The U.S. electrical industry has been buzzing with speculation about the direction of one of its foundational companies following announcements that General Electric is looking for a buyer for GE Lighting and that long-time chief executive Jeffrey Immelt will step down in August.
Rumors have circulated for years that GE would part ways with another of the business lines on which it rose to be one of the most recognized brands in the world. Ever since the company divided its lighting business, gathering its consumer and legacy lighting at Nela Park in a group with electrical systems and appliances while moving its higher-end LED and connected lighting systems under Current, Powered by GE at the new Boston corporate headquarters, the industry has expected GE to divest lighting. When it sold off its iconic appliances business in 2016, the picture became clearer.
Moves by the other two of lighting’s historic “Big Three” lamp manufacturers bolstered these expectations. Royal Philips NV spun off Philips Lighting and Siemens AG divested Osram Sylvania, leaving GE Lighting as the only one still hidden under the umbrella of a global conglomerate.
When Randy Reid of EdisonReport.com on June 8 obtained and posted an internal memo to employees from Bill Lacey, president and CEO of GE Lighting, saying the company is beginning formal talks with potential buyers, the industry shifted to speculation about who would be interested in buying the business, and what the change might mean for the electrical industry and the distribution channel that carries GE Lighting products to market.
The impact on GE Lighting distributors is likely to be minimal, moreso than if it had happened five years ago. The LED revolution has brought an influx of new manufacturers to the lighting business and most distributors have responded by diversifying their sources of supply, said Gordon Hunt, president and chief marketing officer of Illuminating Technologies Inc., Greensboro, NC.
“From a distribution perspective, with all the changes in the industry, we took it upon ourselves a number of years ago not to put ourselves in a position where a change with one manufacturer would put us in a position where we couldn’t serve our customers well,” Hunt said. “We’ve prepared ourselves for radical changes in this industry and this one from GE’s not that much different. It has the potential to be radical change, it also has the potential to be absolutely nothing.”
For Hunt, who still recalls every detail of the very first sale Illuminating Technologies ever made — two cases of GE U-bend cool white fluorescent lamps — the value GE provides today in a rapidly changing lighting market lies mainly in its brand reputation, quality control and the financial strength that allows it to back warranties over many years. A new owner with more coherent lighting market strategy could make the brand even stronger, Hunt said.
“They have some wonderful products. They make great site and area lighting. They do test their products better than most manufacturers do. They do have the funds to stand behind their products,” Hunt said. “They do some things really, really well, but I don’t know that they have ever been able to give us a strategy that seems truly coherent as to why they needed to take Nela Park and move part of it to Boston for this connectivity-based launch. If there’s a grand strategy for doing all these things it’s been very hard to see from the distributor end. Maybe we’re not part of it, or maybe they haven’t been able to articulate it.”
As for who might buy GE Lighting, people seem hard-pressed to come up with a U.S.-based manufacturer who would be a good fit. Lacey’s memo to employees said they would consider selling parts to different buyers and there may be some lines of interest to fixture or controls manufacturers such as Eaton, Acuity, Hubbell or Leviton. But if someone were to buy the whole thing, industry sources say foreign buyers would have much more to gain.
There are few brands on the planet with the recognition value of GE’s “meatball” and few opportunities to tap into a wholesale and retail distribution network like GE has established in the lucrative U.S. market. China-based lighting components giant MLS and several investment firms seized a similar opportunity last year when Osram sold Ledvance and the Sylvania brand.
Bill Attardi, president of Attardi Marketing, a long-time lighting industry executive, is among those who think GE will have a similar appeal to several Asian giants in technology or consumer electronics, some of whom have tried already, with spotty results, to penetrate the U.S. lighting market.
“The best bet is probably another Chinese company saying it’s time for us to penetrate the U.S. market — one way to get in is to buy GE Lighting. It could be someone already in (lighting) components — maybe Everlight out of Taiwan, or a Samsung or LG, that would like to have a presence in the U.S,” Attardi said.
“LG has been struggling all this time to get into the U.S. lighting market, and they have not had any luck penetrating it,” he added. “If LG says, ‘We’ll pay a billion dollars for GE, and this will give us a foothold and we can start to do stuff,’ that would make sense. An established Asian company saying ‘We have the wherewithal to compete but we’ve got to have a presence in the U.S., the world’s biggest market, and we can’t do it internally … now GE’s for sale, that gives us an opportunity to do that.’”
GE has said that the lighting business it moved under Current isn’t part of the package being offered for sale at this time, so distributors who sell for both sides will continue to have relationships with GE. With that in mind, the change from Immelt to John Flannery in the CEO office will matter, but Hunt isn’t convinced it will make a lot of difference. “It’s the board of directors – they kept Immelt for all this time, they let him do a really poor job for a long time, so I don’t have a great deal of confidence,” Hunt said.
All the same, there’s a sense in the industry that GE selling its lighting business is a bit of a turning point, one where change overtakes another part of our history.