Stratus has released its 2025 State of the MEP Industry Report, offering a data-driven snapshot of how mechanical, electrical and plumbing contractors are navigating steady demand amid tightening labor markets, rising material costs and growing execution complexity.
The report draws on survey responses from more than 140 construction executives across MEP trades and points to a widening divide between firms that rely on connected, digital planning tools and those still operating with fragmented workflows.
“The goal of this report is simple: to turn insight into action by helping preconstruction groups, design teams, fabrication managers, field operations, project management teams, and executives at MEP contractors understand where the industry stands today and how a connected, data-driven future becomes a competitive advantage,” said Jake Olsen, CEO of Stratus.
Growth continues, but unevenly
While overall growth across the sector remains modest, the report found that performance varies significantly based on digital maturity. Median year-over-year revenue growth reached 4.5%, with larger and more technologically prepared firms reporting stronger gains in both revenue and headcount.
Labor availability continues to be a central concern. More than half of respondents said hiring conditions have worsened, particularly for fabrication and field installation roles — a trend that is placing additional pressure on project schedules and productivity.
At the same time, rising material prices are squeezing margins. According to the report, material costs increased by an average of roughly 8%, outpacing wage growth and forcing contractors to pay closer attention to procurement, planning and execution efficiency.
Fabrication takes on a larger strategic role
The findings also highlight a shift in how contractors view fabrication. Rather than functioning as a standalone shop activity, fabrication is increasingly becoming a coordination hub that connects design, purchasing, shop work and field installation.
Despite that evolution, operational visibility remains limited across much of the industry. Fewer than 30% of surveyed firms said they track productivity tied to virtual design and construction hours, shop throughput or material logistics. The lack of real-time insight often contributes to rework, missed handoffs and schedule delays, the report noted.
Technology investment seen as a competitive lever
Looking ahead, contractors largely expect demand to remain stable through 2026 and are signaling plans to invest more heavily in technology to improve planning and execution. More than two-thirds of respondents said they intend to increase spending on software and automation, with model-based estimating, digital field tools, fabrication planning and applied AI identified as the most promising near-term performance drivers.
“Investing in technology hasn't always been perfect, but the lessons learned have been invaluable,” said Rob Cross, COO of Baker Group. “The fabrication software we use has given us the real-time analytics, documentation, and production visibility we once only hoped for. We simply couldn't have scaled fabrication as quickly or as confidently without it.”
According to Stratus, the results underscore how connected, data-driven workflows are becoming a differentiator as labor remains scarce and cost pressures persist across the construction landscape.
The full Stratus 2025 State of the MEP Industry Report is available at www.stratus.build.
Originally reported by STRATUS in Construction Dive.
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