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Posts Tagged ‘lighting’



To ban or not to ban….it’s not even a question.

Posted Wednesday December 21 2011 by in Blog
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The past several years has seen the approval of congress hit record lows. The extension of the incandescent bulb is a good reason why. Leaders should lead. Lighting consumes 38% of all of the US energy. Eliminating the worst polluter is simply the right thing to do. We desperately need a real energy policy; banning the incandescent bulb is the right thing to do. This isn’t about freedom of choice; if governing were about freedom, we’d all still be driving cars with 10 mpg, selling guns to babies and felons and have the freedom to paint toys with lead. Even the lamp manufacturers agree, they’ve pulled out of the US for production of these mini-ovens. This is simply a lack of leadership; and the irony is the bill was passed under Bush and the Republican congress over-rode it. We can save more oil by simply enacting real conservation policies than drilling. This is a sad day for lighting in general.

Ever wonder?

Posted Tuesday December 20 2011 by in Blog
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At this time of year, it seems we take a collective deep breath and enjoy the holiday season. From newsletters to twitter feeds to blogs, everyone is putting a little Christmas spin on their everyday posts. We really enjoyed Enlightenment Magazine’s recent article (listed below) that explains a longstanding tradition. Ever wondered how those colorful Christmas lights got onto your tree? In 1880 Thomas Edison hung the first set of Christmas lights outside of his laboratory. The lights were a luxury item and only seen in stores and in the mansions of those who had enough money to run them. It wasn’t until two decades later the average American could afford Christmas lights and in 1903 General Electric began selling them. Some estimate that when the lights were first introduced, it cost about $2000 to light a tree due to the high price of electricity. This year’s White House Christmas tree is lit with General Electrics LED programmable lights. The Christmas tradition has stayed the same for decades, but today we have new technology for a brighter and more energy efficient Christmas experience!

From all of us at Egret, we wish you the Happiest of Holidays.

http://www.enlightenmentmag.com/news/history_of_christmas_lights

People Moves

Posted Friday October 21 2011 by in People Moves
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Congratulations to David Rubin- appointed Director of Sales for North America at Luminus.

http://www.marketwatch.com/story/luminus-appoints-david-rubin-director-of-sales-for-north-america-2011-10-20

 

Are you ready?

Posted Friday August 12 2011 by in Blog
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“Results of a survey of 700 readers of Electrical Contractor magazine indicate a majority of electrical contractors believe LED lamps are now ready or will be ready within a year to replace incandescent and fluorescent lamps.”

via LEDs Magazine – LEDs may have reached “tipping point” with electrical contractors.

The Buzz- June 2010

Posted Thursday July 7 2011 by in Newsletters
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 June 2010
Volume 11 Issue 6

Fragmentation 
by Ted Konnerth

Life was simple when electrical meant 120 volts or higher. High voltage was high voltage, and low voltage belonged to people who installed doorbells. Then alarm systems became popular, along with security systems and dimmers went from line voltage to electronic. Ballasts went from magnetic to electronic and motor controls began talking to PLC’s and the explosion of computer technology in the office led to ‘premise wiring’. Throughout the steady expansion of electronics and low voltage controls, the industry became more complex, not less so. The issue of trade influences became murky; who actually installs premise wiring or occupancy sensors?

 The industry is in a rapid state of fragmentation. Corporations that are renowned for their sales of sophisticated switchgear, motor controls or variable speed drives are hiring electronics engineers, partnering with electronics vendors and meeting regularly with electronics distributors. The definition of ‘electrical’ has become as confusing as the definition of a US-made automobile.

As the channels fragment, the clear borders of who builds what, who sells what and who buys and installs what is in flux. The rapid growth of new alternative energy sources such as wind and solar have created a new industry virtually overnight. The design, procurement and installation of solar is a maze of conflicting sources of influence. Electrical distributors have mostly dragged their feet in transitioning to new technologies. The traditional channel partners are now being sorted into narrower identities.

Lighting companies are now either traditional or LED.  Adding LED into traditional channels is murky at best. The path to market for traditional lighting companies hasn’t changed dramatically in over 50 years. Lighting reps ruled the roost for the new construction channel and still remain largely in control. But the advent of LED technology has introduced literally hundreds of new companies, all with the same message of better, faster and cheaper and all trying to garner a portion of the huge US market. Lighting reps have ignored the retrofit market, the ESCO market and the industrial market; abdicating those segments to their ‘partners’; the electrical distributors.

What happens to those markets when the electrical distributors don’t step up and promote LED lighting products to their industrial or remodel or ESCO customers? The nascent LED companies have stepped into that void. LED companies are currently selling millions of dollars of equipment every day to customers who are simply not being well-represented by traditional channel sources. The creativity and  efficiency of the new entrants’ approach to the market is surprising and elegant. The gamesmanship of the past with huge overage payouts and secret deals won’t ever go away, but the market share size will dwindle.

Electronics companies have a different mindset. They focus on rapid innovation, often with little regard to the end-user of their products. They march to a mantra of better, faster cheaper and let the end customer decide how to apply their products. Electrical manufacturers carry much more embedded costs and traditional relationships that naturally cause their product development cycles to be slower and their product life cycles to be much longer.

It’s a difficult mindset to promote a high priced product with the expectation that it will be twice as robust and half the cost in the near future. Electronics manufacturers regularly work with their customers (mostly electronics distributors or retailers) to mitigate the effects of price degradation. Other than pure metals manufacturers whose cost of goods sold can be attributed to over 75% metal (wire, connectors, conduit, etc), it’s rare for electrical manufacturers to regularly entertain a dialog on price erosion from their channel partners.

The absorption of electronics into ‘electrical’ is changing the game. Electrical distributors are naturally technology-averse, as are electrical manufacturers. As an easy example, we queried 800 electrical distributor executives 60 days ago to ask them if they are currently selling LED ‘bulbs’ (another testament to cultural change, as bulbs have slowly replaced the more elegant term ‘lamps’). Less than 100 were selling them, of the 100, less than 10 were actually stocking them. LED is clearly the wave of the lighting future, and that future began over a year ago, yet the traditional mindset has been to promote items once there is a demand for them. LED demand is being built by the new LED companies, not the traditional manufacturers. As such, it will be some time before those LED companies will ever show up on the doorstep of electrical distributors. In the meantime, they’ll just sell them.

The electrical industry in large measure abdicated the premise wiring market to the ‘low voltage guys’ and literally watched as CEDIA created a national standard and a separate mode of distribution and installation. Solar and wind has also begun a new channel of distribution and solution selling. ESCO’s still tend to buy their products from electrical distributors, but that channel has already begun fragmenting away from the traditional approach. ‘Energy saving’ is the new premise wiring. As distributors slowly explore how to serve that market, the new entrants in this market; focused on faster, better and cheaper will carve out a new channel and reap the benefits.

I’ve met with scores of manufacturers, from huge traditional manufacturers that are industry icons to the small, nimble startups and I’m convinced the industry has changed in fundamental ways that will leave the current list of players to ‘play’ in a much smaller sandbox than ever before. If you’re in lighting and you’ve not noticed that Mitsubishi, Samsung, Toshiba, Smart and Citizen were in attendance at Lightfair; then you’ve already lost share. Both Asian and US electronics companies have the financial wherewithal, the staying power and the technology leadership to completely change how lighting is sold in the US. They will not enter the market playing the game the same way as it’s been played. The same statement can be made in varying degrees for those manufacturers of switchgear, controls and automation. The game is on and it’s going to be exciting.

The Buzz- August 2010

Posted Thursday July 7 2011 by in Newsletters
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August 2010
Volume 11 Issue 8

Talent acquisition in a declining supply
by Ted Konnerth


Most people assume that with high unemployment, the availability of quality talent is as easy as posting an opening and waiting for the flow of hundreds of well-qualified applicants. Let’s disabuse you of that notion and begin by using facts:

1. Unemployment is 9.5% of the working population

2. Unemployment for those with a college degree is 4.8%

3. Baby boomers have begun to retire, with estimates of that pace predicted to quicken as the stock market and therefore retirement accounts return to levels prior to the Great Recession.

4. Emerging markets in the electrical industry are attracting experienced talent away from traditional employers, thereby depleting the available pool.

5. Levels of employee engagement are at record low levels, which will drive employers demand for more replacement talent*.

With the recession slowly subsiding, the electrical industry in particular will be facing a remarkable demographic tsunami. With the boomers marching away, new companies attracting talent with dreams of large equity plays in investment-owned startup companies and a historically low level of recruitment emphasis at college graduate levels, the industry will be caught in a war for talent unseen in recent history.

In just 4 years there have been over 400 new manufacturers of LED products, plus the entrance of global players in wind and solar energy, plus the large growth of electronics development in both existing companies and new entrants. The sum of those effects is that all of these companies have needs for experienced talent who understand the complexities of the electrical industry: channel partners, specification influences, buying influences and product needs. The current level of available experienced talent is already low; despite the constant din of news media reporting the millions of unemployed people.

The majority of the unemployed are laborers; skilled or unskilled. Their plight is unlikely to dramatically improve going forward as many of their jobs have been shipped offshore. Additionally, the talent skills that the emerging companies need today require far more education than traditional laborers. College or technical school diploma-level attributes in IT, computer sciences, electronics and semi-conductors are in high demand. 

The US is already in an engineering shortage. We’ve seen wage increases for engineering talent grow dramatically over the past 3 years as companies have made extraordinary concessions in salary offers and added benefits to attract qualified engineers: relocation, signing bonuses, vacations, etc. Major corporations have constant openings for electronic and electrical engineers. Smaller companies are making multiple offers to engineers to try to attract them.

The war for talent issue has been moving forward for the past ten years. We were all forewarned this day was coming, but in the teeth of a deep recession it’s difficult to rationally increase hiring to prepare for the imminent shortage. Leading companies are already doing exactly that. Our larger clients in distribution have been hiring for the past year, and the manufacturers are just recently addressing their needs for the coming growth period.

If there is a call to action, I would suggest three specific actions:

1. Enact retention strategies for your top talent immediately. Losing a key contributor is extremely costly, not just in the replacement costs, but in the lost down time to ramp up the replacement.
 
2. Implement succession plans for the top talent. A recent study found that less than 50% of corporations have a defined succession plan for their CEO’s.

3. Create a recruitment plan that addresses three issues:

a. Building a bench. Start a college recruitment program.

b. Direct recruitment department. Focused on the college recruiting and the lower level positions that experience higher turnover rates, an internal recruitment organization can effectively meet these needs.

c. Sourcing partnership. For critical talent, that can only be identified through direct recruitment processes, identify a third party firm who can partner with your organization, acting as a pure recruitment organization and as a talent scout for opportunistic hires when ‘best athletes’ become available.


The next ten years will be exciting on so many levels: new technologies, new markets of growth and a melding of electronics and electrical into changing channels. There will be winners and losers in this battle as always, but for those who view the path to winning through attraction of qualified talent, the odds will be significantly higher.

*The Herman Group – www.hermangroup.com
Global Employee Engagement Declining

The Buzz- October 2010

Posted Thursday July 7 2011 by in Newsletters
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 October 2010
Volume 11 Issue 10

Legacy investments and channel tension
by Ted Konnerth

The city of Los Angeles has embarked on a project to convert every street light on their system to LED technology. LA has 210,000 street lights on its system (City of LA is a municipal provider of energy). The project is in its first year and so far, they’ve replaced about 20,000 units, at a fully loaded cost of $493/change-out. The project was budgeted at $57M, spread over 5 years. LA opened the selection process to all takers and 110 companies submitted preliminary bid submissions for their equipment. LA tested 25 of those 110 in a live installation beta site and ultimately selected 10 vendors who could supply the equipment. The system has the capability of integrating smart technology to allow wireless control of the system for unique applications; dimming, high brightness, strobing, etc.).

 A $57M lighting project (based on the math so far, that may exceed $100M). In this economy, or in ANY economy, who gets to play in a $57M project? This is a project of incredible proportions and begs the question of how was it ‘sold’? Let’s look at the traditional methods of electrical sales in the US and determine whom, if anyone was the determining agent of ‘writing this order’.

Lighting equipment is sold through multiple channels or rep organizations, but pertinent to outdoor lighting there are 3-4 likely channels this could have gone through:

  1. Lighting reps. They are the bastion of new construction expertise and largely considered the most technically capable of promoting lighting equipment.
  2. Utility reps. Typically focused on power equipment for investor owned utilities and muni’s, these reps typically are experts in selling electrical equipment for utility applications: transformers, rubber goods, reclosers, etc. Many utility reps also represent some lighting equipment.
  3. Direct factory reps. There are relatively few companies who use a direct sales organization for lighting; but of those that do, they tend to be outdoor companies, such as: Holophane, Ruud/Beta, Musco etc.
  4. ESCO’s. These companies focus on financial justifications to convert older electrical systems into more energy efficient equipment.

Now, who exactly was the ‘proximate cause’ for this project? If you answered none of the above, you’re correct. The earliest rumblings of this project were tied to the Clinton Global Initiative; which worked with the city to develop the plan, address the capital requirements for it and assist in preparing the RFQ’s for equipment (LA is providing the labor through their street maintenance department). So what’s my point?

The electrical industry has functioned (reasonably well) in a narrowly defined structure of channel partners, with their assumed roles and responsibilities. The industry, in general is very good at servicing customers for their needs. Where the system breaks down is when a new technology is so disruptive, that the channel is either poorly trained in the technology application, or is reluctant to embrace the new technologies. LED is such a technology, but so are wind and solar generation, electronic control systems, building automation, etc.

New technologies challenge and stress the partnerships in the industry. Electrical distributors are very efficient enablers of providing goods and services to their customers. But it generally starts with their customers requesting those goods and services. As such, distributors are poorly equipped to be the purveyors of new technologies; especially if that involves premium prices and requisite financial justification to enable the sale. This analogy holds true for lighting reps since they are accustomed and trained to promote goods for new construction, not to develop business where it doesn’t exist. Lighting reps do not call on, nor hold relationships with end-users who may be receptive to a presentation on reducing operating expenses over a life-cycle of ownership. Power reps are also generally limited in promoting disruptive technologies because they are narrowly trained to convert and retain blanket orders with their IOU customers; not present expensive solutions that would inevitably disrupt the security of the current blanket.

I call these relationships ‘legacy investments’. It’s been 20 years since the federal government enacted legislation effectively deregulating the country’s transmission and distribution of utility power. That process involved exhausting studies of the legacy investments of IOU’s in their infrastructure and how those capital investments would be treated on their balance sheets going forward, to allow them the ability to compete without being saddled by their own legacy investments.

The electrical industry is facing a new wave of legacy investments; distributor partnerships with extensive rebates, terms of sale, co-op dollars and buying group commitments, coupled with rep agreements that stipulate commissionable events solely by geography, and pricing structures that are tied to quotation processes that are directly influenced by independent rep control. Those legacy costs have served the industry well for decades, but the new ‘players’ won’t play by the rules of the past. Already, major players in the industry (Eaton, Schneider, Cooper, e.g.) have developed alternative sales channels that are designed to play in the new economy; direct, end-user salespeople presenting alternative financial solutions for the rapidly growing energy efficiency markets.


The electrical industry is at an inflection point; with major electronics firms readying themselves for entry into the US market, it will become incumbent on the US manufacturers to address their legacy investments in the channel. The energy market for renovation or retrofit is at a minimum 4-5X the size of the current new construction market. For lighting alone, that could represent a $100B market over the next 2-3 years. And that is a $100B market that is woefully underserved by the traditional channels.


The City of LA is simply an early adopter of technology. A $57M ‘adopter’; with little direct involvement of the traditional channel partners. The new world is already here.

The Buzz-February 2011

Posted Thursday June 23 2011 by in Newsletters
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 February 2011
Volume 12 Issue 2

It’s a Numbers Game
by Ted Konnerth

I returned from Strategies in Light last week after three days of conferences, technical presentations, booth meetings and client visits spinning with the usual overload of information. SiL is the largest conference dedicated to High brightness LED technology. As such, it’s a conference on ‘emerging trends’ in the electrical industry. Part of the presentation always includes macro-economic summaries of the market for LED. The biggest number was that the market grew 93% last year. That was not a typo, it was 93%, globally, at a total revenue of $10.8B. The $10.8B includes all HB LED applications, of which backlighting for TV’s, laptops, mobile phones is the majority usage. The revenues assumed for commercial lighting applications (fixtures and lamps) were $900M, in 2010. The conference is managed by Pennwell and they have exhaustive research in the LED space, built from the individual dies and reactors up. Where the numbers get murky, are at the market level projections.

The projection for LED usage in commercial lighting is an average annual growth rate of 39% through 2015. This would put LED commercial lighting sales at $4.5B by 2015, four years away. The adoption curve for commercial lighting though will be, and is, far faster than the conference numbers demonstrate. There are several reasons for the murkiness of LED adoption within commercial lighting:

  1. There are over 1400 lighting manufacturers in the US alone. Of those, over 1200 are privately held, so numbers reporting is obscured and unavailable.
  2. LED adoption has occurred primarily at the end-user level, not through the traditional electrical industry channels, so tracking of LED success is virtually hidden from any of the traditional players; distributors, manufacturers and even contractors.
  3. LED sources include over 400 LED manufacturers, most of those from Asia, some working on a strict import model, others working on an OEM-based market and still others working on a collaborative basis through licensing agreements, or other financial relationships.

LED is already ‘here’. The trends for the overall electrical energy transcend pure LED sales, though. The implications of adoption of LED, or SSL (solid state lighting) is that the system is basically DC in nature and coupled with low power consumption lends itself to incorporation into new energy solutions. The possibilities are exciting for LED full adoption, such as:

· Emerge alliance. This nascent organization is developing DC distribution policies and systems to integrate DC power distribution into large areas of DC consumption; primarily large data centers, where hundreds of servers can be run on DC current and save the power losses associated with rectifying and/or inverting AC/DC. This model has proven to be an effective approach, although a lot of work is still required to achieve conformance on standards, etc. But consider the potential for residential DC power supply: attached to solar panels, distributed through a residential project to supply all DC devices; computers, TV’s, sound/security systems, and now LIGHTING, makes the application feasible. Plus it caters to the growing ‘off-grid’ movement. RV’s already run appliances on DC, so those products could also be adapted for a DC distribution. The day will arrive when a residence will come complete with two panels: AC for larger power needs, including power equipment and stoves, heating coils, etc. and DC.

· Off-grid lighting. There are millions of trails, landscape applications, rural environments where lighting could be feasibly and economically supplied without trenching power to the site through the use of SSL, with its low current requirements, and a solar panel and battery system.

· Death of incandescent. It’s here, we just don’t quite know the funeral date yet, but incandescent isn’t a good system. It creates more heat than light, the labor costs associated with changing them and the energy to drive them no longer make sense. So now it’s only a matter of time before they go away. Any incandescent application with long burning hours is an easy one to replace now; chandeliers, exit signs (they’re still out there), quartz floods, etc. they’re all an easy target for immediate replacement.


The issues embedded within the transition to LED are complex and worthy of a far lengthy discourse, but installing and controlling SSL will eventually become the province of those trades who install electronics, not electrical systems. So the future of lighting as an electrical component will go the way of premise wiring; either adapt to an electronics certification process, or abdicate lighting all together. 

It’s an exciting time in the industry; the people who will seize that opportunity will be the next generation of ‘players’. Those who insist on keeping it the way it’s been for 50+ years, will be selling wire and panels for DC.

The Buzz-January 2011

Posted Thursday June 23 2011 by in Newsletters
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 January 2011
Volume 12 Issue 1

EPACT and YOU
by Ted Konnerth


I returned from the SSL Summit conference this week where I heard a presentation on the Energy Policy Act of 2005. EPACT, as it is commonly called has been around 5 years. It offers rebates; CASH rebates to companies, business owners, lighting designers, engineering firms and installers. In addition to EPACT, a project can also earn IRS credits on top of the rebates, PLUS state rebates on top of the EPACT rebates and tax credits.

Funny thing about our industry, we’re so inbred we refuse to listen to new ideas. The entry of those damn new companies: LED, Wind, Solar, Environmental controls, etc. just confuse the way things have always been. I imagine every electrical manufacturer and distributor and design firm read the same annoying ‘trends’: non-residential construction is predicted to be down in 2011, therefore we need to adjust our budget to reflect a modest increase in revenues. The recent TED Mag supplement that contained the summary of a roundtable of industry leaders spewed the same pabulum we’ve heard for years: residential is down but will come back a little, non-resi is down, industrial may see some growth, exports are up a little, metals prices may be a contributor to top line, etc… 

The market for remodel (which includes energy remodeling) is estimated at 10 times the market potential for new construction. TEN TIMES the market potential. There is 71 BILLION square feet of privately held office/industrial space and nearly that same size in governmental space. So, who can figure out how to sell to that amount of potential? Let me give two quick examples: a company that has never been in commercial lighting just landed the contract to replace the majority of the light bulbs in Macy’s (we used to call them lamps, remember?). How big is that? Macy’s has 2,000,000 sockets. One of my clients just landed a $30,000,000 order to relight a large client of theirs. $30,000,000! Neither of these companies were reading about the ‘soft non-residential construction market’ or ‘depressed housing market’. They didn’t know they couldn’t write this amount of business in these ‘tough economic times’. They simply presented a solid, professional, cogent ROI model to the owner of those properties and walked away with multi-million dollar orders. In neither example, did the current value-stream (sic) channel work. In both examples, NO OTHER traditional channel member ever approached them about the opportunity to help them modernize their buildings AND make money in the process.

EPACT represents an opportunity to sell any equipment that reduces energy, to any existing building and earn up to $1.80/sq ft rebate, paid in cash from the US government. The State of GA will pay up to 45c/sq ft in rebates on top of that same rebate. The IRS will allow that same building owner to recover the non-depreciated value of the equipment being removed as an expense deduction AND possibly allow the new equipment to receive a fast depreciation schedule of less than 7 years. This is money that literally can cover most of the cost of the actual remodel project; for FREE. Banks will actually lend against this financial structure and discount the loan based upon the size of the rebates; if you’ll agree to share some of that incentive with them. How many construction projects actually bother to apply for these credits? 3%.

Want to help your kids’ schools modernize their building? EPACT will send the CASH rebate to the installer and/or design firm that generates the project to reduce energy. Why? Because school districts can’t receive tax rebates, so the money goes to the people who create that demand. Private schools can receive the money. But it starts with someone actually saying; here’s a good idea, let’s CREATE demand rather than wait for our contractor to land a bid, at ridiculously low margins.

In an economy where writing business is at a premium, there are opportunities to create new business that are simply ignored. Call it arrogance, call it ignorance, but it’s literally ignored. Our current channel strategy is breaking down; new companies are seeing opportunities where existing companies refuse to look. The game isn’t the same; the ability to sell now requires the ability to ‘sell’! How many distributor or rep or manufacturer organizations have the financial selling skills to present a professional ROI proposal to an end-user CFO or CEO to prove to that company they could remodel their building and be cash-positive from Day One? Not many. Why? Because we train our salespeople to not lose orders. We train our salespeople to maintain the business they have; our sales organizations are mired in the history of how we’ve always done it before.

It isn’t the same. Change or become irrelevant, it’s your choice.

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