David Yencarelli, President & CEO, American Electrical Contracting
Invest: spoke with David Yencarelli, president and CEO of American Electrical Contracting, about the massive infrastructure building projects that are needed to accommodate the migration to Florida, how low taxes are the biggest magnet for the state, and why young people are moving toward trade industries instead of other workforce alternatives.
What have been the overarching opportunities for American Electrical Contracting in the past year?
Our company has been a huge beneficiary of out-of-state migration to Florida. Educational, institutional, and healthcare projects are through the roof. City infrastructure is through the roof. Name it, and it is being built. Every day, 11,000 people move to Florida, and that requires infrastructure, including houses and apartments to move into. They require utility substations and wastewater treatment plants, so that infrastructure needs to be developed where all of these new neighborhoods are going up. Then they need a new Publix and a gas station and McDonald’s, and so on and so forth. Then, we get to our interests, when they need to build new police and fire stations, and ultimately new schools. That is where we are seeing a huge uptick in our revenue streams and workload. We have to build schools for these kids to go to school, and for all the families that are relocating to Florida.
What are some of the unique and defining characteristics that differentiate the Jacksonville market?
First, it is taxes. There is no state tax in Florida, so we have a leg up on our friends in the North and in Georgia or North Carolina. The cost of living has historically been less than the national average, although we are getting closer to that average. Those are the two biggest market drivers of why people relocate here. Our Jacksonville Chamber has done an excellent job of attracting business to the Jacksonville community. Businesses want to be here because of the low taxes, and the incentives and low regulation, as well as the relatively cheap workforce compared to other areas of the country. New businesses are coming here every day.
What are some of the biggest drivers of demand in your industry?
The biggest driver is access. People want access to healthcare, goods, and to government-provided utilities, such as energy, water, and schools. That is why the market is so hot here. What exists can’t sustain the influx of people, so the simple answer is that we need these things. Developers, planning and zoning commissions, and contractors are working together to make sure we keep up with the construction of these facilities that provide that access.
What initiatives have you implemented to ensure business continuity amid material shortages in recent years?
As a reaction to supply chain disruptions in the last two to three years, we set out a strategy to increase our retained earnings. We always want to be in a solid liquidity position. We are so cash-rich right now that it has tripled our inventories. We continue our sustainability plan by making sure we don’t run out of anything. We moved to a new facility that also has more warehouse space, and we are using every square inch. We just recently started bleeding inventory after three years of hoarding as much as possible.
What labor force trend is emerging in the industry today?
I am encouraged that more young people have decided to enter the trades and apprenticeships. They can work on getting a skilled trade certification. This generation of young people, from 16-25, has been receptive to the labor needs in the trade industries, and we are seeing the most interest right now. It is an extremely encouraging trend.
What is the biggest difference between Jacksonville now and pre-pandemic?
We never stopped during the pandemic, and we were never locked down and closed. We had one job site at Whole Foods that paused construction during COVID. The differences are not as pronounced because we didn’t have a hard stop/restart. There is more work from home here than there was before, but it isn’t widespread like in other parts of the country. We can’t build buildings from home, so the construction industry never stopped. The most noticeable things are population growth and traffic.
How will technological advancement impact your industry?
We are seeing it in action every day in reference to our use of AI. Our marketing department is completely AI-driven, and we are using it for estimates. Our employees are using it for things like e-mails and proposal writing, so it can make them more productive. The industry will use it on a lot of design elements, and contractors will be working smarter to get jobs done. It will make us a more efficient industry overall. We will be able to do a lot less work with fewer people because of the time-savings technology brings. We are just at the tip of the iceberg, but we need to adopt it now and make changes now, or we won’t be around five years from now.
What legislation or regulation are you watching that may impact your operations?
At the federal level, the construction industry is under assault by the current administration. Things like the Inflation Reduction Act, major changes to the Davis-Bacon Act, the new OSHA (Occupational Safety and Health Administration) walkaround rule, and the recent Executive Order blocking eighty-nine percent of construction workers from Large Federal Projects, has been detrimental to the American worker, their families, taxpayers, businesses, and imperils the future of the economy. The government’s overregulation and blackballing of open-shop contractors from participating in federally funded projects is a dangerous political game that is hurting working families, reduces competition, and drives up cost to the U.S. taxpayer. Again, this is 89% of all construction workers who are impacted; it seems counterproductive for the federal government to do that given their continued struggles with reigning in inflation.
