The lighting market for lamps is worth £550 million in the UK this year (AMA Research) and the fittings market is worth £1.1 billion, so you can see why so many manufacturers are flocking towards this sector.
But what gives them the right to simple sell any old fitting? In the past, you had to earn respect. Manufacturers specialised in certain sectors. We had fluorescent battens used in factories dominated by the brand leaders, high bay and floodlights were all synonymous with one or two manufacturers.
This wasn’t a cartel - it was simple economics. Lighting manufacturers are not like Google, which can grow by acquisition quickly and easily. In the lighting sector, growth has to be worked at over a period of time and - more importantly - tooled up for production.
This is one of the key differences, now that many companies would pay £100,000 easily for tooling for a new product. Amortise this over the expected lifetime of the product (typically five years) and you still have a proportion of the cost to recover.
Companies had to know what they wanted, design it, test it, modify it, work hard at it and then financially support the launch of it for one or two years before any realisation of profit or contribution was apparent to the company. Then eat. Sleep. Repeat.
The lighting sector’s nature is changing
Today is very different with lighting companies not interested in committing funds for tooling quite so easily. Regular products, such as downlighters, have been commoditised and are today produced by many.
Tooling and proper old-fashioned R&D seems to be focused on high performance sectors - for example, street lighting where there is no 50 unit available…at least, not yet.
How is it so easy to compete? The essence of manufacturing has changed and many sub-contractors who have simple common parts are springing up and entering our industry both at home and abroad. These tend to be from associated industries or completely new ones.
For example, there is one ceiling manufacturer that, because of the advent and growing adoption of linear LED modules, has been able to easily take the fabricated metal enclosure they make into a square one (600 x 600), add a module and - hey presto – it is now a lighting manufacturer!
This company doesn’t need to carry out complex photometrics or thermal analyses. It simply makes a product and sells it. The 30% margin to this firm is a quick win, and is very different indeed to the typically £100,000 tooling cost for a major manufacturer. You can see now, perhaps, why the lighting market is so fragmented and yet attractive.
Vibrant and energised
The lamp market is pretty much carved up with the big three brands, which have between them a 20 to 30% share. In the fittings sector, the biggest UK manufacturer still has only an 8% share. It means that new comers that specialise or offer innovation can become established like never before.
This situation makes our industry more vibrant and energised. Younger innovators and entrepreneurs can establish successful businesses, perhaps using the knowledge they learned from a more established brand. Nonetheless, it is encouraging that so many opportunities exist with the advent of LED lamps. The boundaries are being pushed all the time and global manufacturing truly is upon us.
But take care!
The caveat is that this can go wrong; just because it looks like a fitting and quacks like a duck does not mean it really is one. Far too many installations are getting a bad press and users are experiencing severe light and heat issues – sometimes resulting in early failure - within a year of completion.
Why is this? Quite simply you, cannot buy experience, and the skills of old fashioned lighting or otherwise experienced lighting engineers who have seen the pitfalls of refurbishment projects go wrong is essential.
The biggest issue for companies is not making and stocking ever-increasing numbers of product for the mass market to consume.
The issue is a rather more simple and fundamental one - people. They are the lifeblood of any company and if you do not provide the pathway for them to develop and grown within the boundaries of our new found technologies, then simply put, they will leave. Then they are free to set up smaller companies on their own.
The skills will be lost, and perhaps some famous names will disappear forever from specifications. Experience and people are the two key commodities fittings companies require, and hanging on to them is a tough and constant battle. It will become the pivot for success. With all the technology in the world, if you don’t have good people you won’t get anywhere.