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Nothing seems permanent in the lighting market except change


It has only been a while since legislation guided us to abandon incandescent lamps and start using compact fluorescent light bulbs, and now everyone is talking about LEDs alone. The lighting market has changed completely in the last 10 years since the introduction of LED lighting. However, LED, or light-emitting diode, is a surprisingly old invention. The first time silicon carbide diode was made to emit a faint light was in the early 20th century, but in general people think that LEDs were created in General Electric’s laboratory in the 1960s. The first ones to be created were red LEDs, which were used as signal lights. At that time, LEDs could not be used for general lighting.

It was not until the turn of the millennium that the shake-up of the lighting market started, when the manufacturing of white LEDs based on blue LEDs became cheap enough. The large, international lighting corporations were caught by surprise when small, agile actors that utilised LED technology rushed to the market. At first, LED products were manufactured all over the world, but later the manufacturing of lights has concentrated almost entirely in Asia.

China’s political atmosphere and increased prosperity made a new type of entrepreneurship in the lighting market possible, and suddenly thousands of new Chinese LED lighting companies were formed in the city of Shenzhen alone, forming a new ecosystem. China’s cheap labour, good availability of raw material and tough competition for customers led to a rapid decline in product prices, for which the traditional lighting market was not prepared. Hundreds of smaller and tens of large lighting manufacturers have already had to call it a day, and it has been predicted that there will be more corporate casualties when oversupply and the price war have disintegrated profitability.

Due to the tightening energy efficiency and environmental legislation and the flood of LED lamps to stores, traditional light bulbs have almost disappeared. Today people buy either integrated LED lights or LED light sources for their lighting needs. In integrated LED lights the technology is mainly sold disposable package that has a long service life, but does not have a changeable light source. There are integrated lights that have a changeable light module or a power source, but the products of different manufacturers are not compatible and it cannot be guaranteed that replacement components will be available after a few years.

LED light sources that replace traditional fluorescent tubes and incandescent, halogen and compact fluorescent light bulbs are sold in supermarkets, hardware shops, and electrical supply stores the same way as traditional fluorescent tubes and bulbs were sold a few years ago. LED light sources are mainly used to replace their predecessors in old lamps and lighting fixtures, but new fixtures with changeable LED light sources are sold a lot as well. Increasing digitalisation means that it is possible to buy LED light sources online as well, but based on the recent spot checks by the Finnish Safety and Chemicals Agency (Tukes), few cheap LED bulb purchased from online stores is safe to use.

Motiva, a Finnish state-owned company promoting sustainable change, raises concern about a new problem introduced by technological changes. According to Motiva’s new press release, it may come as a surprise to many that the bulb in new LED fixtures cannot be replaced. In professional use the problem is even bigger. Oftentimes,  end user organisations buy tens or hundreds of LED fixtures at once, but it is not guaranteed that after a couple of years, the same model can be found in the market to replace a few faulty ones. This means that instead of changing a bulb, they have to pay a lot of money to replace the lighting fixtures, settle for non-uniform lighting or in the worst case, replace the lighting and control system of all lighting fixtures prematurely. Many real estate owners have already stopped using LED fixtures where the light source cannot be replaced in their premises.

Inka Oy, a leading webbing manufacturer in the Nordics that was established in 1989, is one of these companies. “We design lighting solutions and installations to last for a long time. Even though manufacturers promise long service life for LED lights, it is clear that some faults will occur in the course of time when a large number of lighting fixtures is used. In those cases, serviceability and security of supply are crucial. We chose LED tubes that are easy to replace and service, because the international standard on LED tubes guarantees that they can be used for a long time,” says Sirpa Heinämäki, vice president at Inka Oy.

This is also something that LuxReview has written about (1). Draft European regulations have raised the possibility of a return to the days of lighting fixtures with replaceable lamps. Thus, the proposals, if adopted, can have major implications for how lights are made.

Even though the storm raised by LED technology is passing over, the lighting market is still in the middle of turbulent years. The industry has changed permanently and different actors are now gathering their ranks and finding ways to differentiate themselves to overcome the profitability issue that is currently shaking up the overheated market. This may also benefit the customers, because the prices are lower than ever in relation to how good the energy efficiency and service life of the current lighting products is. However, the market situation is not sustainable, because there are not enough customers in the market for the thousands of lighting manufacturers that were established during the last ten years. The companies in the industry are now fighting for survival, and we are likely to see more bankruptcies, corporate acquisitions and mergers in the future. At the moment, nothing seems permanent in the lighting market except change.

Markku Laatikainen
Markku Laatikainen
Mr. Markku Laatikainen, one of the founders of Valtavalo Ltd. worked as the CEO of the company in 2008-2019, and continues now in the role of Senior Advisor. Laatikainen has put a great effort in opening and establishing LED tube market in Finland.

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