High Wiring: Top 30 Structured Wiring Dealers

Residential construction reached an all-time high last year, with single-family starts exceeding 1.6 million for the first time.

Even remodeling saw record growth in 2004, up 12.3 percent from 2003. Americans spent $198.6 billion on remodeling projects last year, according to the U.S. Census Bureau, up from $176.9 billion the previous year.

Thus, even if the penetration rate of structured wiring stayed flat from 2003 to 2004, we'd still see a significant increase in the technology. But the Consumer Electronics Association says almost 59 percent of new homes in 2004 were built with structured wiring, up from 42 percent in the previous year. If that's true, some 944,000 homes last year were prewired -- whatever that means.

Few in the industry believe that to be the case, but the outlook nevertheless looks good.

Manufacturers interviewed privately estimate that total 2004 installations ranged anywhere from a low of 400,000 (an estimate from one of the more "purist" manufacturers) to more than 900,000, with most guesses hovering around the 550,000 to 650,000 range for the year. z All of the manufacturers interviewed expect anywhere from excellent (25 percent) to phenomenal (100 percent) growth this year (2005) vs. last.

State of the Top 30

Given these overall statistics, how did our Top 30 Structured Wiring Dealers fare? Unfortunately, we're not exactly sure. This is only the third year CE Pro has compiled a list of the highest-volume installers, and we have tweaked the metrics every year to improve their accuracy and relevance; therefore, we cannot effectively compare this crop of installations to last year's.

This year we included installations in multidwelling units (MDU). In 2003, we discounted MDU installations by half; in 2004, we excluded them altogether; this year, we counted them just like any other single-family installation.

For the first time, we specified that MDU installations must comprise completely independent, stand-alone systems, with no shared hub or subsystems. We reasoned that we should count such abodes because they share similar characteristics as small homes (or modest installations), at least as far as the integrator is concerned.

Anecdotally, at least, business seems to be good for the highest-volume installers on our list. For custom retailer Ultimate Electronics, structured wiring installations grew by roughly 70 percent from 2003 to 2004 (the company's woes began in 2005). Security giant Ranger American saw structured wiring installations grow from 7,500 in 2003 to almost 13,000 in 2004.

What we call "traditional integrators" saw some nice growth spurts, but not nearly on the scale of the national mass-marketers. Do the disparate growth patterns suggest that mass marketers are stealing business away from the smaller guys? Probably not. It's just as likely that the significant overall growth in structured wiring installations has been driven by the marketing resources of the security and retail giants.

The Ins and Outs

It's always a tough task to locate all of the worthy dealers for the Top 30 list and the other lists we compile. And, even if we find them, they don't always care to participate. This year, Brink's bailed out of the contest. The mass-market security provider claimed 8,000 structured wiring installations in 2003. But we do welcome its rival Guardian Protection, which opted in for the first time. Guardian installed almost 12,000 structured wiring systems last year.

We're thrilled that Ultimate Electronics stayed on board, despite the retailer's leaving NASDAQ and grappling with a major restructuring. We can't say the same of Digital Interiors, which was divested by Home Director (formerly listed on the OTCBB) to avert, unsuccessfully, a complete shutdown of the structured wiring manufacturer. Digital Interiors, whose seven offices installed 3,000 structured wiring systems in 2003, was acquired by 180Connect, who did not want to participate in this year's listing.

Still other integrators appear on our list for the first time because they realize it's not such a threat to be recognized for the significant players they are. "I have chosen not to participate in the past because I really didn't want all my competitors to know how we were doing," says Maggie George of iWired, Scottsdale, Ariz., echoing a common sentiment among nonparticipants. "I am not sure it is that relevant anymore. Many of them [competitors] have folded."

In any case, we feel very good about our research methods for this, our third year of the CE Pro Top 30. We are, of course, always open to suggestions (contact .(JavaScript must be enabled to view this email address)).

Top 30 List

#8 | Always A Standard Feature

JWE Corp., Irvine, Calif.
JWE's background in selling structured wiring goes back to before the term "structured wiring" was coined, says Tim Wilcox, vice president of the Irvine, Calif.-based company. UStec's first successful project with a nationally recognized production homebuilder took place right in JWE's backyard. "At that time, we were already aggregating service for voice, video and data at a central point in a home, but UStec's initial entry into the market was a giant success in the eyes of the building community," says Wilcox. "As the de facto expert to many builders, our sales strategy changed to focus purely on educating the homebuilder about home technology. We aimed to convince them that structured wiring was the right thing to do, even if their homebuyers didn't know it yet."

When dealing with JWE's partner builders, Wilcox says that accommodation is key. "It is important to be flexible and remember that the builder is your client," he says. "They are more likely to work with you if you demonstrate an effort to adapt your systems and procedures."

Structured wiring is always the lead item in JWE's sales proposals, and this allows the company to add on other options. "Because structured wiring is a standard feature in over 90 percent of our projects, we look at option revenue from security, audio, vac and component installation as ancillary and only available because we successfully won a structured wiring contract," says Wilcox. Since structured wiring is a standard feature for JWE, it doesn't do retrofits. "We focus on the difficulty and increased cost of retrofit as selling points to why structured wiring should always be a standard feature," adds Wilcox.

For JWE, selling structured wiring isn't tough, but staying profitable has become more difficult. "[Structured] wiring is very competitive in our market and being profitable is increasingly difficult. Some manufacturers have had a hard time grasping that structured wiring has become a commodity. Everyone's panels do basically the same thing, so price is clearly the biggest differentiator," says Wilcox. But customers know about it, and they want it. "It's certainly come a long way, as today's homebuyers expect structured wiring to be an included amenity," he says.

JWE has installed structured wiring in more than 4,000 residences every year for the past 10 years, with 99 percent of the company's business being residential. -- Jason Unger

#26 | Consumer Awareness Is Key

Automatic Switching, Concord, Ontario, Canada
Having to explain to customers why they need structured wiring may leave them worried that it's just something that a dealer is trying to sell them on. But for John Pecorelli, president of Concord, Ontario-based Automatic Switching, he has to worry less and less about trying to convince new-home buyers to include structured wiring. "Customers are starting to see the real value and need for structured wiring," he says. "It seems that more consumers understand what it does and why it is needed," says Pecorelli. "With technology the way it is in the home these days, structured wiring is becoming an easy upgrade."

Since his customers know and understand the need for structured wiring, he is also able to sell them on other products. "Structured wiring gives me the opportunity to talk to customers and have the ability to sell thousands of dollars in extras, [such as] CCTV, home automation and home theater," he says.

Automatic Switching meets with new-home buyers through the company's relationships with builders. "Every customer who purchases a house comes to see me for his low-voltage requirement," says Pecorelli. This is when most of the structured wiring business is done. "[Since] we meet with all the customers before the house is built, retrofits are becoming less frequent," he says. But if the homebuyer is unable to commit to structured wiring, Automatic Switching leaves the door open for possible later installations. "For the customers who do not have the dollars to install the structured wiring, we actually install conduit for future wiring," says Pecorelli.

Installing structured wiring has boosted the company's business. "Since getting into structured wiring, our business has grown every year," says Pecorelli. In 2004, Automatic Switching installed 1,110 full systems and expects to complete 1,400 installations in 2005. The company's business is primarily residential, accounting for 90 percent of the jobs, with the other 10 percent commercial installations. -- Jason Unger

#28 | Building Builder Relationships

Mesa Home Systems, Austin, Texas
Everyone knows that the integration business relies on relationships, but what better way to get involved with some of the people who can help you out than to be on the board of their associations? That has helped Mike Smith, owner of Mesa Home Systems in Austin, Texas. Mesa Home Systems' major install is structured wiring, and Smith develops relationships with local builders by sitting on the board of the local Home Builders Association (HBA), where he has just been re-elected to his third year as vice president of operations. "This puts me in a position of being involved with the presidents [and others] of the local builders and building on that relationship," says Smith. He has been on the board of directors for the past five years.

Mesa's structured wiring installations are 99 percent residential. "We have ongoing relationships with multiple builders and typically meet with a client prior to the house being started," says Smith. Meeting with the client allows Mesa the chance to sell upgrades when the homebuyer finalizes the package with the builder.

But Mesa also benefits from other factors that have helped the company flourish. "We were the beta site for AMP/On-Q structured wiring, so our market has always had high visibility," Smith says. And the amount of home technologies is high in the Austin area, which also works in Mesa's favor. "In our local market, we have a lot of high tech, and that helps drive the market in the size of houses we are involved with," he says.

Mesa doesn't do many retrofit installations, cementing that relationship with new-home builders. "We typically stay away from retrofits because of the time they require," says Smith. "We are too busy to actively work this market unless it is a large enough project to justify the labor it requires."

Through the right relationships and making the company's name known, Mike Smith and Mesa Home Systems are able to install structured wiring in 1,200 to 1,500 homes per year. -- Jason Unger

What Dealers Want

I would like to see the residential structured cabling industry develop standards like its commercial counterpart. Rather than a 19-inch rack with consistent 1U spacing, I would like to see a 14.5-inch enclosure with a consistent mounting grid that would accept any manufacturer's equipment or modules.

-- Shawn Smith, S&S Electric

The best change would be when the vendors start listening to the integrators, and we work together to provide solutions. All of the other approaches have cheapened the value we offer and allow builders more control than one would anticipate in a two-way relationship.

-- Mike Lehmann, ASI

Stop selling to electricians.
-- Joe Strang, Showcase Home Theatre & Automation

Include intercom as part of the panel.
-- David Jablonski, American Home Systems

1) Develop an end-user video presentation for product features and additional available upgrades. 2) Provide additional mounting procedures for Internet modems, routers and modulators.

-- Ali Babazadeh, HabiTech Systems

We always like to see manufacturers educating the consumer directly about their products, which in turn drives our sales.

-- David Botknecht, HW Automation

We need more dinners and better discounts.
-- Bob Cross, C&R Systems