Amid labor shortage, mergers boost workforce for electrical contractor
For nearly five decades, the electrical contractor MVE Group grew slowly on its own, its owners adding subsidiaries in security, solar and energy auditing to diversify services.
But as the job market has tightened up and skilled workers have been harder to find, the Clay Township-based company has started to make acquisitions to bolster its Central Pennsylvania workforce.
At the end of last year, MVE Group purchased West Hempfield Township-based Wilco Electric Inc., an 82-year-old company with 37 employees, to fold into its electrical services subsidiary Meadow Valley Electric.
The Wilco deal followed MVE’s October purchase of East Petersburg-based Wacor Electronic Systems Inc., which added seven employees to MVE subsidiary ESCO Security. ESCO provides security and fire protection services to homes and businesses.
MVE CEO Tim Bollinger, who helped start ESCO in 1984, still favors organic growth for his company, which now has about 120 employees. But with many baby boomers eyeing retirement and a shortage of young people entering construction fields, he recognizes that MVE may have to strike more deals if it wants to find the workers it needs to keep growing.
“I can’t take someone off the street and put them out as an electrician. That’s a four- to six-year training process,” Bollinger said.
Experienced electricians are already busy working, he said. So rather than poach individual employees away from other companies, MVE decided to try acquiring companies to increase its number of office and field workers.
Behind the sale
Wilco Electric President Roger Brubaker, who will be 61 this month, said he has been thinking of an exit plan for about a decade and hoped to have a transition plan in place by age 65. He was the third-generation owner of the company.
He has been around the family business since he was 10 and began working there full time after college. But his children and other family members weren’t interested in continuing the business.
He said a sale to another company was among the options when he began thinking about retirement, though he had hoped to hire a general manager to run the business so he could move out of day-to-day operations.
That didn’t happen and then MVE approached him last summer about a sale.
“I started to think more seriously about it,” Brubaker said.
He also thought about the decline in business during the last recession and the recovery that followed. Wilco saw revenue drop from $4.7 million in 2008 to $2.6 million in 2010 before ticking back up, according to Business Journal records.
As construction activity boomed over the last three or four years, Brubaker said a decision to sell at the end of 2018 became easier.
“If we go through another recession, I thought it might be another 10 years before I could sell,” he said.
Brubaker said MVE is not only a good fit for his employees, but also his own short-term goals.
As part of the deal, he signed a three-year employment contract to serve as director of construction services. It also will allow him to continue his service on the board of the Keystone Chapter of the Associated Builders and Contractors, which represents nearly 600 construction-related firms in the region.
Brubaker is chair-elect in 2019 of the association’s executive committee. He will be chairman in 2020 and immediate past chair in 2021.
“Part of my decision process was making sure they committed to support me at ABC over the next three years,” he said.
After that, Brubaker said he’s not sure what he will do. He said he is still passionate about the building trades. And he is on the Pennsylvania Apprenticeship and Training Council, which approves new apprenticeship programs in the commonwealth.
Brubaker said Pennsylvania’s on-the-job training ratios for apprentices — which is four journeymen to one apprentice in all bids for government work — chokes off growth for construction companies, especially smaller firms.
A legislative proposal is circulating to reduce the ratio, which he believes could mean more apprentices to help companies like MVE establish a pipeline of younger workers.
As this year progresses, Bollinger said the Wilco brand will become part of the MVE portfolio and the name will go away. By the end of the year, MVE plans to close the Wilco office and move all staff into MVE’s Clay Township office.
Moving forward, Bollinger said MVE expects to continue growing organically. He wants to digest the current acquisitions before looking at other deals.
But Bollinger understands that the two recent deals could lead to more opportunities from older owners looking to sell. “We will see how it goes,” he said. “We’re not actively looking.”
He is one of four partners — Ty Espenshade, Alex Hurst and Jay Weaver are the other three leaders — who own 75 percent of the company. An employee stock ownership plan, or ESOP, was started in 2011 and owns the other 25 percent. MVE does not disclose revenue.
Bollinger said workforce will likely remain his company’s biggest impediment to growth.
Despite the labor challenges and predictions for a recession next year, Bollinger said he is optimistic about the construction industry and his company’s position.
“We feel like our mix with ESCO Security, Meadow Valley and solar will help mitigate anything in the downturn,” he said. “I am not convinced that a downturn in the construction market will impact the solar market. It may help the solar market as people are concerned about producing solar energy at a lower cost.”