10.02.2007 — It’s tough to be a high-volume integrator that relies on new construction, and lots of it. It’s especially tough today.

By the end of July 2007, single-family housing starts were down 26.9 percent for the year. The July 2007 seasonally-adjusted annualized pace of U.S. housing starts plunged to its lowest absolute level in over 10 years, and now stands 39.7 percent below its peak, recorded in January of 2006.

And let’s not even talk about the subprime crisis.

In this era, we celebrate the CE Pro Top 30 Structured Wiring Dealers that have hung in there. But how are they doing it?

New Avenues

“Creative” is the word Bill Wright of Ranger American uses when he talks about the structured wiring business.

The San Antonio, Texas-based installation company, which focuses on security, had a fairly good year in structured wiring with about 16,291 installations, up a couple of percentage points from last year.

His group is looking at getting creative with their wiring crews. “We’re even thinking about garage door prewires and sprinkler prewires. We try to get the most out of every house.”

One saving grace for Ranger is the continued proliferation of broadband. “There are certain specs you have to have,” Wright says.

Another high-volume integrator, Design Tech Electronics of Waldorf, Md. has seen its CCTV business “increase dramatically,” says principal George Clark. In fact, CCTV is so strong, he wonders what Design Tech will do “if the market returns to what it was in 2005.”

Several of the Top 30 dealers say they have made headway in new markets. Phoenix-based Dennis Sage Home Entertainment, which saw a dramatic decline in single-family business last year, has had some success in the multidwelling unit (MDU) market.

Collins, of St. Paul, Minn., has always been strong in the MDU market and is finding now that business in the college and senior housing market is growing.

Then again, it helps that Collins is a major electrical contractor in the area, providing low-voltage as well (and that the company got much of the local structured-wiring business once promised to Best Buy).

Structured Wiring & Electrical

Collins used to be “Collins Electric,” then formed a low-voltage division called Convergent Media and, ultimately, determined the low- and high-voltage businesses were so intertwined that the whole group now is known as Collins Solutions.

Combining low- and high-voltage helped Rimi Systems Integration keep pace in 2006. Brian Lipscomb, principal of the Simi Valley, Calif.-based business, says it took his company awhile to make the most of its dual offerings.

Although it saves a builder plenty of money—and plenty of headaches—to use a single contractor for high- and low-voltage work, Lipscomb learned that they still refuse to pay for the benefit. While electrical work may get Rimi in the door, it’s the low-voltage side of the business that makes the money.

Electricians can’t sell options, Lipscomb says. And low-voltage installers can’t do high voltage.

A Time for Reflection

While the housing downturn was just underway last year, several high-volume dealers almost relished the lull to recover from the frenetic 2005.

Back then, Carl Hurrle of Guard-O-Matic, a Tempe-based Top 30 business that failed to reply by press time this year, said the slowdown “gave us a chance to strategize, see where our most important markets were, where we needed to be more efficient.”

At the time, he said, the increasing cost of cable and gas wasn’t really hurting the company’s bottom line because it “covered our margins in better efficiency.”

While Top 30 dealers clearly are not delighting in their free time anymore, they are still working hard at improving efficiencies. One dealer who was forced to lay off many staffers said that the entire company appreciated the new environment because the remaining crew was top notch.

JWE Corp., a Top 30 dealer based in Irvine, Calif., won’t yield to the temptation of the commercial market because it feels “it would distract from our core business and potentially hurt our relationships with our main partners, the production home builder,” says JWE’s Luis Pena.

“We have really seen this time as an opportunity to reflect on the success of the previous boom, fine-tune our operations even more, implement new systems and process improvements, strengthen our relationships across the entire value chain, and ensure we are ready to move forward with our builder partners when the market turns again in their favor.”

Time Yet to Ponder

For those who like to contemplate, there’s both good news and bad news. On the one hand, you may have more time for reflection, “primarily because of the demand-dampening impact of the subprime mortgage and related credit market crises,” says Daryl Delano, research director for EH Publishing, the parent company of CE Pro.

“Forecasts for housing starts and sales recovery in 2008 have grown more pessimistic in recent months.”

On the other hand, Delano says, market conditions, “still appear to be deteriorating, but at a much slower rate than earlier in the year.”

Click here to see the Top 30 Structured Wiring Installers. (pdf)