CHAPTER CONVENTION SCHEDULED MAY 31ST, JUNE 1ST, 2ND, AND 3RD AT THE HISTORIC HOTEL ROANOKE & CONFERENCE CENTER:
The Chapter convention is scheduled May 31st, June 1st, 2nd, and 3rd at the renowned “Historic Hotel Roanoke” located in picturesque Roanoke, Virginia.
A great time is planned with a Friday night cocktail reception and dinner, a Saturday “free day”, a Saturday night cocktail reception with light hors d´oeuvres. A Saturday golf tournament is planned.
Saturday evenings’ dinner is on your own following the Chapter reception. As a suggestion for dinner plans, the “Market” area in downtown Roanoke is just a short walk from Historic Hotel Roanoke. This area is renown for its morning farmers and craft market, restaurants, and its nightlife.
ANNUAL GENERAL MEMBERSHIP MEETING:
Pursuant to the By-Laws, the Annual General Membership meeting shall be held at 3:00 P.M. at the Historic Hotel Roanoke on Friday, June 1, 2001.
If you are interested in attending the Annual General Membership meeting without registering for the convention, your attendance and participation is welcomed. Travel directions are available through the Chapter office if needed.
At this point-in-time, no non-periodic business items (such as a proposed By-Laws change) have been placed upon the agenda. The normal business items shall be on the agenda. A program is in the planning process.
ELECTRICAL CONTRACTOR TRENDS:
“The electrical contractor sector of the construction industry might be characterized by its members’ struggle to move from a reactive stance to a proactive on in the market. Many have had the feeling that they have been tossed about on the seas of change. Some have profitably weathered the high winds of the economy, but a few have become seasick at the sight of their profit margins.”
All in all, industry consolidation will continue, although at a slower pace. Companies that have been consolidating in recent years are now seeking value-added positions for their newly formed companies. After all, this was one of the key objectives for shareholders and clients. The consolidators are beginning to brand themselves either regionally or nationally depending on their size and scope. For the most part, fears that clients would respond negatively to this move have been overcome as clients see that their long-term relationships with local companies aren’t changing.
For companies that remain independent, peer groups are becoming a hot issue. Top electrical contractor executives interested in capturing a wider base for business insights and sharing industry best practices are establishing formal and informal peer groups with like-minded companies in other regions and market areas. This is not only an attempt to compete with larger consolidators, but it allows companies to understand how other companies are dealing with new technology, markets, and labor concerns in order to maintain or improve profitable growth.
In many cases, profit margins continue to all in the electrical contractor sector. Companies that have created and served market niches in the last few years have been able to attain EBITDA’s (earnings before interest, taxes, depreciation and amortization) at 10% and above. High tech, fiber optics, and mission critical projects are among the leading markets for higher profit opportunities.
Putting additional pressure on profits is the fact that the average age of accounts receivable in the sector has increased. Electrical contractors, like many subcontractors, are getting caught in the cash crunch between owners and general contractors. Picking the right clients and contract payment clauses are the only quick solutions to this dilemma.
Even companies who have found successful market niches continue to face the top challenge in the industry – how to recruit able and talented labor. This labor squeeze is projected to continue through 2005, even in the face of a general economic slowdown. Electrical contractors and local unions have to become more creative at attracting young people to the industry. For instance, they have increased the use of “school day” programs for middle school and even elementary schools. The bottom line is that the industry must look at alternative resources for its future work force. Retention of current employees is the key to getting through the labor squeeze.
While most e-commerce issues remain in their infancy, some new technologies are beginning to be accepted and yield benefits. A few companies are using e-commerce to benefit customer service by enabling customers to buy and schedule service online. The use of project specific and collaborative web sites continues to grow, but most of the growth has benefited owner and general contractor. The hand-held computer or PDA has become the most widely used technology by electrical contractors.
Service technicians can instantly communicate customer information and work completed to the office where invoices can be produced and sent. In field construction, hand-held computers and streamlining production and time reporting.
Strategic alliances between general contractors and electrical contractors are on the rise. Strong working relationships that are spread over multiple projects give both general contractors and electrical contractors the opportunity to differentiate their service offerings and gain efficiency due to the extended working relationship.
A final trend stems from the fact that many top executives are in their mid to upper fifties, making a management continuity wave. So, as contractors retire, new opportunities are created for future company leaders. However, the problem for many is selecting and grooming these future leaders.
OUTSTANDING NEW FOUNDATION PUBLICATION! “FUNDAMENTALS OF CONTRACT RISK MANAGEMENT FOR ELECTRICAL CONTRACTOR TRENDS:
One of the most important risk factors for an electrical contractor (or any business) is in the contract language of the subcontract/contract with the general contractor/owner. The quote the “devil is in the details” immediately comes to mind. A contract may contain unfair or burdensome language that could have negative cost ramifications for the electrical contractor. This unfair language is potentially enforceable in an adverse legal forum.
It is imperative an electrical contractor understands the risk and entitlements in contract language. This document assists the electrical contractor to understand the major contract clauses, the degrees or risk of certain language, and will give the electrical contractors ideas of more favorable/unfavorable contract language to attempt to negotiate prior to contract signature.
NEW MEMBER FIRM:
The Atlantic Coast Chapter, NECA is pleased to announce our newest member firm to the Chapter, Vector Electric Company of the Charlotte Division.
Please extend to Vector Electric a hardy “Welcome Aboard” if you see them at any of our upcoming meetings.
NEW IRS WEBSITE FOR SMALL BUSINESS OWNERS:
The Internal Revenue Service launched a new Web site that provides answers to basic tax questions facing small businesses and the self-employed. The site -- http://www.irs.gov/smallbiz -- also features detailed information for the construction and restaurant industries, as well as new businesses.
The small business site also provides a calendar of tax deadlines, online access to IRS forms, news and links to court opinions, regulations, all 50 states and small business resources.
The IRS received advice from the National Federation of Independent Business, Associated General Contractors of America and the National Restaurant Association as it developed its small business site, which will be accessible through the agency’s popular “Digital Daily” home page. It plans to add other industry-specific sites in the future.
Meanwhile, IRS Commissioner Charles O. Rossotti promises the agency will “make incremental progress each year” in providing small business taxpayers with more accurate information through its online assistance program. A study last year found that small business taxpayers got correct answers only 54 percent of the time from the IRS’ tax assistance site.
“We took that report very seriously,” says Jerry Songy, who is charge of taxpayer assistance for the agency’s small business division. The IRS has taken steps to make sure that small business questions go to employees that have the right training and background to answer each query, he says. “We still have a ways to go on that,” Songy says.
COMPREHENSIVE UTILITY DEREGULATION:
There have been no federal utility deregulation efforts to date in the 107th Congress.
Several bills dealing with national deregulation of the utility industry have been introduced in recent years. In light of overwhelming confusion with deregulation in the state of California, it is unlikely that Congress will be quick to take up the issue.
To date, deregulation has been primarily a state issue. Twenty-five states have either passed deregulation statutes or issued comprehensive regulatory orders affecting the sale result. The primary goal for deregulation is:
1) to provide customer choice of the provider of electric power; 2) to permit the market, rather than regulators, to set the price for power; and 3) to rely on the incentives of the marketplace to promote cost-effective solutions for the supply of electric power.
While states should have considerable latitude in addressing deregulation issues, federal standards are needed to achieve real competition in a market heavily regulated and devoid of competition for more than a century.
At the outset of deregulation, federal standards and oversight are needed to ensure development of real competitive markets and to overcome the residual monopoly power of incumbent utilities.
Any comprehensive deregulation effort must address small business & acute; legitimate concerns of the crippling effects of ratepayer-financed competition.
The NECA Position:
NECA would support a comprehensive approach to deregulation only if it were designed to bring about truly fair and open competition for electric power and energy service markets. While NECA recognizes efforts to open new electric markets, the issue of unfair utility competition was absent from legislation introduced last year.
At a minimum, acceptable federal legislation should require:
¨ A prohibition of cross-subsidization of competitive operations by ratepayers.
¨ A definition of cross-subsidizations that includes the transfer of tangible or intangible assets from the utility to their affiliates and subsidiaries.
¨ Operational (as opposed to functional) separation of utility and non-utility operations.
¨ Protection of proprietary customer site information and data.
¨ Reasonable and non-discriminatory access to utility architecture, systems and information.
¨ Establish appropriate affiliate transfer-pricing rules to reflect the true value of goods and services transferred.
The Environmental Protection Agency (EPA) has launched a Web-based database designed to make it easier to purchase "green" products. The website, www.epa.gov/oppt/epp/database.htm, contains information on more than 600 types of products and services, including lighting and electrical equipment. The goal of the Environmentally Preferable Purchasing (EPP) Program is to encourage the use of green products whenever possible. Green, or environmentally preferable products, are "...products or services that have a lesser or reduced effect on human health and the environment when compared with competing products or services that serve the same purpose..." (Executive Order 13101). The EPP Database currently includes several types of information: • Voluntary standards and guidelines used to compare the environmental prefer ability of products and services. • Contract language and specifications containing environmentally preferable purchasing language. • Other sources of information about the environmental prefer ability of products and services. For more information on the EPP Program, visit the EPA´s web site at www.epa.gov/oppt/epp.