When we decided to call this annual research analysis of the commercial integration dealer market the “State of the Industry,” it was a playful allusion to the “State of the Union” addresses given annually by the U.S. president.

The more we thought about it, though, the more the connection between the commercial integration market and the North American economies feels legitimate.

It’s an industry that reflects cash flow. What’s more indicative of economic performance than whether or not money is exchanging hands? When commercial integrators (CIs) are doing well, it means businesses are spending money to improve their systems and operations.

It’s an industry that reflects construction. We all know how a stymied new-construction market impacted the U.S. and Canadian economies. The healthier the new-construction and remodeling markets are, the more opportunities CIs have to pursue.

It’s an industry that reflects innovation. The “next big thing” is often the next big boost to the economy. Since offering the next big thing to their clients - whether it’s digital signage or a constantly updated and monitored IT communications network - is CIs’ business, evaluating demand for their services is as good as looking at an economic report from the U.S. secretary of the treasury
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All things considered, we should be cautiously optimistic about the economy given the results of our Commercial Integrator State of the Industry report. Consider that 47 percent of surveyed CIs say their 2010 revenues were up at least 6 percent versus that of 2009. Another 28 percent say they were flat in 2010, meaning they were neither up nor down more than 5 percent. That leaves a mere quarter of CIs that say they were down at least 6 percent in 2010.

Photos: State of the Industry Report

The outlook for 2011 is more positive - and yes, human nature dictates that business owners are optimistic about their futures. The fact remains, though, that 61 percent of surveyed CIs expect their 2011 revenues to climb another 6 percent over that of 2010. Just as 28 percent said they were flat in 2010, 28 percent expect to be flat in 2011. Only 11 percent expect to be down at least 6 percent in 2011.

Post-Recession Bounce Back
Technically, the “Great Recession” ended in June 2009, but that means little to CIs that experienced lingering effects. However, the fact that so many surveyed CIs - 61 percent - anticipate more than 5 percent growth in 2011 shows that most are seeing the market stabilize.

Things are starting to loosen up, says John M. Hoyt, CEO of Greenville, S.C.-based Homeland Secure IT. “Server renewals are going ahead as planned. Workstations are being replaced that were in need of replacement two years ago and clients held off,” he says. “All in all, important hardware updates aren’t being delayed like they were in 2009.”

Tampa, Fla.-based AVI-SPL, which can speak to various vertical markets, is also seeing companies open up their budgets, according to design engineer Joseph Thomas. “Projects that have been on hold are being reactivated. Some projects that had to be ‘value-engineered’ are having the bells and whistles put back into them,” he says.

Not every commercial integrator shares AVI-SPL’s and Homeland Secure IT’s optimism. Nearly 40 percent of surveyed CIs expect their revenues to be either flat or down in 2011. Lexington, Ky.-based Advent Pro AV, which concentrates on bars and restaurants, houses of worship (HOW) and hospitality markets, isn’t seeing (or anticipating) opportunities open up, says owner David Acton. “Business is holding steady at this point.”

To get back into growth mode in 2011, Acton says his priorities include building his brand and raising awareness of his company. He’s not alone. When asked what is his company’s biggest challenge for the year, Mark Coxon of Orange, Calif.-based Orange ProAV echoes: “Our company’s biggest challenge is in creating awareness and developing our brand.”

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About the author

Tom LeBlanc - Editor-in-Chief, CI,

Tom has been covering electronics integration for seven years. Prior to being named editor-in-chief of CI, he was senior writer and managing editor of CE Pro. Before that, he wrote for the sports department of the Boston Herald. Migrating to magazines, he was a staff editor for a golf publication and an outdoor sports publication. Follow him on Twitter @leblanctom.

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