Industry corner: lighting the way: the U.S. lamp industry, 1985-2005 - Industry Overview

Business Economics, Oct, 1996 by Mary F. Babington, Christopher R. Moberg

While a mature industry, lamp-making in the United States is showing signs of revitalization. This resurgence is due in part to a shift in the lamp product mix and in part to an expansion of both the replacement market and new applications. Low cost, low energy-efficient incandescent bulbs are giving way to compact fluorescent and high intensity discharge lamps. In terms of end uses, there is strong demand for better indoor lighting levels, but still at a reasonable cost. Vehicles of all kinds require a wide variety of lamps. Outdoor lighting is in demand for both security and comfort reasons. Special applications range from medical equipment to decorative uses. Technological advances are surprisingly great, given the maturity of the industry and the marketplace. Similarly, marketing innovations are coming into their own. While three key suppliers (General Electric, Osram-Sylvania, and Philips) account for about 90 percent of total sales, specialty or niche marketers have a place. Sales of lamps of all kinds should rise from 5.1 billion units in 1994 to about 6.8 billion units by 2005. Net imports took about 30 percent of sales in 1994, and little change is expected in this figure.

The U.S. lamp market exhibits a large degree of stability and maturity, because much of the demand is generated by replacement needs. As bulbs burn out, they must be replaced. A strong trend now toward more efficient, longer life lamps reduces demand, but the dollar value of sales should rise. New applications will depend largely on economic growth, especially housing starts, new vehicle sales, and manufacturers' shipments. Aggregate sales of lamps until now exhibited both cyclicality and seasonality.

In the past decade, annual lamp sales displayed fluctuations, with drops of 3 to 6 percent as well as increases of 1 to 7 percent annually. Such volatility is attributable chiefly to the ups and downs in new building activity, coupled with changes in the product mix toward longer lasting incandescent bulbs and fluorescent tubes. In addition, lamp production and sales are seasonal. Typically, the fourth quarter of the year shows increases due to shorter daylight hours plus demand for holiday lights.

Three forces are converging that should positively influence the increased use of lamps in the United States in the coming years:

1. The desire for increased security and comfort. People at work, on the road, and at home wish to feel safe; good illumination contributes to this and provides a sense of well-being too.

2. More companies, in both manufacturing and the service sector, run overtime in the evenings or operate second and third shifts at night.

3. Vendors are aggressively marketing more energy-efficient and more user-friendly lights; customers are listening and buying such lamps, even though they cost more than the old bulbs.

For these reasons, lamp sales should resume their upward march. Compared to a growth rate of less than 1 percent per year in unit terms during 1985-94, unit sales should expand at about 2.7 percent per annum during 1994-2000, which is in line with the real rate of expansion for the U.S. economy during the second half of the 1990s, as seen in Table 1. The dollar value of lamp shipments will benefit further from continuing changes in the lamp product mix from lower- to higher-priced items. This shift is due to consumer interest, utility initiatives, and regulations encouraging energy-efficient devices.

Table 1

U.S. Lamp Shipments and Sales By Type
(million units)

                                                       % Annual
                                                         Growth
Item                    1985   1994   2000   2005   94/85    00/94

GDP(bil $87$)           4280   5344   6218   7053     2.5      2.6
units/0005 GDP          1.10   0.96   0.97   0.97      -        -
Lamp Sales              4715   5128   6020   6815     0.9      2.7
-net imports            1241   1598   1900   2135      -        -
Lamp Shipments          3474   3530   4120   4680     0.2      2.6
Large Incandescents     1602   1837   2050   2235     1.5      1.8
Miniature Incand.        839   1010   1215   1390     2.1      3.1
Flourescents             393    586    770    965     4.5      4.7
HID & Other
Elec. Discharge           79     69     75     85    -1.5      1.4
Photographic Incand.     561     28     10      5    -28.3   -15.8

Source: Research Division, The Freedonia Group,
Cleveland, OH, 1996.

LAMP SALES BY TYPE

There are two major categories of lamps: incandescent and electrical discharge lamps. Respectively, they account for about 80 and 20 percent of shipments. Incandescents dominate because they are inexpensive and provide relatively good quality light. However, electrical discharge lamps - primarily fluorescent and high intensity - are more efficient and continue to gain ground. In advanced office and home applications, users are also putting together combinations of the two kinds. Details on unit sales and growth rates by key categories are shown in Table 1.