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Ewweb 4582 Lighting Industry Rules Pr 2

The Changing Rules of the Lighting Game

April 3, 2018
LED technology has unleashed new market realities that change how distributors, reps and manufacturers attack the lighting market.

GOOD BYE, GOOD OLD DAYS

In the lighting industry of years gone by, electrical distributors typically would choose one of the “Big Three” lamp manufacturers (GE, Philips and Sylvania), partner with a ballast company, pick and choose lines from one of the big lighting fixture packages and fill in as needed with the next tier of bulb manufacturers.

Those days are gone, The Big Three has have their worlds turned upside down. GE’s lighting business is reportedly on the block; Philips Lighting’s Dutch parent company spun off its lighting business as a separate public company, now called Signify, and Osram sold the Sylvania brand and the related U.S. lighting operations now known as LEDVANCE to a consortium of Chinese investors, including MLS (the parent of Forest Lighting). Osram continues to play in the lighting industry and reports that 66% of its sales are tied to LEDs in one way or another through its interests in LED semiconductors and other components, auto lighting and specialty lighting.

At the root of all these changes to the lighting business is the fact that LEDs have lowered the cost of offering a total lighting solution, which can be defined as a package of products that covers most of the core commercial/industrial lighting applications (office lighting, outdoor/parking lot lighting, warehouse lighting, replacement lamps, etc.).

It wasn’t all that long ago that when Philips put together package of lamps, ballasts and lighting fixtures through a series of mergers and acquisitions it seemed totally revolutionary. You don’t need to do that today to provide a total lighting solution. The lower cost of assembling LEDs, drivers, fixtures and related components into ultra-efficient sources of light has leveled the playing field for companies of all sizes. In the past, the light bulb manufacturers that marketed incandescent, fluorescent and other types of traditional lamps had to either make major investments in highly specialized bulb manufacturing equipment, or private label bulbs from oversees. Today, it’s not all that hard to source the various components needed to market a LED solution (semiconductor lighting chip, light engine, housing/fixture, etc.) on a far more cost-friendly basis. The challenge for customers is to find out which marketers are doing this with quality components and will be around to back up their products a few years down the road if any quality problems arise. The checklist below will help you evaluate LED manufacturers.

The lighting industry still has its giants, with eight companies bringing in sales of more than $1 billion: According to EW’s research into SEC filings and annual reports, at least eight companies do more than $1 billion in lighting sales: Philips Lighting ($8.7 billion); Osram ($3.4 billion); Acuity ($3.5 billion); LEDVANCE ($2.4 billion); GE ($2 billion); Zumtobel ($1.6 billion); Cree ($1.1 billion); and Eaton (estimated $1.5 billion to $2 billion). On the next tier are companies doing at least $100 million in sales, including several public companies for which sales revenue data is available: Hubbell Lighting ($729 million); Panasonic’s Lighting division ($307.9 million); LSI Industries ($239 million); and Revolution Lighting ($152.3 million).

While the sales volumes may drop once you get past this tier of lighting manufacturers, the number of manufacturers increases. Some of the companies in this group that you see most in the electrical market started out in narrower product niches and expanded to offer much broader packages that, depending on your definition, could be considered total lighting solutions. These include Eiko, Forest Lighting, Fulham, Halco, Keystone Technologies, MaxLite, RAB Lighting and Satco. And don’t forget how players like Leviton, Lutron and Legrand have expanded their lighting operations over the years. 

ALTERNATE CHANNELS TO MARKET

Lighting manufactures no longer have to limit their channels to market to the traditional channels of distributors and reps — they can sell their lighting products online or through Amazon or other web-only vendors. We see many companies mixing and matching their distribution strategies in today’s lighting market, with some going the traditional distributor/rep route and others leaning toward online sales.

With so many new players offering lighting solutions, it has become hugely important for electrical distributors or independent reps to carefully evaluate the pedigrees of these suppliers before getting involved with them, and the checklist mentioned earlier includes some good questions to ask of these companies to make sure they are dependable and have the technical chops to market reliable lighting equipment.

Atlanta Light Bulbs, Tucker, GA, is particularly concerned about the source of the LEDs used in the lighting products it distributes and in the post, “10 Questions to Ask Your LED Lighting Supplier & Installer” at www.atlantalightbulbs.com it advises anyone buying LED products to ask suppliers, “Who manufactures your lighting products or do you distribute for US brand names? If major brands, which ones?” “We offer over 120 brands of energy efficient lighting products from brands you know, such as Philips, Osram, Maxlite, Acuity & Halco,” the post says. “Due to the inconsistencies in dealing directly with Chinese LED manufacturers, Atlanta Light Bulbs does not directly import LED bulbs and fixtures.

“We believe that true LED manufacturers are in the business of research, design and improvement. We demand high-quality LED products. We are in the business of specifying and distributing LEDs and energy-efficient building products. We are not an importer or a manufacturer.

“You will find many local small LED companies that claim to manufacture the product. However, they are solely buying product directly from one of the thousands of undocumented oversea manufacturers. They then market themselves as a manufacturer. Since little R&D goes into their products, they are usually selling LED technology that is several generations behind the latest technology available. What happens if they go out of business?” 

EW’s editors hope these articles help guide your company through the changes in today’s lighting market.   

CHECKLIST: QUESTIONS YOU NEED TO ASK VENDORS ABOUT LEDS

Electrical Wholesaling first published a list of questions that readers could use to evaluate LED suppliers about nine years ago with the help of DOE Lighting Program Manager James Brodrick, who put together a checklist to help Lightfair attendees. After the 2009 Lightfair show he added additional material from the folks at of Acuity, Cree and and Lightswitch Architectural. We have updated that original checklist with questions from the websites of Regency Lighting and Atlanta Light Bulbs, two of the largest lighting specialty distributors in the United States.

COMPANY BACKGROUND

  • How many years has the company been in business?
  • Whose LEDs are being utilized? Where are they based?
  • Do your products have any of the following; Energy Star, DLC or LDL qualification?
  • Does the company website include detailed information on their products, including cut sheets, photometric reports, UL, DLC, Energy Star, and LM90 reports?
  • Is the product listed to a UL standard? (UL1993 for self-ballasted lamps, UL1598 for fixtures)
  • Does the company have any open product recalls?
  • What is the largest project the company has completed?
  • What is the company’s approximate total annual sales?

INPUT/OUTPUT OF THE LIGHT SOURCE

  • What are the delivered lumens?
  • What is the real input power?

COLOR

  • What is the CRI at each color temperature?
  • How do you ensure color consistency among fixtures built today or a year from now? Over the life of a product?
  • Does the thermal management system keep the LED junction temperature below specified maximums in all applications?
  • May I see at least two samples of the same Correlated Color Temperature?
  • Were your chromaticity measurements performed according to LM-79 by an independent lab?
  • Is there a written binning policy?

LIFE/WARRANTY

  • Is there a written end of life policy? How will spares be made available?
  • Do all system components from SSL manufacture have a warranty and labor to fix/replace?
  • How long is the warranty? What exactly is covered?
  • Has LM-80 testing been performed by your LED or LED module manufacturer? What does it say about lumen maintenance?
  • If the product fails after the purchase or during the warranty period who do I contact?

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