clean energy resources has gone to red states or red counties in blue states, and a report on Yahoo Finance said according to data from the Department of Energy, $10.8 billion in investments in solar energy have gone to red states, while just $4.1 billion have gone to blue states. That post also said $35 billion tied to electric vehicle spending has gone to Republican districts, while $22 billion has gone to Democratic ones.

#6. Lower Interest Rates Could Mean More Demand for New Homes and Construction Loans

Many construction economists believe lower rates in 2025 will juice up construction spending. In a recent monthly analysis of the Dodge Momentum Index, a measure of future business conditions in the construction market, Sarah Martin, the associate director of forecasting for Dodge Construction Network, says rate cuts could impact the construction market by mid-2025. The Dodge Momentum Index is a monthly measure of the value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year.

“By late 2025, the impact of the Fed’s rate cuts should be substantial enough that we see projects in planning reach groundbreaking more quickly than they have over the last year or so,” she said. “That should lead to some stronger nonresidential construction starts in mid-2025 to early-2026. There really is a steady pipeline of construction projects that we believe are going to be ready to break ground once those market conditions are right.”

Richard Branch, chief economist for Dodge Construction Network, said in his monthly analysis of construction starts that, “Lots of projects are coming into the top of the funnel, but are not yet coming out of the spigot.” He expects that to change if the U.S. Federal Reserve cuts a full point off of the current federal funds rate.

#7. Digital Procurement Tools for Electrical Contractors Seem to Be Gaining Traction

Electrical contractors have more tools than ever to digitize their business operations in the areas of bidding, take-offs and procurement, through well-known names like Trimble, McCormack Systems, Conest Software and Cert-In Software. Over the past year or two, EW’s editors are hearing more about companies focusing specifically on the procurement part of the contractor equation. Based in Covino, CA,

Kojo (www.usekojo.com) seems to have a higher profile than others in this space and is promoting its capabilities to help contractor link directly with distributors’ business systems. In a Nov. 2023 press release, Kojo said it had 23 suppliers in beta with its Supplier Integrations feature, along with 25 electrical contractors. Some of the distributors now using its software, according to the company, are Border States Electric, Fargo, ND; Graybar Electric Co., St. Louis, MO; Rexel, Dallas, TX, and its Birmingham, AL-based Mayer Electric subsidiary; and Main Electric Supply, Santa Ana, CA.

#8. Data Center Demand: To the Moon in 2025?

You can expect the astonishing growth of data centers to continue on 2025, with new demand from AI applications and the rapid growth of the digital economy. The construction dollars are staggering when measured by two different metrics. Electrical Marketing’s database of large construction projects ($100 million or more) has 60 data centers that either hit the planning stage or broke ground in 2023 and 2024, and these projects have a total contract value of approximately $74.4 billion. More than 20 of these projects have an estimated total contract value of at least $1 billion. On top of all these dollars is the Dec. 10 announcement by Google that It would be co-investing $20 billion in a new generation of date centers that would be co-located in “energy parks” with their own source of renewable energy.

In another metric, the U.S. Census Dept. now breaks out new data center construction in its monthly value of new construction data. Through Oct. 2024, new data center construction was running at a $29.99 billion rate. When you figure that the general rule of thumb for estimating projects size is that electrical work accounts for 10% of total contract value, you can see there’s some serious electrical opportunities for the foreseeable future in data centers.

While quite a bit of this data center work reportedly is going to larger national contracting firms with a specialty in servicing this business, the sheer number of these projects would seem to indicate that there will at least be some electrical sales opportunities for smaller companies as well.

#9. Newer Technologies Like App-Based Digital Lighting Control, Digital Power and SMRs (small modular reactors) Will Offer the Market New Profit and Revenue Opportunities in 2025.

It’s hard to pinpoint a past era in the electrical construction market when so many new technologies offering future business potential. As the demand for new sources of power and advancement of digital control technologies from the R&D labs to the job-site continue, they will provide electrical  distrinbutors and their contractor customers with new opportunities to differentiate their businesses next year and beyond. Following is a brief discussion of several technologies of particular interest.

Lighting control

App-based lighting control continues to get more intuitive to use, easier to commission and sophisticated to control more complex lighting systems. 

Artificial Intelligence (AI)

AI is already dramatically impacting the electrical market, both as a tool to help companies operate more efficiently, and as a driver for the construction of data centers. A post at www.npr.org said a Goldman Sachs report estimated that a query through an AI tool such as ChatGPT “takes nearly 10 times as much electricity as a Google search query.

Small Modular Reactors (SMRs)

Because of their insatiable appetite for power, data centers, EV charging stations and other new electrical loads are asking more of the U.S. electrical grid. Some power experts are re-evaluating nuclear power as a potential source. Ninety-three conventional nuclear power plants already produce about 20% of the nation’s electrical power.

While it will take several years for SMRs to provide a notable amount of electrical power, they are attracting plenty of attention because they will be easier to bring online. Their modularity will make them easier to build, and because of their smaller size, data centers and other big-time power users may be able to have them right on-site. Commissioning is a years-long process with conventional nuclear power generators, but SMR advocates believe there will be less red tape in getting them online. They are in the early-development stage and prototype stage right now, but you can expect to see some of them being built after 2025. 

DC Digital Power

Digital power is a potentially game-breaking technology first seen in the lighting market with PoE (Power over Ethernet) LED lighting systems. While these lighting loads are comparatively small, digital power is now used for much larger projects because so much of the electrical load is serving digital devices and systems that operate on lower voltage electrical systems including computers, lighting, security, televisions and other electronic loads.

Since digital power can be run through much smaller cables such as 18/2 speaker cables and Cat 5e cable as a Class 2 wiring system, it can save quite a bit on installation time and material costs. Some savings estimates for PoE run as high as 30% because these systems don’t need to be installed in conduit or utilize more expensive metal boxes or support systems.

Although digital power is in its infancy, Sinclair Digital, Fort Worth, TX, has wired two hotels with digital power, the Sinclair Marriott in Fort Worth and the Hotel Marcel in New Haven, CT. It also wired an office for Southwire, which has invested in the firm. According to a Southwire post, Sinclair installed PoE wiring in roughly 23,000 sq ft of offices, meeting rooms, workstations and multi-purpose space the Battery Atlanta mixed-used development adjacent to Truist Park, home of Major League Baseball’s Atlanta Braves.

Voltserver, East Greenwich, RI, also wired a large hotel with digital power -- the 777-room, Circa Hotel & Resort in Las Vegas, The hotel was wired with Voltserver’s digital power products to power advanced building automation, digital in-room controls, LED lighting and electrical power distribution. 

While it's very early days for digital power, think about the impact it could have as an alternative to conventional wiring methods. So many of today's electrial loads, including lighting, televisions, computers, printers and security systems, could run on DC digital power systems.