It's not getting easier for venerable lighting companies to fight off modern startups who are marching into the industry with LED-only strategies, unencumbered by legacy technologies.
The latest example comes from Australia, where the difficult transition from conventional light sources to LEDs appears to have cost the job of the scion CEO at the country's biggest lighting company.
The Australian financial website BRW reported that $365 million Gerard Lighting – no longer owned by the wealthy Gerard family – has ousted Simon Gerard, who led the company since 2006 and who is the great-grandson of Alfred Gerard, the man who founded Gerard Lighting's predecessor business in the 1920s.
Owners CHAMP Private Equity reached outside the industry to replace him, tapping Peter Murphy, former CEO of Independent Liquor, a New Zealand company that Japanese brewer Asahi purchased in 2011.
'Simon Gerard, the long-serving chief executive of Gerard Lighting...has been replaced in a management restructure,' BRW wrote. 'The Gerard Lighting business operates in a fiercely competitive industry subject to intense pricing pressures as imported products jostle for extra sales buoyed by a strong Australian dollar,' BRW reported.
In other words, the same market conditions that forced Samsung out of the lamp business last month, that pressured Siemens to sell off its Osram lighting division last year, and that has Dutch conglomerate Philips considering doing the same appears to have squeezed earnings at Gerard, which both makes its own products and distributes others'.
Like Philips and Osram, Gerard is saddled with costs from its conventional lighting business in incandescent, fluorescent, metal halide, mercury vapour, high pressure sodium and other technologies.
While it is offering modern LED lighting and has an LED research and development division that it calls iLP (intelligent lighting products), it faces stiff competiton from new LED-only wunderkinds.
Companies such as Opple Lighting from China as well as Aurora, Cree, TCP, LIFX, Acuity and others born in the modern lighting era are pushing rapidly onto the traditional lighting industry's turf, offering products and services that take advantage of the digital nature of LEDs (light emitting diodes) and that offer LEDs' tremendous energy savings.
As semiconductors, LEDs lend themselves to digital and wireless switching that allows remote control of on/off, brightness, colour frequency, colour temperature and other light aspects. They are also shaping up as key to urban information networks in which lights and lightposts use sensors to gather useful information about things as diverse as traffic, parking, air quality, and crowd behaviour.
Big lighting companies that remain in the business must therefore find new revenue sources, as their old model of selling replacement lamps will no longer work with LEDs, expected to last for over 20 years. In that pursuit, soon after US lighting stalwart GE in September scotched rumours that it is exiting lighting, it said it is merging its lighting division with another GE group charged with digital and software innovations.
The BRW story noted that owner CHAMP brought in new CEO Murphy because it 'seeks to improve the operational performance of the lighting manufacturer and distributor.' It did not provide recent financial results for Gerard, which has been privately held since CHAMP acquired it in 2012.
Neither Gerard Lighting nor CHAMP replied to Lux emails requesting more information by the time this story posted.
Gerard Lighting is best known for its Pierlite brand, which recently parted ways with Philips, whose lamps and luminaires it had distributed for 10 years. Gerard is the descendant company of Clipsal, the 1920s electrical accessories firm founded by Alfred Gerard, and sold to Schneider Electric in 2003.
It's not clear what actions new CEO Murphy will take. He's experienced at difficult business environments: Soon after Asahi acquired Independent Liquor in 2011, the Japanese outfit sued Independent's former owners for misrepresenting the company's value. Countersuits followed.
At Independent, Murphy was in charge of products including Vodka Cruiser and Woodstock Bourbon. You could say that the rough-and-tumble of the modern lighting business has driven Gerard Lighting to drink.
Photo is a screen grab from Pierlite's website
Other big, LED-induced industry headaches and antidotes:
- Samsung comes clean: It's exiting LED bulbs
- GE reshuffles brass to stir up lighting innovation
- Philips: A long goodbye to lighting?