Panel shop business


Thread Starter


I am considering opening a panel shop focusing on construction of custom industrial control panels, operator stations, MCC's etc. I am looking for information from anyone who has been in the business. Specifically regarding NEC certification (is it necessary, do companies specify it), ISO certification (again does anyone care), Insurance etc. I believe that I have the technical abilites to operate such a business but am unsure in these other areas. Any thoughts would be appreciated.

Bob Peterson

1. No such thing as NEC certification. Ability to apply UL listing is pretty common place these days. You will probably want to get that. Not
cheap, figure it will cost you $10-20k. I( know there are those who will tell you it can be done much cheaper, but reality has a way of making such claims fall by the wayside when all the costs are actually counted.

2. No one really cares about ISO anymore. But as a new business, it should be easier to become certified, This is also a pricey thing, and whatever benefits there might be have to be weighed carefully against the costs.

3. Panel shops are an extremely competitive business. The cost of entry is very low, and its seems every time you turn around someone else has just opened one up.

4. panel building is by and large not a technical business. Its mostly semi-skilled labor and commodity parts, so the profit margins are low.

Bob Peterson

Charles @ AIS

UL listing is being required by many Cities and Counties across the United States. Our company has been part of the UL family for years now to meet this demand. True indeed, you will pay for it though. Check with the nearest UL office about the UL508a program.
I did it 10 years ago and have since left to "pursue other opportunities", translate: I didn't make it. It is a tough business mainly because you must either maintain a constant flow in order to keep trained employees, or do it yourself and live with the feast or famine nature of what you can manage alone.

Third party certification is often required if your business model is based on public works projects, contractors or large industrials with insurance inspectors, but it is not absolutely necessary to start out.

In fact, in order to achieve UL508C certification of your shop they inspect panels that you have already built. This implies that you had a customer willing to take a chance on you, or you already have some busuness that didn't really require labeling, meaning that it isn't all that necessary to everyone. In a pinch, field inspection of your panel is available from UL, ETL and now several other NTRLs (Nationally Recognized Testing Labs) such as ENTELA and FM for relatively low fees which can sometimes be absorbed on a case-by-case basis. This used to be very expensive when UL was the only game in town, but competition has benefited the marketplace. The $10-20K figure for certifying your shop is old. That too has come down due to competition. I just helped someone who did it for $5k, although the time involved in paperwork is tremendous. If you do it yourself, that's free, right? (wink wink)

Some areas of the country are overloaded with panel shops, others are sorely lacking. Good investigative work will tell you what you have. If contractors complain about long lead times and few choices, it might be a good idea. If you already have 5 or 6 good solid customers who will buy panels from you all year long, I'd say go for it. Any less than that and you run the risk of ending up broke while waiting for the next order. Also assume that you will loose 20% of your business every year to natural attrition so make sure you have sales time to replace it. The biggest mistake is not being able to sell the next job while building the last one.

Rotsa Ruck.