The Australian market for LED lighting is showing only “miniscule” signs of growth due to uncertainty about the economy, according to George Toth, owner and managing director of Victorian manufacturer, mLight. His firm is now looking to expand by capitalising on innovation and targeting offshore markets, initially in the US.
Mr Toth said that while the market was not booming in Australia, it was a “reasonably comfortable situation so long as a firm is doing all the right things”.
“It is a bit of an eye-opener for Australian manufacturers that they can’t just look at the local market, they have to look internationally.”
Mr Toth said competing on price was not the answer, as success required innovation in design. He believes this is also how Australian manufacturers can maintain current wage levels and meet manufacturing costs, while still being competitive.
His firm recruits graduates including mechanical and electrical engineers, marketing, commerce, administration, orders processing, research and development, design and manufacturing management. In the past three months, three new staff have been added to the team, bringing the total number of staff to 35.
“Australia has some fantastic talent in the younger generation,” Mr Toth said.
“The top [management and engineering] team meets every 90 days and makes a 90-day plan for where we want the business to go, and everyone participates in direction of the company. I also have a business coach who I see once a week who assists in making me accountable for what I do – and everyone in the team is accountable for what they do.”
mLight has seen growth in turnover of around 15 per cent annually, and is targeting a similar figure for this year. The company’s ongoing research and development has been market driven, with the firm an early innovator in the shift from T5 and Compact Fluorescent Lighting towards LEDs.
“Ninety per cent of our product now is LEDs. I forecasted it would be around 40 per cent about two to three years ago, but while I did forecast it would grow it has been a surprise how much. LEDs are now the only product [generally] being specified by architects and engineers.
“Around 10 per cent are specifying fluorescents, but that is either because the customer has not caught up on the technology, or because of price.”
In terms of retrofit projects, Mr Toth said there were some question marks around the suitability of LEDs for retrofit projects where the existing fitting is retained. He said the firm’s R&D and testing has established that because LEDs are sensitive to heat, some may not match the sales pitch in terms of performance. There are also cases, he said, where the LEDs deliver energy efficiency at the cost of light levels.
“We decided not to design products for retrofitting, but to design to suit the LED innovation,” he said.
“There is a lot of quick and easy money being made retrofitting existing light fittings by changing lights over, but it [sometimes] doesn’t live up to expectations, all it has done is reduce power consumption by reducing light levels.”
The other issue he pointed out is that suppliers who claim the product has a 10 to 20 year lifecycle can generally have no proven basis for such a claim, as it will “take 10 years at least to find out if that is true”.
“We’re [also] finding LED is extremely susceptible to heat, so if the fittings don’t dissipate heat effectively it has a great impact on the light and the performance of the light. A lot of CFL tubes are being replaced with LED tubes, but we know through our R&D it is difficult to dissipate heat within the diameter of the fluoro tube.”
Imported products also come with risks, as there is no requirement for on-shore testing to back up manufacturer or sales agent claims. This, he said, has resulted in numerous cases of large retrofits finding that the LED products did not deliver the required light levels, so while they are saving energy, the light is dimmer and unsuitable.
The testing of all his company’s products is NATA-certified, and where possible, all components are sourced locally, with resilience built into the supply chain in the form of multiple suppliers for any one part, even multiple tools for essential tasks, so on-time delivery can be assured.
The LED chips themselves are sourced from offshore manufacturers, as there is at this point no Australian manufacturer.
Mr Toth said the only suppliers they use for the LED chips are those who have an onshore presence and the financial backup to be able to rectify any issue that may arise. Because the scale of many of mLight’s projects is quite large – including the majority of Aldi supermarkets, 150 Collins Street, and schools and hospitals – this degree of accountability is essential.
“Ultimately you’re only as good as your supplier. And if they fail you, you fail your customer.”
Mr Toth said that as a manufacturer, the products in the marketplace that perform poorly were a concern, as “ they are destroying the market and customer’s trust in the products”.
The key, he said, is to educate customers properly and ensure they are aware there can be issues.
The key was to think long term.
“As a business, we have long-term, strategic survival plans. There is a much brighter future for Australian manufacturing [than some think], and that is in design and innovation.
“We fit into a very niche market, and we understand that Australia is a limited market, so to be successful we need to be internationally competitive. It’s kind of like a wake-up call, if we are to have a viable future, we have to be innovative, be a lean manufacturer, compete from the point of view of have less wastage than other firms, and have the right, qualified people.
“Just by employing these principles your business is propelled forward.”