Aurora firm lights up with potential for growth - 6/20/11
By CHUCK SODER
4:30 am, June 20, 2011
Ellis Yan wants his light bulbs to replace Thomas Edison's.
Mr. Yan, CEO of Technical Consumer Products Inc. of Aurora, said he has spent the past four years preparing for 2012, when the federal government will begin phasing in a ban on traditional incandescent light bulbs.
Starting Jan. 1 it will be illegal for companies to make or import 100-watt bulbs. The same thing happens to 75-watt bulbs on Jan. 1, 2013, and 40- and 60-watt bulbs will join them on the banned list a year after that.
Mr. Yan wants to make sure consumers replace many of those bulbs with compact fluorescent lamps made by TCP, one of the world's biggest CFL manufacturers.
Hence, ever since the federal government passed the Energy Independence and Security Act of 2007, he has been ramping up his company's production capacity and flying across the country to educate high-volume bulb buyers about the law.
“We've been preparing since then for this moment,” he said.
The new law is one reason why TCP later this year plans to start producing CFL bulbs at a 100,000-square-foot warehouse it owns behind its headquarters on Campus Drive.
By Thanksgiving, the company expects to have 22 to 25 employees cranking out the coil-shaped lamps, which are both more expensive and more efficient than traditional incandescent bulbs, according to Mr. Yan and Jim Crowcroft, vice president of marketing for TCP. The company eventually could add more lines and shifts at that facility, Mr. Yan said. He declined to how much TCP will spend on the project, but he noted that the state of Ohio and the federal government rejected TCP's requests for incentives.
“We funded it ourselves — everything,” he said.
Made in the USA
The new manufacturing workers would make up a relatively small portion of the total headcount at TCP, which employs about 7,000 worldwide, including about 200 in Northeast Ohio.
Regardless, TCP's plans to start a CFL manufacturing line in the United States represents a big change, not only for the company, but for the CFL industry as a whole. Founded by Mr. Yan, TCP started making CFLs in the mid-1990s, back when making the bulbs required workers to bend the glass by hand. So the company made them in China, where it has three factories. Other manufacturers took a similar route: Almost all CFLs are made overseas.
Since then, however, automation technology has made it possible to make more bulbs with fewer people — one reason TCP is able to start making CFLs in the United States.
They'll still be more expensive to make, but Mr. Yan, a Chinese immigrant, said the project still makes sense. The U.S. government, which prefers to buy products made in the country, is one potential customer, but consumers in general will pay slightly more for products if they know they are made in the United States, Mr. Yan said.
And there will be a whole lot more consumers as the Energy Independence and Security Act of 2007 is phased in over the next few years.
“This is huge in terms of light bulbs,” he said.
In addition to preparing to start the new line, TCP has been working to increase total production capacity at its Chinese plants, which decreased during the recession but since then has come back up, Mr. Crowcroft said. The company can make about 1 million bulbs per day and is working to increase that number, he said, declining to go into more detail. The company lately has been funneling all of its profits back into the business to make sure it's ready for when the law goes into effect, Mr. Yan said.
“We believe we are ahead of everybody else in preparing for EISA,” Mr. Yan said.
Mr. Crowcroft agreed.
“We believe we're in the leadership position. Not "a' leadership position, but "the' leadership position,” he said.
Efficiency experts
Mr. Yan would not say how big of a piece of the incandescent bulb market he expects TCP to take, nor would he give sales figures. Mr. Crowcroft described recent sales growth at TCP as “moderate.”
Today, CFLs account for about 25% of all light bulbs sold, said Joseph Higbee, director of communications and marketing for the National Electrical Manufacturing Association of Rosslyn, Va. The bulbs are 75% more efficient than traditional incandescent bulbs, according to information from the association.
Consumers also will be able to replace standard incandescents with halogen incandescents, which are about 28% more efficient than their predecessors, or light-emitting diode bulbs. Companies just recently have begun selling LED bulbs designed to replace standard incandescents. Among them is General Electric Co., which developed its bulb at its Nela Park campus in East Cleveland.
LED bulbs, which can cost $20, $30 or even $40, are expected to eventually become a serious competitor to CFLs, which typically cost a few dollars each.
The differences between the three technologies go beyond price and energy use, so each likely will take a piece of the market that belongs to incandescents, Mr. Higbee said.
He declined to say which technology will win the battle.
“As far as where the market will go, we'll see,” he said.
Full Story can be found here Crain's Cleveland Business