Lighting Equipment Manufacturers Opt for Offshore Production Sites to Sustain Growth.

Business Editors

PALO ALTO, Calif.--(BUSINESS WIRE)--June 8, 2004

Lighting equipment manufacturers across North America are increasingly shifting their production facilities to less expensive overseas locations due to immense pricing pressure from the members of distribution chain and customers.

New analysis from Frost & Sullivan (http://www.BuildingTechnologies.frost.com), "North American Lighting Equipment Market," reveals that this market generated revenues worth $10.27 billion in 2003 and is likely to reach $10.95 billion by 2010.

If you are interested in a virtual brochure, which provides manufacturers, end-users and other industry participants an overview of the latest analysis of the North American Lighting Equipment Market, then send an email to Melina Gonzalez - Corporate Communications at [e-mail] with the following information: your full name, company name, title, telephone number, fax number and email. Upon receipt of the above information, an overview will be sent to you via e-mail.

"Migrating to inexpensive locations abroad seems to be the logical solution as this can significantly reduce labor costs, which currently constitute nearly 20 percent of total production expenditure," say Frost & Sullivan Research Analysts Jerry Davis and Sapan Agarwal.

For those domestic participants that are unable to take advantage of overseas manufacturing, the situation is more challenging, as they have to counter both pricing pressure from the distribution chain and the proliferation of low-cost imports.

Eventually, domestic manufacturers have to reduce manufacturing costs to the maximum extent possible and their inability to do so could result in bankruptcy. In fact, these manufacturers are becoming hostages to the pricing strategies of manufacturers that have external production facilities.

"While low prices are good up to a certain point, there exists a line of demarcation, that, when crossed, jeopardizes the entire distribution chain from raw materials to finished products," opine Davis and Agarwal. "Deciding on the right price and sustaining an efficient distribution chain are the keys to survive and outperform competition in this market."

The position of smaller lighting equipment manufacturers is worse. Lacking the resources required to combat large competitors and withstand the market maturity, they are gradually being edged out of the competitive landscape.

Irrespective of their size, participants are also being challenged by the end-users' reluctance to install superior lighting equipment due to high upfront costs. This is further reducing the already lean revenue flow of manufacturers and the decline is likely to continue until end-users realize the extensive benefits of sophisticated lighting solutions.

With constant reduction in the cost of technology, the prices of high-end lighting products are decreasing. Still, their prices are comparatively higher than the conventional lighting products, such as incandescent lamps, thus restraining prolific growth.

"The silver lining could come in the form of increasing demand for smarter building facilities and the drive toward lighting automation," say Davis and Agarwal.

ASHRAE/IES 90.1-1999, the new energy code to be enforced by the U.S. Government from July 2004, is likely to accelerate the drive toward automated lighting. This new code restricts the permissible wattage per square foot in new constructions and renovation of certain classes of building.

With such a stringent constraint imposed on energy consumption, automated lighting features are likely to witness a surge in demand and this, in turn, expects to provide opportunities for manufacturers of sophisticated lighting control devices.

The lamp replacement market and niche applications such as security lighting also promise to be potential growth areas. In fact, novel applications hold untapped revenue potential and participants should target them to widen their customer base and sustain growth.

The "North American Lighting Equipment Market," part of the SVC 9449 and SVC 9343 subscriptions, examines two main product segments: lamp equipment and lighting fixtures. Lamp equipment is further divided into incandescent lamps, fluorescent lamps (such as T12, T8, T5 and compact fluorescent), and high-intensity discharge (HID) lamps (such as metal halide, high-pressure sodium, low-pressure sodium, mercury vapor). The study discusses prevailing market challenges while highlighting the potential growth opportunities for participants. Executive summaries and interviews are available to the press.

Frost & Sullivan, an international growth consultancy, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients' management teams, to deliver market insights, and to create value and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers and support staff spans the globe with offices in every major country.

               North American Lighting Equipment Market
                                 A617

The following is a list of key industry participants: AAMSCO Lighting Inc.; Acuity Lighting Group,Inc.; Advance Transformer Co.; Advanced Lighting Technologies Inc.; Aero-Tech Light Bulb Co.; Allanson International Inc.; American Lighting Association; American Scientific Lighting (ASL); Amerillum Corp.; Amerlux Lighting Systems; Aromat Corp.; Ballastronix Inc.; Bieber Lighting Corp.; Brodwax Lighting; Catalina Lighting Inc.; Cooper Industries Inc.; Denki Corporation of North America; Duro-Test Lighting Inc.; EGS Electrical Group; ENERTRON; Feit Electric Co.; General Electric Company - USA; Genlyte Thomas Group Inc.; Hubbell Lighting Inc.; Interlectric Corp.; Juno Lighting Ltd.; LaMar Lighting Co. Inc.; Lights of America Inc.; LITETRONICS International Inc.; OSRAM SYLVANIA; Philips Lighting; SIMKAR Corp.; West Virginia Electric Supply Co.; Western Extralite Co.; Whiteway/Spaulding/Indalux; Wholesale Electric Supply Co.; Wildcat Electric Supply Ltd.

Keywords in this release: lighting equipment, lighting automation, North America, ASHRAE/IES 90.1-1999, energy code, security lighting, lamp equipment, lighting fixtures, incandescent lamps, fluorescent lamps, compact fluorescent lamps, high-intensity discharge lamps, HID, research, information, market, trends, technology, service, forecast