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US Industrial Outlook

Electric lighting and wiring equipment

Electric lighting and wiring equipment – Industry Overview

John J. Bodson

The electric lighting and wiring equipment industries produce current-carrying wiring devices (SIC 3643), noncurrent-carrying wiring devices (SIC 3644), and lighting fixtures (SIC 3645, 3646, and 3648). These products are used extensively in the construction and renovation of all commercial, institutional, and industrial enterprises, as well as residential dwellings. Industry demand for these products is directly related to the health of the construction industry.

Before reading this chapter, please see “Getting the Most Out of Outlook ’94” on page 1. It will answer questions you may have concerning data collection procedures, forecasting methodology, sources and references, and the Standard Industrial Classification (SIC) system. For other issues related to this chapter, see chapter 5 (Construction).

Since hitting its cyclical low – which stretched from the first quarter 1991 through the fourth quarter 1992 – the U.S. residential construction market has been experiencing a moderate, albeit uneven, recovery. Relatively stable home prices, along with the lowest mortgage rates in more than 20 years, have promoted home affordability, helping to drive the recovery, and boost demand for electric lighting and wiring equipment. However, increased demand from the residential sector has been tempered by the downward trend in nonresidential construction.

Although the office building market still must try to assimilate the surplus of empty space left over from the 1980’s, other parts of the commercial construction market – including the retail construction market and, to a lesser degree, the industrial construction market – will lead the comeback of the nonresidential construction sector.

The anticipated turnaround in the commercial market, together with the increased vigor of the residential market, should bolster overall demand for electrical wiring and lighting products.

In an effort to stimulate international competitiveness, the U.S. government is urging American businesses to utilize metric measurements so their products would be more readily accepted in foreign markets. As an incentive, the Government set a target date of January 1994 for all federal construction projects – estimated at about $40 billion a year – to be bid and designed in metric dimensions. In some cases, the sizes of individual construction components must be redesigned to conform to international metric standards, such as wallboard and plywood. In other cases where no international standard exists, including most wiring and electrical fixtures, the size of the actual components would not change, but their descriptions and placement on blueprints would be recorded in metric figures.

The government incentive program does not affect residential construction.

The electrical wiring and lighting industry, in general, is not a proponent of metric conversion, according to the National Electrical Manufacturers Association (NEMA). However, a NEMA spokesman said, many companies are able to bid on federal projects and international contracts using the metric system, and will continue to do so in the future.

CURRENT-CARRYING WIRING DEVICES

Used for interior electrical construction, current-carrying wiring devices serve primarily to switch electrical current or to connect equipment to a power source. Products of this industry include lampholders, convenience and power outlets, attachment plug caps, connector bodies, switches, dimmers, fluorescent starters, and wire connectors.

Shipments of current-carrying wiring devices grew more than 4 percent in 1993. Increased demand for these products was influenced by tighter codes and standards for new home construction, and continued growth in the renovation market.

Improved housing affordability will stimulate the already recovering residential construction market, further boosting demand for current-carrying wiring devices.

The outlook for some of these devices, such as ground fault circuit interrupters (GFCIs), is particularly encouraging as a result of the gains in new residential construction. GFCIs are devices that detect ground faults and then act immediately to shut off power to that part of the circuit being protected. The National Electrical Code requires the installation of these devices near sinks and other wet or damp areas of new houses, creating a built-in demand for the product.

INTERNATIONAL COMPETITIVENESS

Reversing a long-standing pattern of trade surpluses, international trade in current-carrying wiring devices posted a deficit in 1992 as an 18 percent increase in imports more than offset a moderate gain in exports. The trade deficit trend continued in 1993 as imports, valued at $1.44 billion, exceeded exports by about $180 million. Primary markets for current-carrying wiring devices in 1993 were Canada, Mexico, Germany, the United Kingdom, and Japan. While Canadian imports continued strong, the anemic Japanese and European economies played a major role in the development of this trade deficit. Primary exporters to the United States were Japan, Mexico, and Germany.

Approval of the North American Free Trade Agreement (NAFTA) would help to strengthen the position of U.S. exporters, particularly in the Mexican market where tariffs on imported lighting fixtures would gradually he removed. The strengthening of the already lucrative Mexican market would help to reduce the trade deficit in this sector.

Outlook for 1994

The value of industry shipments of current-carrying wiring devices will increase by more than 4 percent in 1994. The primary driver of this increase will be the strengthening residential construction market.

Long-Term Prospects

Shipments by the industry are expected to continue to grow in the range of 3 to 4 percent a year through 1998. Increased housing construction will be the driving force behind this growth trend.

NON-CURRENT CARRYING

WIRING DEVICES

Products of this industry include electrical conduits and fittings; boxes for outlets, switches and fuses; and pole and transmission line hardware. The demand for these products is influenced primarily by the nonresidential construction market. The weakness of this sector was responsible for a general downturn in the shipments of these types of products since 1988.

In 1993, shipments declined 1 percent eliminating most of the gain of 1992 but still a major improvement over the 16 percent decrease in shipments recorded in 1991.

Outlook for 1994

The value of industry shipments of noncurrent-carrying wiring devices is expected to remain flat in 1994.

Long-Term Prospects

Industry shipments will increase 2 to 3 percent, compounded annually, for the period 1994-1998 as the recovery of the nonresidential construction market picks up steam.

LIGHTING FIXTURES

Supported by the resurgence of the residential construction market and continued modernization and retrofitting practices, the value of industry shipments for the lighting fixtures industry rose nearly 7 percent in 1993.

Energy Efficiency

Since its introduction in 1991, the Environmental Protection Agency’s (EPA) “Green Lights” Program has grown to include more than 1,100 corporate partners – up from about 400 companies the year before. A voluntary program, “Green Lights” encourages companies to use energy-efficient lighting products and techniques. The program’s objective is to reduce the air pollution which is produced by the generation of electricity. Commercial lighting systems are a good first target for the program, as lighting presently accounts for about 40 percent of a commercial building’s electric power consumption, According to the EPA, using energy-efficient lighting wherever profitable would result in a 50 percent cut in the amount of electricity required for lighting, and an 11 percent reduction in aggregate national demand for electricity. This translates into almost a $20 billion annual savings, as well as a considerable reduction in the amounts of carbon dioxide, nitrogen oxide, and sulfur dioxide emitted into the atmosphere.

To become a “Green Lights” member, a company agrees to survey all of its facilities and install new energy-efficient lighting systems in at least 90 percent of its space. These new systems are designed to maximize energy savings while not compromising the quality of lighting in the facilities. An extensive support network has been set up by the EPA to facilitate the process, including training workshops, a Lighting Upgrade Manual, and a computer software program.

Regulation Still Driving Ballast Market

Tighter Federal regulations on energy efficiency, as well as the continued success of electric utility rebate programs, have improved prospects for the electronic ballast market. A ballast is used to stabilize fluorescent lamp current, providing the correct lamp starting and operating voltage, and limiting waste. In the wake of Federal requirements regarding ballast installation and support from the utilities, the solid state electronic-type ballast continues to register impressive growth. Shipments by U.S. producers rose nearly 60 percent in 1992 to 13.3 million units valued at $274.6 million in current dollars.

Another factor boosting demand for electronic-type ballasts is the rebate programs offered by many U.S. electric utilities. In a typical rebate program, a utility compensates the end user for a portion of the cost of the energy-efficient products purchased, and sometimes for the installation of those products. Previous supply problems for electronic-type ballasts abated somewhat in 1993 as suppliers began to catch up with increased consumer demand.

INTERNATIONAL COMPETITIVENESS

As the competition for world markets intensifies, many U.S. manufacturers of lighting fixtures and related products are strengthening their international positions through mergers, acquisitions, and joint ventures.

Perhaps the biggest news on the international front involved the merger of Osram and Sylvania, now operating as Osram Sylvania, Inc. Osram was already a leading lighting products company in Europe, with strong positions in Latin America, Japan, and other Far Eastern countries. Sylvania brought its own strong international presence to the merger, providing the new Osram Sylvania, Inc., with a solid international market base.

In the high growth Asia-Pacific region, GE Lighting expanded its global operations through a joint venture with APAR, Ltd. The new venture, named Ge-Apar Lighting Private, Ltd., is based in Bombay, India. GE has also joined forces with Hitachi to market, sell, and distribute light bulbs in Japan, naming its Tokyo-based venture Hitachi GE Lighting, Ltd.

Philips Electronics acquired 70 percent of Kondo Sylvania, a producer of illuminating equipment, and renamed the venture Kondo Philips Lighting. Catalina Lighting’s joint venture with Montreal-based O’Design Ceramic, Inc., will allow for the distribution of Catalina’s lighting fixtures throughout the Canadian market.

Outlook for 1994

As the nonresidential new construction sector begins its recovery, and the residential market returns to a more robust level of growth, shipments by the lighting fixture industry should increase by about 7 percent in 1994. Continued growth in retrofitting will also provide support to this surge, as the EPA’s “Green Lights” program continues to grow, and public awareness of the importance of energy-efficient lighting is expanded.

Long-Term Prospects

The demand for products of the lighting fixtures industry should remain strong during the 1994-98 period, increasing at a compound annual rate of 4 percent for this period. John J. Bodson, Office of Materials, Machinery, and Chemicals (202) 482-0681, August 1993.

Additional References

(Call the Bureau of the Census at 301-763-4100 for information about how to order Census documents.) Electric Lighting Fixtures, Current Industrial Reports, MA-36L(91)-1, U.S. Department of Commerce, Bureau of the Census, Washington, DC 20233. Telephone: (301) 763-5194. Fluorescent Lamp Ballasts, Current Industrial Reports, MQ36C, U.S. Department of Commerce, Bureau of the Census, Washington, DC 20233. Telephone: (301) 763-5573. Wiring Desvices and Supplies, Current Industrial Reports, MA36K(91)- 1, U.S. Department of Commerce, Bureau of the Census, Washington, DC 20233. Telephone: (301) 763-2824. EC & M (Electrical Construction and Maintenance), Intertec Publishing, 888 7th Ave., 38th Floor, New York, NY 10106. Telephone: (212) 332-0647. Electrical Contractor, National Electrical Contractors Association, 7315 Wisconsin Ave., Suite 1300W, Bethesda, MD 20814. Telephone (301) 657-3110. Electrical Marketing Newsletter. Intertec Publishing, 888 7th Ave., 38th Floor, New York, NY 10106. Telephone: (212) 332-0600. Electrical Wholesaling, Intertec Publishing, 888 7th Ave., 38th Floor, New York, NY 10106. Telephone: (212) 332-0600. Lighting and Human Performance: A Review, National Electrical Manufacturers Association, 2101 L St. NW, Washington, DC 20037. Telephone: (202) 457-9400.

COPYRIGHT 1994 U.S. Department of Commerce

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