SIC 5063 Electrical Apparatus and Equipment, Wiring Supplies, and Construction Materials

SIC 5063

This category covers establishments primarily engaged in the wholesale distribution of electrical power equipment for the generation, transmission, distribution, or control of electric energy; electrical construction materials for outside power transmission lines and for electrical systems; and electric light fixtures and bulbs. Construction contractors primarily engaged in installing electrical systems and equipment from their own stock are classified in SIC 1731: Electrical Work.

NAICS CODE(S)

444190

Other Building Material Dealers

421610

Electrical Apparatus and Equipment, Wiring Supplies and Construction Material Wholesalers

INDUSTRY SNAPSHOT

Electrical equipment wholesale companies, or merchant wholesalers, purchase or take title to goods produced by manufacturers and resell the goods to retailers, or other wholesalers, at a profit. They help to lubricate the U.S. economy by providing retailers with goods to sell, and by finding and cultivating markets for manufacturers' products.

In 2001, the U.S. Census Bureau reported that there were 13,878 establishments in the electrical apparatus and equipment, wiring supplies, and construction material industry. There were approximately 168,091 employees with an annual payroll of about $8 million. In 2003, there were 24,048 establishments reported and over $75 million in sales.

Electrical apparatus and equipment represented the largest sector of the industry, with 7,888 businesses and about 32 percent of the overall market share. Electrical supplies had 3,799 establishments and controlled over 15 percent of the market. Lighting fixtures had 2,287 establishments and accounted for nine percent of the market. Burglar alarm systems had 1,869 locations and about eight percent of market share. Electric motors had 1,019 establishments and accounted for about four percent of the market. Combined, these industry sectors contributed more than $35 million to the overall sales. States with the highest number of establishments were California with 2,860, Texas with 1,863, Florida with 1,791, New York with 1,451, Illinois with 1,007, and Pennsylvania with 1,002.

ORGANIZATION AND STRUCTURE

Historically, this industry has been fragmented, with establishments focusing on local markets and specializing in particular items. For instance, California alone had more than 1,600 electrical equipment wholesale establishments in 1997. Still, throughout the 1990s, a few large wholesalers acquired smaller, regional outlets in order to gain efficiency of scale for their operations.

Transactions by merchant wholesalers account for a majority of equipment sales. In addition to merchant wholesaling, some transactions involve agents and brokers. Although the agents and brokers work as middlemen between producers and retailers, they are usually compensated directly by the manufacturer in the form of fees and commissions. The third type of wholesale establishments are manufacturers' sales offices and branches, which sell their equipment directly to retailers.

In addition to buying, selling, and shipping products between producers and retailers, wholesale companies have recently begun to provide more value-added services to their customers. In the case of industrial electrical equipment, wholesalers often provide engineering and technical consulting. They might also arrange to have products customized or repaired. Wholesalers of contractor and consumer electrical supplies might arrange special financing plans, help retailers develop just-in-time inventory systems, or provide overnight delivery services for specialty items. Many wholesalers also incorporate a shifting price scale that favors customers who purchase the most.

Products

The wholesale market for electrical supplies is divided into industrial and consumer products. Wholesalers deliver industrial electrical equipment primarily to utility companies and to firms engaged in heavy industries. The four primary types of equipment are transformers, switchgears, motors and generators, and relays and controls. Transformers are used by utilities to regulate and deliver power to their customers and by industries to change voltage for varying equipment needs. Smaller transformers are used in a variety of products from doorbells to low-voltage lighting and security systems. Switchgear products include panel boards, circuit breakers, fuses, and other devices used to generate, transmit, and distribute electricity. Motors and generators are used by utilities, industry, and residential consumers alike. Industrial relays and controls are used to start...