Tariffs Impact Lighting Costs

We have been hearing from contractors that many fixture manufacturers, including Acuity Brands, Hubbell Lighting and Eaton, are being forced to raise prices because of the recent tariff increase on Chinese goods.  

The tariff on lighting components and fixtures was 10%.  However, on May 10th the tariff was raised to 25%.  The 15% tariff increase is too much for manufacturers to absorb so they, and ECs, consider this a Force Majeure event (unforeseeable circumstances that prevent someone from fulfilling a contract).  By invoking Force Majeure they are voiding previous pricing and are issuing new quotes showing the cost increases.  

This doesn’t mean that all fixture prices are going to increase by 15%.  The amount of Chinese made components varies by manufacturer and fixture line.  More Chinese components will mean a higher cost increase.  To us this means that until the tariff and trade situation with China settles down lighting designers would do well to keep their clients informed of the varying impact on fixture costs and therefore fixture budgets.

IoT Lighting? No Thanks.

The current global cyber-attack, combined with last year’s “denial of service attack has me thinking about the lighting industry and IoT.

It was ironic that last year’s attack happened just days before the IES annual conference, at which IoT lighting was touted as the next big thing that everyone had to adopt or be left behind. You may recall that one aspect of that attack was that hackers recruited IoT devices like thermostats and smoke detectors. Many designers may think, “Well, sure, homeowners don’t have good security, but that wouldn’t happen to one of my corporate clients.” The current attack shows the flaw in that thinking. New tools have allowed hackers access to supposedly secure networks, and not all networks that should be secure (such as Britain’s NHS) actually are.

The question, then, is, “Why should my lighting system use IoT?” I’ve asked several friends in lighting design firms large and small and the answers I’ve received are revealing. Almost no one has a client who is asking for this. (I’ve had exactly one client who wanted the lighting system connected to the corporate LAN.) Do they want lighting systems connected to their BMS? If the client is knowledgeable and the building is large, yes, although today’s lighting systems have so many programming options we don’t need the BMS to control the lighting system. Do they want lighting systems to use Wi-Fi so that users can adjust the lights from phones and pads? Not very often. “Why would I want to give that many people authorization to change the lighting?” is the question asked, and rightly so. Do they want light fixtures with IP addresses and built-in Wi-Fi, Li-Fi, daylight sensors, occupancy sensors, temperature sensors, humidity sensors, and software that tracks shoppers or monitors space usage? “How much will that cost?” is the usual first question, followed by a strong “No.”

If we designers don’t see an artistic or operational advantage to these systems, and if our clients don’t see an advantage and aren’t asking for these systems, why all the noise about them? The answer, of course, isn’t better lighting design or increased energy efficiency, it’s money. Companies like Cisco see expanded profits from embedding Cisco sensors in every light fixture in a building, connecting all of those fixtures to Cisco POE switches and perhaps controlling the fixtures and sensors with Cisco software. Fixture manufacturers, always looking for a way to differentiate their products, jump on board. Marketing departments create hype, magazines and web sites need material, and voila! the next “must have” lighting system feature.

Who’s providing network security? The corporate IT department, I guess. Are the lighting systems vulnerable to hacking? The current and recent attacks tell us the answer is, “Yes.” Are manufacturers of IoT devices investing in security? Not really. They see it as the responsibility of someone upstream. Would anyone want a lighting system that is vulnerable to being turned off in an emergency, or reprogrammed by someone just to see if they can do it? No.

Some of the lighting systems I am designing are quite complex involving hundreds of fixtures with hundreds of addresses, multiple control protocols, and multiple points of control including touchscreens and Wi-Fi devices. One thing no one has to worry about, though, is high-jacking or corruption of the system. Each system stands alone. Software updates, if they are ever needed, are downloaded and installed via a USB key. Anyone wanting access to the system has to be within Wi-Fi range and has to hack the network. What would they get? Access to a single lighting system. There’s almost no reward and therefore there’s almost no incentive. Call me a Luddite if you like, but for now I’m going to stick to designing secure, flexible systems that provide my clients with only the features that they want at a price they are willing to pay. I’m sure that the pressure to “innovate” will eventually lead me to using these IoT systems. But for security’s sake I’m going to resist for as long as I can.

IES Releases RP-31-14 Recommended Practice for the Economic Analysis of Lighting

The Illuminating Engineering Society has released a new Recommended Practice.  RP-31-14 Recommended Practice for the Economic Analysis of Lighting is now available as a PDF download or soft back from the IES Online Store.  From the IES:

Good lighting should be responsive to the needs of the user. Among those needs are the aesthetic and the visual, as admitted in the oft-quoted “lighting is both a science and an art.” But the user also has economic needs. In fact, it is the economic needs that often drive the decision making process when lighting systems are designed and purchased. 

This recommended practice is written from the point of view that “economic analysis” is not the same as “how to beat the budget.” Rather than considering economic analysis as the antithesis of engineering or artistic analysis, is should be thought of as subsuming these other needs. When a competent lighting professional takes care of economic needs, in conjunction with the artistic, engineering, and other needs, it increases the likelihood a project will have success and longevity. Financial considerations ad demonstrated through an accurate lighting financial analysis are important, but other elements such as aesthetics, human visual performance resulting from a lighting system appropriate to a given task, and other considerations involved in lighting for the human and natural environment are of equal importance.

Fixture Cost Frustration

One of my clients has expressed frustration with the caveats I place at the end of my lighting fixture budget. Why can’t I give the client a simple budget estimate? The answer is that fixture manufacturers don’t have a manufacturer’s suggested retail price (MSRP) for their products, which is something we’ve all come to expect for products ranging from potato chips to cars. We all know that things we want to buy have an MSRP or list price and it’s up to the seller to decide whether or not to sell at a lower price.

However, with lighting equipment the sales representative and the manufacturer collaborate to establish pricing for each project (see chapter 9). Larger projects with more luminaires will usually pay less per luminaire. This can be frustrating for everyone. It’s hard to develop a reliable fixture cost database when fixture costs are variable.

Another issue with pricing from the sales rep is that it is usually dealer net, distributor net, or DN pricing. This means that the luminaire price the sales rep gives to the designer is the price that the electrical distributor will pay the manufacturer. It does not include the electrical distributor’s markup for overhead and profit, nor does it include possible markups by the electrical contractor and/or the general contractor.   It is up to the lighting designer to estimate the total markup(s) as well as taxes, shipping and such, and add that amount to the projected lighting fixture budget, but designers have no direct knowledge of what markup these firms will add, nor do we have any control over their markups. The result is that I wind up footnoting my budget with notes like markup percentages are estimated, pricing is based on cost estimates provided by sales representative, and pricing is based on projects of similar size and scope.

Finally, as I explained here, the fixtures that I specify may not be purchased for the project. Once substitutions enter the picture another layer of mystery is added. Yes, it’s complicated. Here’s a flow chart that tries to explain the flow of information (denoted by question marks) and money (denoted by dollar signs) of design and sales relationships. See chapter 9 for a full explanation.

fixture sales