THE PROSPECT of industry-wide price rises grew significantly this week with the announcement by Eaton that it is following Acuity Brands’ lead by putting up the cost of its luminaires by 6 per cent.
Vice president of sales Joe Melchiors wrote to distributors and agents informing them that due to ‘increases in the cost of metals, commodities, freight and other logistical components’, the company is implementing a general price increase on both legacy technology products and selected LED and controls equipment.
Rises will vary by product category with an average of 6 per cent, but luminaires with a ‘heavy metals composition’ may see higher than average increases. The new list prices become effective on Monday 16 July.
‘Due to the current volatility of the materials markets and changing government regulations, Eaton’s Lighting Division reserves the right to modify the effective dates or percentages of this announcement and may reprice current orders that extend beyond the current project quotation date’, wrote Melchiors.
The move follows the surprise announcement last week by America’s biggest fixture manufacturer, Acuity Brands, that it was introducing the first major price rise in the market in years.
Acuity – parent of major brands in both the USA and Europe including Lithonia, Winona, Holophane, Hydrel, Carandini, Gotham, Indy, Peerless and eldoLED – is putting up its prices in the US for all traditional lighting technologies and many LED products by 6 per cent from Monday 11 June. Senior vice president of global sales Sero Cardomone blamed ‘significant inflationary pressure’ for the increase.
It’s significant that Eaton is broadly matching Acuity’s rise of 6 per cent. With these two major brands taking the initiative, it gives the green light to medium-sized manufacturers to follow suit with similar increases.
Additionally, eyes will be on European and other markets to see who will make the first move on prices.
Many observers describe the moves as a long-overdue correction to continuously falling prices, and see the announcements as leading light makers asserting themselves in an effort to maintain profitability in a turbulent market.
A crop of first-quarter results has underscored the pressure on margins in the sector. Philips Lighting recently reported a 16.5 per cent drop in adjusted first-quarter earnings and a 67 per cent plunge in net income on an 11.2 per cent sales decline.
Osram cut its 2018 sales and earnings forecasts and Zumtobel slashed its fiscal-year 2018 profits forecast in January by as much as 70 per cent.
GE is exiting the lighting business altogether, after itself going through a name change more than two years ago, renaming much of its lighting business as Current, powered by GE.
However, customers of the lighting industry may be forced into stark choices between branded light fixtures and components and cheap Chinese imports. Sectors such as retail face disruption themselves, and investment decisions on store fit-outs are increasingly being postponed.
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