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Excerpts from the 2008 Lighting Survey

As a precursor to our annual State of the Industry reports, this 10th annual Lighting Survey already shows evidence of a recessionary 2008.

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This survey focuses on lighting. Yes, it provides sales data as well, but such information is more of a sidebar. However, because this survey was posted on ST’s affiliated website (www.signweb.com) in mid January (and we asked for year-end 2008 sales results), the bad news is already trickling in.

Although the study doesn’t examine overall sales trends, it asks if the respondents’ electric-sign business changed from 2007 to 2008. As shown in Table 2, all five groups individually suffered a decline in their electric-sign sales in 2008, with a cumulative average loss of 7.5%. Never previously had a collective decline been evident.

Otherwise, in terms of sign-illumination specifics, LEDs once again are used more often than neon (last year was the first time), but the gap has narrowed (Table 4). Fluorescent lamps remain unquestionably the most popular form of sign illumination.

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Last year was the first time this Lighting Survey obtained all of its results via an online survey. This year’s results markedly differ because, although four respondents reported sales of more than $5 million, only one answered more than a handful of questions.

Here are some highlights:

• More than two-thirds of all neon production is being outsourced, the second-highest total this survey has seen (Table 6). The percentage of neon sales related to repair/maintenance is at an all-time high.

• After having increased (and tripled) over the past four years, the percentage of LEDs used for border tubing dropped by more than half from last year (Table 8).

• Also in terms of LED usage, white has surprisingly surpassed red with its highest percentage of use (Table 9). Simultaneously, the percentage of red LEDs is the lowest this study has seen.

• For the first time, for every color, LEDs are preferred over neon (Table 10).

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• For the second consecutive year, when choosing between neon or LEDs, “reliability” and “durability” are the two most important factors (Table 11).

• The percentage of respondents who reported using “more neon” in 2008 (3.7%) is the lowest ever (Table 12).

The respondents

As noted, all of this year’s results were gleaned from responses on Signweb. The 121 responses are essentially the second highest in the past eight years (there were 122 responses in 2002). Unfortunately, more than half (55%) didn’t disclose their sales volume, which waters down some results. Last year, 50% failed to do so. Consequently, we condensed last year’s seven sales-volume categories down to four.

Over the years, respondents’ average sales volumes have fluctuated wildly, and this year’s $2.5 million average (Table 1) is the second-lowest total in the past five years, but higher than any for the first five years. Representation in our first three sales-volume categories is remarkably similar.

As noted, the average respondent reported a 7.5% decrease in electric-sign sales from 2007 to 2008 (Table 2), whereas no prior year had reported less than a 3.4% increase. The 25 companies that reported a decline averaged a 27.7% decrease, while the 15 companies who enjoyed sales-volume increases averaged a 17.9% rise. Generally, the smaller the company, the less likely it suffered a decline, and the more likely the decline was a smaller percentage.

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Illumination rumination

Table 4 is perhaps this survey’s most interesting table because it has chronicled the infusion of LED technology. Last year marked the first time LEDs overtook neon in terms of usage, and decidedly so, at 30.2% “marketshare” for LEDs and 22.8% for neon, both of which were an all-time high and low. This year, LEDs maintained their lead, but the margin shrunk in half from 7.4% to 3.7% (28.2% versus 24.5%). The undisputed leader, fluorescent lighting, claimed its smallest percentage in six years at 38.9%, which is still a hefty double-digit preference.

We wish we knew more about the “unknowns,” because they substantially prefer neon over LEDs (29.9% versus 18.7%). Conversely, for the first three sales-volume categories, LEDs are used more than twice as often as neon.

Even at a low 3.6%, incandescents had their best showing in five years. HIDs tied for their worst showing ever, at 1.8%. Fiberoptics continue on life support.

Neon news

The most telling statistic in neon usage is a more than 2:1 ratio of outsourced neon to inhouse production (68.9% to 31.1%), the second highest percentage ever (Table 6), even though last year’s percentage was even higher (74%). The ratio of neon for exterior use versus interior use (nearly 4:1) is middle of the road over the past decade.

Likewise, the percentages of neon being used for channel letters (68%) and cabinet signs (8.3%) approximate the average for the past seven years. Border tubing’s 13.5% is its third lowest in the past decade, while art/sculpture’s 5.8% is its third highest.

Neon repair/maintenance, as a percentage of neon-related business, is at an all-time high of 36.7% (Table 6), which simultaneously means newly created neon, as a percentage of the neon business, is at an all-time low (63.3%).

Still LEDing

Most notably, LED usage for border tubing has declined, after four years (and a tripling) of constant growth. This year’s 7.5% is less than half of last year’s 15.4% (Table 8). This is countered by an approximate 7% increase in LED usage for channel letters.

The 88.3% of LED use outdoors is approximately average for results over the past six years.

The neon/LED debate

The last three tables examine the choice between neon and LEDs. Table 10 specifically addresses color. This year represents the first time LEDs are preferred over neon for all four specific colors, as well as “Other.” Last year, neon barely held sway for green, but the scales incrementally tipped the other way this year. Similarly, overall, LEDs are preferred over neon by a 6:4 ratio. Last year was the first time LEDs overtook neon.

The preference for red LEDs over red neon is at an all-time high at exactly a 2:1 ratio. The same holds true for white LEDs, which overtook white neon for the first time last year. For “other” colors (two people specified yellow), LEDs overtook neon for the first time.

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Click here to purchase the March 2009 print edition with the complete report.

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