LED, Construction and Industrial 2016 Planning Inputs

As you’re planning your 2016 initiatives, we thought we’d share some LED, construction and industrial information we’ve seen that could impact 2016 revenue planning or opportunity focus:

• Our friend Bill Attardi from EnergyWatchNews directed us to this article, Top 10 LED Market Trends in 2016.  While it has more of an Asian slant, some key projections:
  • Continued decline in LED component pricing which will continue the decline in LED pricing.
  • Many component manufacturers are incurring losses, which could lead to some bankruptcies. Some companies are withdrawing from the component segment of the business which could indicate that the rate of component price decline may be diminishing.
  • The role of China in the LED market and perhaps a penchant for some Chinese manufacturers to enter more of the lighting market through launching of brands and/or acquisitions.  We’re starting to see some of this in the electrical distribution industry.
  • LED bulb prices are nearing luminaire prices due to standardization which has led to “aggressive promotion pricing”.  The article expects further cost reductions for LED bulbs.  LED will continue to take share from other light sources given that pricing will continue to decline.
  • Smart lighting is in its infancy and has fallen below “expectations”. The most effective element is lighting controls, however, consumers (note – businesses were not mentioned), aren’t willing to pay up for the benefit yet.
• Here’s an interesting posting from Craig DiLouie on LightNow.  He aggregated the forecasts from many construction analysts into one chart. In some instances he added 2014 in-place construction and then the 2015 forecast and 2016 forecast.  These are all national numbers. In many instances the data is segmented by sub-category (i.e. education, religious, health, public safety, resi / commercial, hotel, industrial, etc). Data sources include Dodge Data & Analytics, IHS Economics, Moody’s Economy.com, FMI, CMD Group, Associated Builders and Contractors and Wells Fargo Securities.  Bottom line, 2016 construction spending, according to the American Institute of Architects is supposed to be up 8.2%.
• Focused on marketing your industrial offering? Consider downloading IHS Engineering360’s Industrial Marketing Planning Kit.  We’re not endorsing there services, however, there could be some insights in here to help you with your industrial strategy.
  • Marketing to industrial customers means you need to focus much of your effort on three audiences – purchasing, maintenance and engineers.  Each requires a different strategy.
  • The download kit focuses heavily on engineers and purchasing. While more from a manufacturer perspective, distributors should take note as this can impact their positioning as well as if an ecommerce strategy will become more than an alternative order entry system.  Content marketing, engagement initiatives, sales enablement, SEO, e-marketing are all critical to making “digital marketing” successful.  Need to know more, give us a call.
• Why is manufacturing seemingly in decline but the economy still reports growth?  This article in Supply Chain 24/7 may provide a glimpse. While the article infers that the manufacturing economy, as a whole, could still be “challenged”, the service economy continues to percolate along.  The challenge, from an electrical industry viewpoint, is that if the service economy isn’t building new offices / stores, then the electrical spend declines.
  • Some thoughts
    • This is only relevant if you are industrially-oriented or a diversified company.  If you are 100% contractor, continue to focus on commercial construction (projects), lighting and lighting retrofit initiatives.
    • If you serve the industrial market all may not be doom and gloom.  It’s important to understand your market and understand your customers. What do they make and whom do they sell to? Some segments are in deep decline due to affiliation with the oil / gas market or impacted by the strong dollar which can influence the OEM export market or possibly the agriculture market which is having low commodity prices which inhibits “farmers” from investing into their business. Other segments may be up (i.e. food & beverage, medical devices, etc).  Look at sub-segments to find growth and then seek similar companies in your marketplace. DISC’s Market Track database can help identify electrical potential by SIC in your marketplace and other services like InfoUSA can help identify companies in your area by SIC. Some manufacturers offer services to also do this with a focus on their product category (Leviton does / did have a service called MKIS as did a few others (and if you know of more, please share or send to us and we’ll post)).

Hope the info helps