Three of the news stories we picked for this month’s cover story, “The 10 Top News Stories of 2013”, are part of much larger macrotrends that could reshape core elements of the electrical industry and the U.S. economy throughout the next decade and beyond: the game-changing impact of LEDs on the lighting market; the digitization of the specification and purchasing of electrical products; and the impact of less expensive, domestically produced oil and natural gas on the electrical market and on the U.S. economy as a whole. Over the next few months, I will take a look at each of them in this column. First up is the impact of LEDs on the lighting world.
There have been plenty of headlines over the past few years about lighting manufacturers buying LED companies, but the story behind the story is that getting into LEDs is really a matter of survival for many traditional lighting manufacturers — they can either transition their businesses to LEDs or risk being obliterated by them.
I can’t think of another electrical product group that has been totally transformed by a new technology to the same extent LEDs are changing lighting. Specialty wire and cable changed the mainstream wire and cable market in the 1980s as personal computers and computerized industrial and building controls came to be, but low-voltage cabling expanded the boundaries of the wire and cable business, and didn’t replace core building wire and power cable products.
The product itself. LEDs will eventually do a better and more cost-efficient job of lighting virtually any application than the products they replace. LEDs seem to have reached a tipping point of sorts over the past 12 months because the quality of light the best LEDs now produce rivals almost anything from conventional light sources, and the price/payback ratio of LEDs is much more palatable than it was even a year or so ago.
Product sources. In the “good old days,” deciding which lighting products to stock used to be a much easier decision for electrical distributors. Generally speaking, they would align themselves with one of the “Big Three” lamp manufacturers — GE, Sylvania or Philips — and fill in as needed with smaller niche lamp manufacturers; stock a reputable ballast and control line or two, saddle up with one of the major lighting fixture packages (Cooper Lighting, Hubbell, Genlyte, USI, etc.), and stock other manufacturers’ lighting fixtures as needed.
Erase that scenario with LEDs. I can see the day when distributors align themselves with a primary manufacturer that provides LEDs and fixtures in the same units as a total lighting solution; a handful of fixture manufacturers for design/spec jobs as appropriate; a controls vendor; a specialty LED/lamp vendor for LED retrofit work; and perhaps a provider of legacy lighting products (incandescents, fluorescent, metal-halide, high-pressure sodium, etc.)
Feet on street. Many electrical distributors have abdicated big lighting jobs to specification lighting reps and specialty distributors, but full-line distributors are probably still the biggest market channel for lighting products.
There’s no guarantee that will continue to be the case. The multi-billion dollar question of most interest to distributors and reps is who will be selling most of the LED lighting systems in the future. Global LED vendors new to the North American lighting industry are still figuring out their sales channels, but some of them have already decided to sell their products online or direct. My guess is that electrical distributors will still play a major role in the sale of LEDs, at least for the traditional lighting companies that remain major players in the lighting market.
Market demand. Since LEDs can easily last two or three times longer than the traditional lamps they replace, the lamp replacement business as most distributors know it will be a thing of the past. The good news is there are millions of sockets that can be converted to LEDs. I hope you have already started to cash in on this opportunity.
What’s happening with LEDs in the lighting market is truly remarkable, and we are all living through what very well might be the biggest electrical product transformation in the industry’s history. What do you think the lighting market will look like in five or 10 years? I would love to hear your thoughts. Drop me a line at [email protected].
