Comment: AufruhrUnrest

14. Nov 2014

The changes and consolidation within the lighting market are gaining in speed

Text: Joachim Ritter

The changes and consolidation currently taking place within the lighting market are gaining in speed… and giving rise to news items that make even the general public sit up and take notice. Just recently a report published by Reuters international news agency announced that South Korea based manufacturer Samsung Electronics are amending their corporate strategy when it comes to their LED business. The company will cease ist lighting business outside of South Korea. The reasons for this move are quoted as being based on extreme losses due to price wars, and the growing competition from Chinese manufacturers in particular. In an official emailed statement Samsung Electronics announced that they would basically remain active in the LED industry, but focus on areas such as backlighting for displays of consumer products. In 2010, the Samsung Group identified LEDs, rechargeable cells for hybrid electric cars, solar cells, medical devices and biopharmaceuticals as new growth drivers for the conglomerate and forecast that they would generate 47.5 billion US dollars in annual revenues by 2020 for their affiliates. It would appear they have now been forced to significantly lower their profit expectations. Just a few weeks ago news got through that the Dutch company Philips had decided to spin off its century-old lighting business and concentrate on a more profitable area of business, namely health care and consumer products. For lighting experts who have been in the business for a number of years, it is hard to imagine that the name Philips will no longer feature in the lighting market as it has done in the last decades. It may be a bit premature to make such radical suppositions and may well not end up quite as drastic as that. In the situation the lighting market currently finds itself in it makes sense for the company to handle its lighting activities separately and more flexibly in order to be able to respond to demand more effectively. In this context, the restructuring that Osram underwent this summer does not appear to be in the same vein. In Osram’s case the company was reacting to market developments with the very clear perspective of reinforcing their position on the market. Whatever stories are out there, there is no need for the lighting market to panic or to question the future of lighting design in principle. On the contrary – the need for LED solutions and the modernisation of old lighting systems is ongoing and the volume of work to be done is on the increase. AEC Illuminazione, an Italian manufacturer of exterior lighting fixtures, recently announced that they have been commissioned to replace 80,000 luminaires in the streets of Milan. And guess what lighting technology they will be applying. And there was also mention of a similar “complete replacement job” in Turin. The problem right now is one that the manufacturers have to deal with, and LED manufacturers in particular, who are compelled to hold their ground vis-à-vis their competitors. The first step is clearly to increase profitability by restructuring and reducing costs in order to remain competitive. Competition is good for business, as they say. Other ways of surviving include specialisation and the development of high-quality products and fields of application. There is still room for development here: what is required is further research and additional knowledge with regard to the effect of light on human beings and the environment. And lighting designers also bear their share of responsibility for the future of the industry. Price wars fought at the expense of quality can run the risk of discrediting the entire industry: lighting schemes or systems that do not perform as promised, or as indicated by the designer responsible, because “someone” succumbed to cost pressure, definitely discredit the profession. A client who believes he is investing in a high-quality lighting installation needs to feel he has made the right decision. Resorting to cheap products acquired through dubious channels means treading on very thin ice. After all: you don’t get owt for nowt! And no professional lighting designers who work without being paid a fee, either.

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