Sector: Lighting

Market Overview: Lighting is one of the easiest ways to realize energy savings in a retrofit and the push to achieve significant savings through innovation and new lighting technologies is greater than ever. The lighting and bulb market—which includes incandescent bulbs, CFLs, fluorescent tubes, and parts and components—has been in a steady decline for several years as LEDs rose from 1.5 percent of the market in 2011 to more than 27 percent in 2016. Contractors are starting to install the new LED technologies as people are willing to pay the higher up front costs to have a more energy efficient, durable product in their home.

Due to this switch to LED technologies, manufacturing opportunities in the energy-efficient lighting fixtures and components sector are growing. Like the United States, many countries have banned the use of incandescent fixtures. Europe is in the process of banning halogen fixtures by 2018. This provides a significant export opportunity for U.S. manufacturers of LED technologies. In general, innovation and the creation of new products such as “smart lighting systems” (which have the ability to analyze data and communicate with each other to adjust lights automatically) will be primary factors for growth in this market.

The energy efficient lighting market is mixed when it comes to U.S. manufacturing content. Imports will continue to be strong for component electronic parts and low-end consumer LED bulbs. Currently 56.5 percent of U.S. demand for lighting fixtures is met with imports—mostly from China. The lighting sector has a highly dynamic and globalized supply chain with some items exclusively manufactured overseas, which makes it difficult to increase U.S. content.

Solid state lighting products used for commercial, architectural, institutional and other large projects tend to have a higher percentage of U.S. content (both parts and assembly) than those used in residential settings. Of the residential products, those that are custom, niche or higher-end tend to have more U.S. content and assembly versus those found on big box store shelves. High costs like tooling, small profit margins and significant competition make it difficult to manufacture affordable U.S.-made products for the average homeowner or tenant. One company currently manufactures two high-end residential and architectural brands that are U.S. manufactured with 65 percent domestic content. So, the domestic supply chain does exist, but it is cost prohibitive when it comes to making affordable products.