Manufacturer Outlook
With economic indexes such as the Architecture Billings Index in flux, manufacturers aren’t envisioning rapid growth in new-construction starts in the coming year. “My general take is that nonresidential construction is far from healthy,” says Brian Golden, president and CEO of Litecontrol in Hanson, Mass. “There are opportunities out there, but everyone’s fighting for every order.”
Nevertheless, Golden and other manufacturers are rosy about their business outlook for one primary reason. “The retrofit market is coming in and offsetting the disappointing starts,” he says. A combination of energy costs, rebates and incentives from utilities, and regulatory changes are spurring many owners to replace less-efficient fixtures, especially T12 fluorescent lamps, which are being phased out by law (AL Supplement: Infrastructure, Winter 2009) with more-efficient fluorescent or LED fixtures, he says.
Linear fluorescent lamp shipments increased during the third quarter of 2011 compared to the previous quarter, according to NEMA, the association of electrical equipment manufacturers. T8 lamp shipments grew the most with a 6.1 percent gain (20.8 percent year-over-year), while shipments of T5 lamps posted an increase of 5.7 percent from the previous quarter and 18.8 percent year-over-year. The index for T12 lamps slipped nearly 10 percent compared to a year ago. The association’s incandescent lamps shipment index for the third quarter decreased 1.2 percent from the second quarter, but was up 21.5 percent compared to the same period last year. Compact fluorescent lamps (CFL) shipments registered a slight gain of 0.9 percent over the second quarter, but the index declined year-over-year, sinking 15.4 percent.
LEDs Go Big
The retrofit-and-replacement market is driving substantial growth for LED lamps, says Steve Briggs, vice president of marketing and global product management at GE Lumination in Cleveland. “The biggest trend is the incredible efficiency growth of LED,” he says. “When you look at where LEDs have really penetrated, it’s where ROIs really hit the strike zone. The cost and performance have come down to hit that range.”
The LED market is growing 30 percent to 40 percent in the aggregate, Briggs says, and some sectors, such as outdoor, are growing even faster. “For commercial outdoor, you can see payback ranging from three to four years,” he says. “For roadways, it’s below eight years. Those are the magic tipping points.”
In a May 2011 report on advanced (high-efficiency) lighting in the United States, research firm Freedonia Group confirmed the trend of growth for high-efficiency lighting in general and LED lamps in particular, citing a decrease in the cost of high-efficiency lighting and a desire among businesses, institutions, and government entities to lower energy expenses and reduce the labor costs of replacing light fixtures. The firm predicts that U.S. demand for LEDs will grow the fastest of any advanced lighting product through 2015, rising nearly 15 percent per year to $6.1 billion. The study, which examined the U.S. market for high-efficiency lighting products, including most fluorescent lamps, LEDs, halogen lamps, and advanced high-intensity discharge (HID) lamps (but excluding less-efficient fluorescent lamps such as T12s), predicted that overall U.S. demand for advanced, high-efficiency lighting would grow 9.3 percent per year through 2015 to more than $11 billion.
“LED is getting so complex [that] most architects and interior designers can’t unravel it. So architects and interior designers who have never used a lighting designer before are using them for the first time.”
—Michael Gehring, partner and CEO, Kaplan Gehring McCarroll Architectural Lighting
Investment in LED technology is cutting costs at a rate of 30 percent per year, making it a broadly affordable technology, states a July 2011 market report, “Lighting the way: Perspectives on the global lighting market,” from research firm McKinsey & Co. The report predicts that LED’s market share is likely to accelerate over the next decade—rising to almost 60 percent of the overall lighting market by 2020—with revenue growth of 30 percent per year. This suggests that global revenues from LED lighting will amount to nearly €65 billion ($82.7 billion) by 2020 (bit.ly/A4g8UY, from AL LED, Fall 2011).
Energy Expertise
For designers, tightening energy codes and the growing interest in finding energy savings, combined with the growing complexity of lighting technology, could create an increased demand for their specialized expertise. “Every time the code gets more complicated, that’s good news for lighting designers,” Gehring says. “LED is getting so complex [that] most architects and interior designers can’t unravel it. So architects and interior designers who have never used a lighting designer before are using them for the first time.”
With architects and owners receiving an onslaught of information about LED and other energy-efficient technology—only some of it reliable—lighting designers have an opportunity to play the role of educator, says Baney, whose firm offers lunch-and-learn sessions about topics such as LED lighting to its clients. “We felt like we needed to educate them so they understand where those technologies might be appropriate and inappropriate,” he says. “You can’t just say, ‘I want to be green and use only LEDs.’ ”
While Baney says that lighting designers aren’t often called in for energy retrofits and renovations, the booming market in those projects represents a growing opportunity for designers. Energy retrofitters are often focused only on the payback and footcandles of light, he says, not on the lighting quality. Lending their expertise to help clients retrofit to lighting that is both high-quality and energy-saving is another chance for lighting designers to grow their business in the years ahead.
