SIC 3646
COMMERCIAL, INDUSTRIAL, AND INSTITUTIONAL ELECTRIC LIGHTING FIXTURES



The commercial lighting fixture industry is comprised of establishments primarily engaged in manufacturing electric lighting fixtures for commercial, industrial, and institutional customers. Popular industry offerings include hotel and restaurant chandeliers, desk and floor lamps for offices, luminous ceiling panels, and industrial fluorescent lighting fixtures.

NAICS Code(s)

335122 (Commercial, Industrial, and Institutional Electric Lighting Fixture Manufacturing)

Industry Snapshot

About 80 percent of industry output in the late 1990s was used for commercial and institutional purposes, while 15 percent was utilized in industrial applications. Approximately 4 percent of production was exported. The largest single market for commercial lighting devices was in office buildings, which purchased about 9 percent of all fixtures produced by both residential and commercial fixture manufacturers; hospitals and parking garages both consumed about 1 percent of production. The remainder of the market was highly fragmented. The value of industry shipments totaled $4.6 billion in 2000, compared to $4.1 billion in 1997.

Background and Development

Following Thomas Edison's invention of the light bulb in 1879, the use of lighting fixtures in commercial applications gradually became widespread. During the industrial revolution of the late 1880s and early 1900s, electric light fixtures became common in factories, hospitals, hotels, and other commercial structures. Fixtures for fluorescent bulbs, which were introduced in 1938 and were more energy-efficient than previous bulbs, became the emphasis of the industry by the 1950s. The steady market growth precipitated by the post-World War II U.S. economic expansion pushed sales of commercial fixtures past $1.5 billion by the early 1980s.

Healthy commercial development throughout most of the 1980s resulted in an average annual revenue growth of nearly 8 percent for the commercial fixture industry, and, by 1990, sales topped $3.0 billion per year. Despite a severe downturn in commercial development in the late 1980s and early 1990s, sales dipped only 1 percent in 1991 before rising an encouraging 4 percent in 1992. Healthy institutional demand and sales of fixtures for new energy-saving bulbs continued to buoy earnings in 1994 and 1995, as industry revenues climbed to around $3.5 billion, up more than 16 percent from 1992. In 1997 the value of shipments reached a little over $4.0 billion.

In the mid-1990s U.S. commercial lighting fixture producers benefited from government initiatives that encouraged businesses to replace existing lamps and fixtures with new energy-saving devices, which gradually phased out the old equipment. The new devices and lamps produced more light per watt, so that less electricity was needed to power the fixture. Companies also boosted profits through cost-cutting programs and productivity gains, which traditionally meant reductions in the work force. In light of increasing foreign competition, as well as the introduction of the North American Free Trade Agreement (NAFTA), many manufacturers were forming joint ventures with overseas producers and moving production facilities outside the United States. Shipments by both residential and commercial fixture producers were expected to grow at a rate of between 3 and 5 percent annually through the end of the decade.

Current Conditions

According to Frost & Sullivan, the North American lighting equipment market will reach $15.2 billion in total revenue by 2005, up from $10.3 billion in 1998. Consolidation is a major trend, as large companies acquire smaller ones. Moreover, manufacturers are targeting the institutional and commercial segments.

Total industry shipments grew from $4.10 billion in 1997 to $4.61 billion in 2000. Over the same time period, the cost of materials increased from $2.04 billion to $2.22 billion, and the total number of industry employees grew slightly from 23,098 to 23,836.

Industry Leaders

About 320 U.S. companies competed in the commercial lighting fixture industry in 1997, with about half of all establishments employing 20 or more workers. The majority of the top 50 competitors reported less than $50.0 million in sales and had fewer than 200 employees. The industry's largest participant was National Service Industries Inc., of Georgia, which had sales of about $2.0 billion and 16,100 employees throughout its diversified operations. Other industry leaders included Lithonia Lighting Co., with $764.0 million in sales and 4,500 employees, and Cooper Lighting, with $475.0 million in sales and 5,000 employees.

Workforce

Although industry employment rose from 19,000 in the early 1980s to 23,000 by the early 1990s, the total number of employees dropped slightly in 1997 to 22,818 workers, over 70 percent employed in production. Of the industry's 23,836 employees in 2000, 16,437 were production workers earning about $12 per hour. In the late 1990s, the leading states in number of employees were California (3,053), New York (1,654), Massachusetts (1,259), Ohio (1,070), and Pennsylvania (1,019).

Future employment prospects in this industry are not encouraging. According to the Bureau of Labor Statistics, many manufacturing positions were expected to decline significantly between 1990 and 2005, in the wake of productivity gains and the movement of production facilities overseas. Sales positions and some specialized machinist occupations, however, which account for a relatively small share of this industry's workforce, will probably increase.

America and the World

The global market for all lighting products (including lamps, lighting fixtures and fittings/control equipment) was estimated at $26.0 billion in 1996, according to Frost & Sullivan. Through 2000, the market was expected to grow by 5.1 percent to $28.0 billion. Metal halide lamps and compact fluorescent lamps are two of the fastest growing segments. The European professional lighting equipment market was estimated at almost $7.0 billion in 1999, which Frost & Sullivan predicted would to rise to over $8.0 billion by 2006. The majority of total sales are comprised of interior products for the commercial sector. Over 100 small- to medium-sized manufacturers make up the industry, led by Philips and Osram.

Because Asian imports are pushing down U.S. prices, American and European manufacturers are expanding into the Chinese market. The two European leaders, Philips and Thorn, established either joint ventures or separate facilities during 1998. Cooper Lighting and Thomas Industries, both based in the United States, also established several joint ventures. Japanese manufacturers are following their example with at least one joint venture and a major contract at the Capital Airport.

Further Reading

Darnay, Arsen J., ed. Manufacturing USA. 5th ed. Farmington Hills, MI: Gale Group, 1996.

"Frost & Sullivan Sheds Light on North American Lighting Equipment Market" Press Release. Available from http://www.frost.com/verity/press/environment_energy/pr576314.htm .

Lamps to 2001. The Freedonia Group, December 1997.

"Major Foreign Lamp Producers Edge into Chinese Market." Asia Pulse, 19 September 1998.

U.S. Department of Commerce. International Trade Administration. U.S. Industrial Outlook 1994. Washington: GPO, 1994.

United States Census Bureau. Economics and Statistics Administration. 1995 Annual Survey of Manufactures; Value of Product Shipments. Washington: GPO, 1997. Available from http://www.census.gov .

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

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