One of the industries hit hard by recession is the lighting fixture manufacturing industry. The industry had a rough patch during the economic downturn. However, the industry is reportedly on the rebound and expected to grow stronger in the next five years. This new and positive development has prompted IBISWorld – the world’s leading publishers of business intelligence with specialization in industry research and procurement research, to update the Industry Market Research Report for Lighting Fixtures Manufacturing in the United States.
The improvement in activities may be attributed to new legislation that specifically demands energy-efficient lighting, which in turn equates to increased revenue. During the recession, revenue fell an enormous 22.6% in 2009 and 4.1% in 2010. The following year – 2011, the industry made an impressive turnaround and is expected to continue on with such growth in 2013.
Reasons for Poor Industry Performance
As per IBISWorld estimates, industry revenue is expected to increase 2.3% over the year to reach the $10.3 billion mark. This was in contrast with its poor performance for the past five years which can be attributed to:
- Reduced downstream demand from residential and non-residential construction markets
- Import competition fueled by rising manufacturing capabilities in Asia and Latin America prompting local production to shift to overseas production.
- Local manufacturing’s constraints on profitability
- Lower labor and overhead costs for overseas manufacturers
- US manufacturers forced to reduce their markup which led to falling profitability
Effects Of Profitability Constraints
Industry manufacturers are compelled to consolidate facilities as a result of profitability constraints in order to minimize production and overhead costs, thus causing the decline in the number of establishments at an average of 0.7% per year. This translates to 1,051 facilities in the last five years.
There are many reasons for the industry’s improved performance including:
- Fast-improving construction sector boost demand for lighting fixtures
- Transition of businesses and households from the old-fashioned and inefficient incandescent light bulbs to energy-efficient light sources
- Phasing out of incandescent light bulbs which started in 2012 and replacement of LEDs (light emitting diodes) through a federal legislation
Manufacturers of Lighting Fixtures
Lighting fixtures manufactured by the Lighting Fixtures Manufacturing Industry include non-electric lighting equipment, lighting fixture components, lampshades made of paper, metal or electric lighting fixtures. Excluded from the industry are manufacturers of light bulbs and tubes, the UV curing lamp, vehicular lighting equipment, aerospace lighting systems, plastic lampshades, current-carrying wiring devices and glass lighting fixtures which are covered by other associations like National Electrical Manufacturers Association or NEMA, Global Lighting Association and other industry trade groups and organizations.
Is this welcome news for the US manufacturing industry in general?