In search of the light fantastic (IT – 6/08/10)

The switch to green lighting has moved from CFL bulbs to LEDs and Irish firms are targeting niche shares in a burgeoning market, writes Adam Maguire.

As LEDs (light-emitting diodes) become an increasingly promising replacement for traditional light sources, numerous Irish companies are seeking – and finding – niches in a burgeoning market.

CFLs (compact fluorescent lamps) have to date been the assumed replacement for inefficient incandescent bulbs as companies, households and governments alike seek to go green. LED equivalents, however, have quietly moved into prominence in recent years, offering even greater efficiency and life-span than CFLs with less environmental risk.

This sudden shift is evidenced by Philips, which two years ago announced it would not spend another penny on research for CFLs, focusing instead on LEDs only. Since then, the company has been engaged in a race with General Electric (GE) as they attempt to create a practical LED for the consumer market.

With billions of dollars up for grabs, it is easy to see why these big players are so keen. What may be less clear is how a number of small Irish companies think they can compete against such massive manufacturers.

“Everybody is focused on getting LED into where a critical mass is, there’s definitely momentum behind the technology,” says Cian O’Flaherty, chief executive of Frontline LED which provides indoor and outdoor lighting for companies such as Tesco and Vodafone Ireland. “However a lot of international companies are focusing on bulbs, spotlights . . . Philips and GE seem preoccupied on supplying street lights and incandescent replacement.”

Rather than try to compete in the same space, Irish LED players are instead targeting niches, the aim being to take market-share before the big players get there.

“Nobody is at the level that we are at or the level we are looking to get at with our down-lights. We believe we can steal a march on the market,” says Seán Carty, chief executive of Lita Lighting which is developing and manufacturing lighting for industrial, commercial and retail with a long-term view towards a consumer offering.

“It really is a great product and what we want to achieve nobody else is even touching at the moment.”

Lita Lighting was originally based in Spain but moved to Ireland after it was acquired by Carty late last year. He says many people told him he was mad for not manufacturing in Asia but to him, the legacy of the multinational manufacturers in Ireland made the move an obvious one.

“There was a biblical exodus of manufacturing companies from this country over the past few years,” he says.

“The good news is that the US multinationals left behind an incredibly educated workforce who know how to make technical goods well.”

He says there are no other real perks of the move – such as easy grants or tax incentives – and it was purely a business decision.

“There are significant cost savings being based in Ireland and having development in Europe, not least the quick access to market,” O’Flaherty says.

“It’s also an English-language economy. LED in the US has been a huge story and being in Ireland gives you an advantage there as it’s a place and location that’s attractive to the US market.”

Frontline currently has its RD (research and development) and manufacturing facilities in Seoul, South Korea, where O’Flaherty is based. He says this helps keep them close to the cutting-edge development taking place there but he feels it will not be long before that knowledge is taken back to Kerry with him.

“South Korea is one of the largest economies in the world and is well known for quality semi-conductors. Being able to work at the coal face with companies that are so familiar with the product and the industry is so advantageous.

“Ireland has suffered from companies coming in and moving on when the economics make sense. We’re taking the opposite tack, we’ve come to harvest the knowledge and then bring it home.”

One of the most successful Irish LED companies to date has been Nua Lighting. This company specialises in the lighting of fridge and freezer displays in a retail setting and has been extremely successful internationally, working with large multiples such as Tesco around the world.

Unfortunately no spokesman for the company was available to talk at the time of going to print, however there was no shortage of praise for Nua Lighting from its peers.

“When you see what Nua has done in such a short space of time, it’s just phenomenal, they really have a great product and a great set-up in what they do,” Carty says.

“Nua have had such market exposure for six years, that exposure is invaluable even if others decided to compete with these guys,” O’Flaherty adds.

However, despite the rapid progress of late, LED still faces the challenge of its high cost – something which has so far thwarted Philips’s and GE’s attempts at a consumer iteration. For businesses this is different, however, as return on investment is given a much longer time-frame. It stretches beyond simple energy savings, too.

“You’re talking about a 50,000-hour life-span so it’s a two- to three-year return on investment,” O’Flaherty says.

“During the lifetime you also don’t have to worry about maintenance, like a crane going up a floodlight to change bulbs every few months, so it makes perfect sense.”

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