New Study Reveals Top Lighting Fixture Manufacturing Trends

North American lighting fixture manufacturers are optimistic about sales prospects for 2007-2008, particularly in the nonresidential construction market, and more optimistic about profitability than they were two years ago, according to a new study.

08/14/2007


North American lighting fixture manufacturers are optimistic about sales prospects for 2007-2008, particularly in the nonresidential construction market, and more optimistic about profitability than they were two years ago, according to a new study conducted by ZING Communications, Inc. Manufacturers see significant opportunities in technological investment and development, marketing/promotion and cost reduction. However, a general lack of education about lighting’s value and product knockoffs present significant threats.

The newly published "2007-2008 Lighting Industry Outlook" was designed to explore lighting manufacturer perceptions about business conditions and their companies’ business prospects in the coming year. The study, including data tables, graphs, verbatim responses and analysis, is based on surveys distributed to about 1,260 lighting manufacturers, with a 9.2% response. Key results are contrasted with the findings of the 2005-2006 study published in 2005.

The study presents its findings from the viewpoints of multiple manufacturer types, including

1) lighting fixture manufacturers
2) LED component and fixture manufacturers
3) lamp, ballast and control manufacturers.

LED product manufacturers were identified as a new respondent group in the 2007-2008 study due to its importance as an emergent technology; for example, about six out of 10 (59%) of the survey’s fixture manufacturer respondents offer LED components and/or fixtures.

Additionally, the fixture manufacturer respondent group is further delineated by 1) product category (architectural indoor, decorative indoor, outdoor), 2) product type (specification-grade versus non-specification-grade), 3) size of firm and 4) markets served (residential and nonresidential).

Key findings for the lighting manufacturer respondent group, as suggested by the research, include:

A sizable portion of fixture manufacturers believe that construction activity and their sales will increase in 2007-2008, but are less optimistic about their net profits increasing, although they are generally more

Average lighting fixture prices are predicted to increase over the next two years by seven out of 10 respondents, up from five out of 10 respondents in 2005.

The top threat trends to fixture manufacturers are general lack of education and product knockoffs. Two years ago, the top threats were gross margin costs, competition from imports, and selling, general and administrative costs.

The top three opportunity trends for fixture manufacturers are R&D/technological development, marketing/promotion and cost reduction, consistent with previous findings.

A significant portion of the lighting industry engages in offshoring as a business strategy. Less than three-fourths (72%) of fixture manufacturer respondents say they manufacture products in foreign, lower-cost labor markets such as Asia, up from about one-half (51%) in 2005. Larger companies, manufacturers serving the residential market and manufacturers offering non-spec-grade products are more likely to offshore than other companies. Offshoring is expected to continue to accelerate over the next two years.

Two-thirds (66%) of respondents at fixture manufacturers with annual sales greater than $25 million believe mergers and acquisitions will increase, suggesting that the pace of consolidation may accelerate, up from 40% in 2005.

Fixture manufacturers, on average, regard the architect, the lighting designer and the manufacturer sales rep to be the most influential segments of the sales channel.

“North American lighting manufacturers as a whole appear to be more optimistic about business conditions than two years ago,” said Craig DiLouie, principal of ZING Communications, Inc. “The research suggests that lighting fixture manufacturers are more likely than not to believe that nonresidential construction activity, manufacturer sales revenue and average lighting fixture prices will increase over the next two years. They are not as optimistic about net profits increasing, but are more optimistic than two years ago. Cheap imports and gross margin and selling, general and administrative costs are considered less of a threat now than they were in 2005.
The biggest losers in today’s lighting market are companies focusing exclusively on the residential market and the offer of non-specification-grade products. The biggest opportunities for today’s lighting fixture manufacturer are in developing innovative products and aggressively promoting them to the specification market, while the biggest threat remains a lack of education about lighting’s value among end-user markets, indicating there remains a strong need in the industry for an industry marketing and education campaign targeting the end-user.”

For more information about the 2007-2008 Lighting Industry Outlook, go to www.lightsearch.com and click on the tab, Market Reports.





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