What happened to light bulbs being US made? — Part 2

In the first installment, I explained how the lighting industry was vertically integrated. By making investments in heavy metals, glass production and other raw materials, the big three lighting companies were virtually irreplaceable in terms of where to buy light bulbs.

As LEDs became more of a threat, light bulb companies had made investments into the diodes, but not into all the raw materials that made them good lighting products. But there was still potential. GE and Philips had fixture divisions and Sylvania and Philips bought ballast companies that could potentially make solid state drivers. What hurt us the most at Sylvania was the slow divestiture of the lighting investments.

Sylvania had glass plants that would slowly hemorrhage money. Glass plants survive by operating 24/7. You cannot turn off a furnace without incurring large costs and risks. But as demand would fall, the plants were just flowing glass and recycling it just to maintain viability.

Most of the plants were also filled with some nasty stuff, requiring big costs for cleanup before a facility could be sold. And it would only be the land that had value. No one needed these raw materials.

In 2006, Sylvania started a new division to introduce LED products into the general lighting market. LEDs still weren’t cost effective substitutes, but that was coming. This group, that I got to run, was to make innovative, low-priced LED products marketed to the consumer market. We targeted grocery, hardware, DIY, clubs and big box stores like Target and Walmart.

Our products were simple. Our first product, the DOT-ITTM, was a round battery-operated push on light. We also developed some plug-in products like night lights with battery backup. These could be unplugged and used as emergency flashlights.

Our division grew sales quite nicely over the first two years, until the housing market crashed. But our real goal had been to find ways to use our light bulb raw materials to make LED light bulbs and fluorescent retrofits. Instead, our company went to China, where low-cost components like plastic instead of glass, gave us a better break even point to absorb the high LED and driver costs.

Before long, China was being outsourced for almost all LED and driver components. And those fixture manufacturers who used to buy our light bulbs, well, they hired electrical design engineers and developed their own configurations of LEDs and drivers to match the fixture. The power shifted from the light source to the light deliver system. In essence, from light bulb to light fixture.

I left Sylvania at the end of 2012, after 30 years. LEDs were still a small percentage of sales, and those sales were not profitable, but the revolution was coming. I went to work for a start-up lighting representative agency, and I specialized in large government projects. In other words, I went from selling light bulbs, to selling lighting fixtures and retrofit kits (retrofit kits would create a lighting module that could be placed into an existing fixture. It cost more than a light bulb, but less than a whole fixture.).

In 2013, over 90% of our sales were fluorescent lights. But, by 2015, over 90% of our sales were LED products. And by 2016, 100% of sales were LED. We were selling to the cutting-edge market, but the old light bulb industry way dying a fast death. I’m sure you’ve seen it yourself if you’ve walked into a DIY store. Light bulbs used to dominate the main aisle. And those shelves were mostly Philips, GE or Sylvania bulbs. Today, with little investment needed to develop LED fixtures and bulbs, the shelves are filled with brands I have never heard of.

The barrier to enter the traditional light bulb market was high. You didn’t have start-ups competing with you. With LEDs, our line card at times had 20 different suppliers listed. And where the big three lighting companies made every light bulb conceivable, the new start-ups usually specialized in one category of product or one market.

And as for Sylvania, the company, it was sold in the early 1990’s by GTE (now known as Verizon) to OSRAM (which was a subsidiary of Siemens). Soon after I left OSRAM SYLVANIA, the company was split into two pieces, one being OSRAM and one being SYLVANIA. Siemens sold off both pieces. OSRAM is owned by an Austrian company, and they sell automotive lighting, and they kept the LED investment for manufacturing. SYLVANIA was sold to a Chinese company and the company renamed as LEDVANCE. This division is selling to the consumer and industrial and commercial markets.

As for the light bulb divisions of GE and Philips:

Philips is now spun off and known as Signify.

GE is sold off and know as Current.

A sad ending for three great competitor companies. And a lesson is to be learned about future-proofing your business by anticipating trends. Moore’s Law was staring them in the face and none of the three companies went out strongly to grab the brass ring. I still believe that US investment back in the early 2000’s would have ultimately paid dividends.

But the other disappointment was in how slow the federal government was to recognize the loss of industries like lighting and, not only bought Chinese product at times because it was cheaper but refused to incentivize manufacturers to invest in our country.

And that ends the great light bulb odyssey from US to China.