The Electronic Installation Business Profile Survey Reveals Some Encouraging Installation Industry Data, and Profit-Potential for Builders.

Numbers don't lie. That's why they're good to have. And that's why it's good that the GE Security-sponsored 2004 Electronic Installation Business (EIB) Profile study reflected an optimistic future for the electronics-installing business.

The industry as a whole enjoyed a good year in 2003, and expectations are for strong growth in the year ahead. This is one of the many "bottom line" conclusions that can be drawn from the results of EIB, a comprehensive survey of the broad spectrum of electronics-installing companies across the United States.

Conducted over a two-week period in February, the EIB represents the second annual online survey of this market sector. The initiative is intended to gather market-intelligence information that is available from no other source, either public or private.

The Electronic Systems Industry Consortium provided additional financial backing to support the collection of detailed data on the labor-market characteristics of the electronics-installing businesses.

First Things First … Revenues

Among the more enlightening data collected are:

• Annual sales revenue for companies in the electronic-installation business responding to our survey averaged $2,879,280 in 2003. Respondents as a group anticipate that their annual sales revenue in 2004 will increase almost 12 percent from last year's level to $3,221,722.
• During 2003, firms responding to our survey had median revenues of $624,000. And respondents anticipate 28 percent growth this year, with 2004 revenues rising to a median value of $800,000.

(Editor's Note: The revenue averages are inflated—accurately, but somewhat misleadingly—by responses from a number of very large companies. Therefore the medians—with half of the responses below this value, and half of the responses greater than the median—are again more representative of the profile of the typical electronics-installation business.)

The average price of a respondent's residential-system installation during 2003 was $20,691. This average is projected to increase by 13 percent this year, and by another 22 percent during 2005. Commercial-system installation prices are also expected to rise during 2004 and 2005, but at a slower rate than for residential installations.

Getting Personnel

Among the more significant findings regarding labor are:

• Employee compensation consumed 35 percent of a typical company's 2003 total revenue.
• Entry-level installers and electronic-system technicians earned an average of $12.73 per hour.
• Entry-level systems designers earned an average of $33,175 last year.
• Senior-level employees in both job categories earned an average of about • 60 percent more than their entry-level counterparts.

From a median of eight installer/technician/system designers on staff during 2003, respondents anticipate hiring two more workers this year, two next year, and two workers for each year from 2006 to 2008.

To meet the anticipated demand for competent low-voltage installers, technicians, and designers in the years ahead, training programs will have to expand their current offerings—a major priority of the Electronic Systems Industry Consortium. Respondents to our survey said that their best sources of fully-qualified new employees in recent years have been apprenticeship programs, technical institutes and trade schools. These formal training programs, as a group, were seen by 40 percent of respondents to be the richest source of competent workers—a much larger share than the 11 percent who identified employment ads as most productive, or even the 27 percent who identified the time-honored tradition of "hiring away from competitors" as their best source of fully-qualified and productive new workers. And many of those that reported "other" as their best source of skilled labor, went on to identify individuals coming out of less-formal training programs, including most prominently those trained in the military and those completing formal certification programs sponsored by organizations such as CEDIA and BICSI.

Who Are These Companies?

Among the key benchmark statistics that offer a profile of a typical integrator are:

• The typical electronics-installation firm responding to our survey has been in business for an average of 13 years.
• More than a quarter (27 percent) of all respondents indicated that they have been in business for five years or less, while a nearly equal number (24 percent) said that they have been in the electronics-installation business for more than 20 years.
• Both the median and the average ages of survey respondents (85 percent of whom identified themselves as being either company executives or system design/installation management) were 44 years.
• Thirty-three percent of survey participants reported that they were from the South region of the United States. Twenty-three percent were from the Midwest, another 24 percent were from the West, with the balance of 20 percent from the Northeast.
• Respondents run or work for companies with an average of 67 employees. But the median number of workers in electronics-installing businesses was eight workers—a figure more representative of the true small-business character of the industry.
• Fully 35 percent of responding companies indicated that they employed four or fewer people, while 10 percent said that they had more than 100 employees on staff.

Tip of the Iceberg

The data reflect only a general summary of the valuable information about the industry collected in the EIB survey. We'll take a look at some of the other summary results in the September issue of TecHome Builder.

Greater marketing and strategic-analysis value for your company can be found in a review of the extensive cross-tabulations of survey questions contained in the full survey report. The study also includes details on dealers' expenditures on audio, video, networking, communications, security and automation controls.

You can order a copy of the full 2004 Electronics Installation Business Profile report for the list price of $1,995. For information on obtaining a copy of the full 2004 Electronics Installation Business Profile, contact George Keegan at 508-663-1500, ext. 229. Or email him at gkeegan@ehpub.com.