Larson Electronics LLC

Inconsistent US Energy Legislation Depresses U.S. Domestic Economic Recovery

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As new energy standards and regulations are enacted across the globe in an effort to address the rising costs of energy production, the declining availability of fossil fuels, and the environmental impact of energy production, some of the traditional leaders in lighting industries are finding themselves hard pressed to maintain competitiveness. With lighting accounting for a significant portion of the total electrical power consumed worldwide, and the typically slow advancement of efficient lighting technologies, it is only natural that lighting be specifically targeted in legislation designed to spur improvements in current energy efficient technologies and the development of new ones.


While a modest approach among a handful of nations towards enacting regulation of any kind, be it trade, tariff, safety, environmental or what have you, normally produces effects that are limited in their scope and easily weathered or often even embraced by established industries, the current legislative climate is being influenced by collaborative efforts among a significantly large number of nations. The effect of this far reaching legislative approach to energy efficient lighting has been to throw the lighting industry into a state of uncertainty and wildly fluctuating market values. As lighting developers and manufacturers race to realign their focus to reflect the new standards now coming into full effect around the globe, large numbers of new players are appearing as well and attempting to capitalize on the potential new growth such change often represents. The lighting industry today is in a state of change not seen in over 40 years and stands to replace the automobile as the newest international manufacturing battleground as countries work to assert their dominance.


Companies such as GE and Philips, longtime stalwarts of the lighting industry, have for the past few decades dealt with the devaluation of traditional incandescent lighting due to an influx of cheap products from countries such as China, by focusing on greater diversification and expansion into ever widening areas of electronics manufacturing. This created less competition in the lighting sectors and allowed the producers of cheap lighting to gain an even larger share of the lighting markets, until we now see domestic light bulb production lagging far behind offshore production. Exacerbating this reduction in domestic manufacturing has been the tendency over the last 25 years for US and western based companies to outsource production overseas, where production costs can be up to 10% lower or more, in a possibly misguided effort to maintain competitiveness. The net result has been fewer US jobs as US companies moved operations offshore and increases in trade deficits while these companies’ share of the lighting markets remained low.


With the coming global enactment of new energy policies and the sharp focus on outdated lighting technologies contained within them, western based companies have noted a great deal of potential for recapturing their lost share of the lighting markets. After President Bush’s signing off on new energy standards in 2007, domestic companies began a major realignment that was intended to take advantage of new lighting technologies such as CFLs and LEDs, and give them the real potential to dominate the emerging energy efficient lighting markets. This shifting of focus was predicated on the demise of the incandescent lamp and the expectation that these energy efficient technologies would make up over 80% of the lighting markets by 2025. Since countries such as the US have held dominance in CFL and LED lighting technology development for the past few decades, this move towards energy efficient lighting would indeed seem to represent an excellent opportunity for US companies to reassert themselves as world leaders in the lighting markets.


However, such simplistic notions while sensible and realistic enough, are all too often sabotaged by the very same legislative processes which spurred their enaction. As quickly as legislation can encourage the creation and growth of new markets, it can also severely damage the efforts of domestic producers working to bring to market the technologies needed to meet the new demands. The latest example of this comes by way of recent congressional efforts to delay or even repeal the new US energy regulations set in motion by President Bush. With the latest successful efforts by congress to defund enforcement of new regulations, even if only for a short time, has come a serious blow to domestic lighting manufacturers who have spent the last four and a half years gearing up to meet the demands of these regulations. While countries such as China have aggressively and decisively moved ahead with enacting strong regulation and enforcement intended to bolster their domestic demand for energy efficient lighting as well as reduce environmental impact and energy usage, US based companies have found they cannot expect any such reliable domestic demand.


Because the idea behind removing this regulation is born of political pandering to minority groups dedicated to maintaining “freedom of choice”, there is little to suggest it has any basis in a desire to actually aid the improvement of our domestic economic health by augmenting efforts to gain competitiveness on the world stage. Without a strong domestic demand for energy efficient lighting, US based companies will be hard pressed to form a solid consumer base and have no choice but to attempt direct competition overseas without it in markets where the regional manufacturers hold their own domestic  advantage and lower labor costs. This will serve to give yet another boost to foreign producers who will find plenty of room for expansion outside of their own healthy domestic demand that will serve to fuel that expansion.


 If we are to judge only by legislative efforts, it would seem that once again the United States has demonstrated its unwillingness to regain its status as a world leader through innovation, design and supply. The last decades’ run of debt based value and empty profit has gone and left a smoldering economic ruin that most countries are only now realizing cannot be repaired without a healthy domestic base. In European and Asian nations, the largest hindrance to economic recovery has been the naturally difficult task of finding the best solutions and enacting them effectively. Here in the US however, it would seem simple partisan political motivations are the biggest stumbling block and that these political agendas hold more value than a strong domestic economy.



The views expressed here are those of the author and do not necessarily reflect the views of Larson Electronics.

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