The rapid changes in the lighting industry are making the traditional lighting giant GE a helpless choice.
Following the GE Lighting CEO's internal mail announcement, starting November 30, GE Lighting will terminate all direct commercial activities in Asia and Latin America. Recently, foreign media revealed that GE Lighting announced this month that it will close its light bulb factory in Bridgeville.
This traditional lighting factory was built in 1948.
GE spokesman Alicia Gauer. revealed that if the union agrees, the company will officially close the factory in August 2017. This is the third lighting factory that GE announced this year.
According to relevant sources, the traditional lighting products produced by the factory are outdated and it is expected that new products will be produced in this factory in the future. At present, the capacity utilization rate of this factory is only 80%.
Lighting business adjustment is accelerating
Earlier this year, GE Lighting announced plans to close its lighting fixtures in Lexington and Somerset in the United States by the end of August 2017. The main business of these two factories is traditional lighting products, among which Lexington mainly produces traditional lighting fixtures, and Somerset mainly produces halogen lamps.
The company reports that GE Lighting is now planning to focus on driving innovation and growth in LED technology. Half of the bulbs in the future US market will be LEDs, and by 2020 more than 80% of global lighting revenue will come from the LED business.
GE Lighting said in a press release that the closure plan is based on the trend of rapid conversion from traditional lighting products, including incandescent, halogen and fluorescent lamps, to LED lighting over the past decade.
In the past few years, GE Lighting's revenue has come mainly from traditional incandescent and fluorescent products, but the revenue of these products is declining year by year. Because the government continues to push consumers to choose more energy-efficient products, such as LED lighting.
I have to say that compared with many competitors, this lighting giant from the United States has not been able to perform well in the Chinese lighting market in recent years. Although the brand of “General†has penetrated into every corner, it is in Philips, Osram, etc. Under the strong pressure of the brand, GE's actions appear slow and conservative.
As the world's largest multinational company providing technology and services, GE has gone well in its diversification strategy, but the lighting business seems to have become a chicken-like presence in recent years.
According to GE's official financial data for the first half of the year, GE Lighting's revenue from lighting revenue fell 11% in the second quarter of this year, with traditional lighting revenue falling 23% and LED revenue growing 4%. In the second quarter, LED revenue accounted for 42% of total lighting revenue.
Previously, GE has sold the appliance business. Revenue data from GE's industrial division showed that revenue from the appliance and lighting business fell 25% year-on-year to $1.7 billion, and net profit fell 42% to $96 million.
According to industry insiders, the global market positioning of GE Lighting is part of GE's divestiture business and restructuring strategy. GE hopes to improve its valuation and keep pace with its competitors.
Asset divestiture is a high probability event
Since last year, Philips Lighting and Osram Lighting in the traditional lighting giants have successively divested their lighting business.
In the first half of this year, Mu Linsen officially joined IDG and other consortiums to acquire the general lighting business assets that Osram divested. The current acquisition is still in the process of advancement.
In addition, as several traditional lighting giants in China are listed on the IPO, the speed of integration of the global LED lighting industry with the help of capital market forces is accelerating.
GE currently has four plants in Shanghai and one joint venture in Xiamen.
“GE started from lighting and sold the lighting business. GE has also discussed this for many years. From a rational point of view, it is understandable to sell it, but inside, old employees and management are in love. If you can't accept it, if you sell the lighting business, it will break the root of GE. Investors and even the American people can't accept it." Nie Pengxiang, chairman of the incentive test, told Gaogong LED.
The light bulb company GE Group, founded by Edison, and Philips and Osram are listed as "the world's three major lighting giants".
In the era of incandescent lamps, GE lighting was brilliant. However, entering the era of LED lighting, GE's inherent advantages in the lighting market have been constantly replaced. Although the history of GE Lighting is 12 years earlier than Philips, its influence in the global lighting field has gradually surpassed by Philips. Even its US domestic market has gradually been captured by emerging CREE and other manufacturers.
"In the United States, GE has neither chips nor packaging, only application channels, so in the era of LED lighting, missed the opportunity. In the US competition, CREE has always been known as the 'price killer', GE has no advantage in price Therefore, it has always been in a defensive posture against CREE." Nie Pengxiang explained.
Chen Yiping, general manager of Sunshine Lighting China, said that it is not surprising that GE Lighting has withdrawn from the Asian market.
Due to the overall strategy of GE Lighting, they themselves have less capital investment in the Asian market. Coupled with the increase in labor costs in recent years, etc., it has not been able to compete with Chinese companies in the field of general lighting.
For GE Lighting, the only advantage is in high-end markets such as special lighting.
More industry insiders boldly predicted that GE Lighting is likely to divest its general lighting business assets and find suppliers in Asia, especially China.
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