09.30.2008 — Like the construction industry that fuels it, the structured-wiring business was dismal in 2007, and high-volume integrators continue to struggle in 2008.

"We're definitely down," says Mark Buzzard of Liberty Bell Alarm, Sacramento, Calif. "None of the builders are building anything."

That's the bad news.

The good news is that many custom installers, who have relied on new production homes in the past, are making positive adjustments to thrive in the new economy.

For its part, Liberty is pumping up the energy around its home systems business, recently adding funky artwork to its installation vans. "We're getting tons of buzz and positive feedback," Buzzard says.

The companies that can weather the storm are benefiting from the attrition of former competitors. "A lot of our competition is going out of business, says Luis Pena of JWE Corp., Irvine, Calif. "So, we are getting some new builder contracts."

With 2,202 structured wiring installs in 2007, JWE is down by more than half from the previous year. Still, Pena remains optimistic.

"Sales are down, but we're getting enough of the [security] monitoring business," he says.

JWE collects about $1 million per year from security contracts. In addition, Pena says, JWE managed to increase its penetration of most low-voltage categories except for central vacuum.

Celebrating its 25th year in business, Pena says the company "is still very committed to the residential building industry" and is launching a new branding campaign this year.

New business tools, says Pena, have helped JWE adjust to the change in production volume. He cites the development of JWE's own Web-based systems for CRM/ERP, reporting, scheduling, payroll and other business tasks.

Diversifying with Retrofit, Custom, Commercial

Most high-volume dealers that are "making it" have turned to more custom-oriented work to fill the production void. With business down 50 percent from last year, Phoenix-based Dennis Sage Home Entertainment has been doing well lately with custom installations using Crestron.

Ditto for HW Automation, Ft. Lauderdale, Fla. "We have reinvented ourselves in an effort to survive the current times," says CEO David Botknecht, "by bringing on new partners, such as Crestron."

Like other dealers interviewed for this story, HW is taking its talents to commercial markets. Specifically, the company has become an authorized Department of Defense contractor. It was a "lengthy process, requiring an extensive application," but Botknecht says it is paying off.

Not surprisingly, high-volume integrators have taken crash courses in retrofit applications. Dennis Sage Home Entertainment, with the help of SpeakerCraft, launched an aggressive campaign to upsell clients with prewired homes.

"We're going through all of our old files, calling everyone," says Sage. "We're giving away free outdoor speakers to get into the home for the home theater business." Sage laments, however, that "no one in the lower-end homes wants to spend money right now."

Questron Inc., based in Elkridge, Md., is "really attacking retrofit," says president John Hall. The company is getting a hand from its happy clients, using their names (with permission) to win business from neighbors.

In marketing pieces sent to very targeted areas, Questron uses client names and testimonials to show, "Look what we did for your neighbor." The micro-marketing is more expensive than traditional mass-market campaigns, but the effort is working well, according to Hall. Questron rewards its referring clients generously.

"We don't just send them a thank you card," Hall says.

Banking on the Upsell

In the production market, many an installation company has gone out of business by giving away the prewire and banking on the upsell.

In the custom world, however, the prospects are rosier, according to George Clark, general manager of Design Tech Electronics, Waldorf, Md. His company provides a very basic 3x3 structured wiring package free of charge to custom builders.

"The only thing we ask in return is the homebuyer's information sheet so that we can meet and upsell," he says. According to Clark, this approach has been working well.

"The custom home buyer/builder spends a lot more than the standard track home buyer, which offsets the cost of labor and the free package."

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