Commercial Integrator January 2023 - 22

ANNUAL REPORT
Industry Update
INTEGRATORS
ARE NAVIGATING
UNPREDICTABLE
CROSSCURRENTS
CI and NSCA's annual
State of the Industry report
captures a moment of integrator
optimism counterbalanced by
macroeconomic headwinds.
By Dan Ferrisi
EVERY YEAR, Commercial Integrator
partners with NSCA to deliver an update
on the state of the commercial AV industry,
examining the challenges that integrators
face, the strides they've made and the opportunities
that lie ahead. As the calendar
flips to 2023, the landscape for integrators
appears somewhat uncertain...perhaps
even treacherous. After all, worldwide
inflation has spurred talk of a possible recession,
supply chains are still snarled and
integration businesses continue to wrestle
with vexing talent issues. On the flip side,
however, commercial AV technology is
now recognized - perhaps more than
ever before - as mission critical to delivering
the kind of experiences that people
want and expect. That means integration
businesses can and should lean into the
value they provide, and price their services
accordingly.
To paraphrase Tom LeBlanc, NSCA's
executive director, it's a challenging time to
22
be an integration business owner, but it's
also a great time to be an integrator.
CI and NSCA surveyed nearly 150
owners and operators to better understand
the health of their integration businesses, as
well as to draw conclusions about the commercial
AV market overall. This report draws
on that data, while also offering detailed
analysis from NSCA CEO Chuck Wilson,
LeBlanc and other industry stakeholders.
Inflation and Interest Rates
Although we usually start the State of the
Industry report with topline figures about
revenue and the business climate, the challenges
this year are so specific and acute
that it makes sense to begin by tackling
them. Our survey indicates that 83.6% of
integrators believe that inflation and escalating
costs are a top-tier concern in 2023. " It
was the pandemic and COVID-19 hanging
over our head, " Wilson laments. " Now, it's
interest rates and inflation hanging over our
Commercial Integrator JANUARY 2023
head. There just is always something! "
One of the clearest ways that inflation
harms integration businesses is that true
project costs can quickly change, resulting
in once-profitable jobs ending up upside
down. Citing wage inflation, price increases,
logistics costs, fuel surcharges, etc., Wilson
remarks, " You've got all of these things
that just incrementally added a whole
bunch of costs to the fixed and variable cost
of doing that project. " Accordingly, he says,
many integrators are racing to pull quotes
off the street and reprice them. In fact,
Wilson notes, one NSCA member recently
had its sales team pull 200 quotes off the
street, retracting them as soon as the expiration
date hit. Of course, clients aren't likely
to be happy when they're asked to take on
these added costs, but Wilson underscores
that every trade is having to make these
adjustments to stay in business.
Rising interest rates are just as problematic
for integrators, most of whom work
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Commercial Integrator January 2023

Table of Contents for the Digital Edition of Commercial Integrator January 2023
