As Lighting Becomes a Main Revenue Source, How Can Contractors Make These Projects More Profitable?
According to a bi-yearly industry survey, lighting replaced power distribution as electrical contractors’ top source of revenue before the onset of COVID-19.
Between 2004 and 2020, power transmission and distribution fell from 69% to roughly 25% of contractors’ top line – as lighting grew to almost 30%. All told, 92% of contractors worked on lighting projects in 2019, with almost nine in 10 working on LED lighting and just over seven in 10 installing lighting controls.
Since the most recent survey, customers have shuttered and rearranged facilities to navigate the ongoing pandemic. Limiting and reallocating Capex spend will undoubtedly affect contractors’ distribution of projects.
However, as commercial buildings accommodate remote work and less foot traffic – and industrial facilities enforce social distancing while coping with unprecedented shifts in demand – lighting plays an important role in operational efficiency.
As customers limit their budgets, contractors can help them prioritize projects with immediate impact and proven ROI – like LED conversions.
But taking on more institutional and industrial lighting projects requires contractors to keep up with a range of technologies that influence energy efficiency, employee well-being and more.
Why Your Next Customer Probably Needs a Lighting Upgrade
Customers often call in a contractor to update an aging facility. Over half of commercial buildings in the U.S. were built from 1960 to 1999, and the average warehouse was 34 years old in 2018.
In fact, revenue across all contractors in the 2020 survey was split evenly between new construction and modernization/retrofit projects – at just over 30% and just under 30%, respectively. The rest came from maintenance, service and repair.
Many buildings have replaced retro-patterned carpet or updated production equipment. But a contractor will likely notice dim corners and warm-toned rooms, with deep cube cell or metal halide fixtures in the ceiling and toggle switches on the wall.
While outdated lighting is easy for a trained contractor to spot, a customer may not see the impact it has on their space.
Swapping fluorescent lighting for an LED solution with controls can cut energy costs by up to 80%1, and industrial buildings can save up to 87% by replacing HID lighting2. LED fixtures also last longer, reducing maintenance costs.
Perhaps more significantly, the right lighting also has the power to change the way people see and use a space. Providing adequate, consistent lighting for tasks throughout a facility can boost productivity by 10-50%3while reducing errors and improving safety. Poor visibility plays a role in many common workplace accidents – from nurses dispensing incorrect medication after misreading a label, to the 100,000 forklift accidents reported to OSHA each year.
Bright, well-lit spaces with a lower carbon footprint also enhance a company’s image as a modern, positive and environmentally conscious place to work. Visitors walk away with a good first impression, and employees feel better about their work environment.
The New Technologies Contractors Need to Know
Recent developments in LED technology seek to multiply efficiency gains by helping customers manage their spaces and energy consumption more effectively.
Lighting controls add intelligence to LED systems, allowing them to adapt according to patterns of use.
Although LED lighting cuts their energy bills, facilities may still be paying to light empty space. Controls add to the energy savings from an LED system by dimming or turning fixtures off when areas are unoccupied or daylight is available.
According to a study by the U.S. Department of Energy, replacing all lighting systems across the country with state-of-the-art LED products would save about 4 quadrillion BTUs of energy – equivalent to 1/5 of all energy consumed by the residential and commercial sectors in 2020. Installing these LED systems with controls would cut an additional quadrillion BTUs, saving about $56 billion per year in total.
Controls also help building managers gather data about occupancy over time and reorganize spaces to improve efficiency. As companies reimagine facilities to accommodate short- and long-term effects of the pandemic, the intelligence and flexibility they gain from smart lighting will prove especially valuable.
Lastly, controls allow buildings to adjust color temperature to mimic natural sunlight and complement circadian rhythms. Beyond making spaces more comfortable and functional throughout the day, recent studies indicate that blue-toned LED lighting can support better health.
However, only 0.2% of U.S. lighting installations in 2018 included connected lighting controls.
In the past, controls required expensive fixtures and new wiring. Now, contractors can offer a variety of affordable, reliable, wireless solutions that work with smartphone apps.
Many institutional settings can also benefit from tunable white solutions, which adjust the color temperature of lighting to fit different tasks. Tunable white does more than illuminate a space – it tailors the quality, color and intensity of light to promote focus or relaxation and create custom scenes.
As facilities work to reopen safely, some are also implementing ultraviolet (UV) lighting solutions to help disinfect occupied spaces.
Proven Process for Complex Lighting Projects
As technologies advance, it can be difficult for customers and contractors to keep up with the trends.
Adoption of LED lighting has grown significantly in recent years, with installations doubling from 2016 to 2018 across all applications. However, LED still made up just 30% of all general illumination lighting.
Given the clear cost savings and impact on occupant experience, why are so many facilities hesitant to flip the switch on better lighting?
When building managers enter the LED market, they get lost in a buyer’s maze. One-size-fits-all solutions lead them down the wrong path, or they get lost as choices multiply – leading manufacturers offer roughly 2 million SKUs. Codes and standards also vary across the U.S., and change often.
Distributors can help navigate this maze by starting with the purpose of a space, instead of the products available.
In most areas of a facility, lighting serves one of three goals: safety, productivity or prestige.
Each goal requires a unique strategy. Storage rooms need a cost-effective, functional solution to meet safety standards. Spaces that need to make an impact, on the other hand – like a reception area – can use high-quality fixtures to showcase architectural details. To support productivity in workspaces, lighting should be consistent and adjustable to match tasks and biorhythms.
Using site survey methods we can walk through a facility with a customer to identify their priorities – from ROI to maintenance – and the purpose of each space. Then, we can select the right solutions from the “three Rs” – relamp, retrofit or redesign fixtures – and put together a proposal that acts as a clear “renovation roadmap”.
By installing LED lighting and controls in new construction, contractors can help facilities run more efficiently from Day 1. However, a blank slate comes with its own challenges.
Our program brings together all our resources from design to install to make lighting projects more profitable and productive.
Starting with the purpose of each space, we can help you balance impact and cost to create a successful proposal and layout. Our sales reps have been trained in the latest design build products, techniques and software, and can bring technical experience to complicated jobs.
On complex projects requiring a variety of fixtures from multiple manufacturers, your supply chain can determine whether you stay on time and on budget.
Our project management services bring organization and visibility to your process. By coordinating fixture handling solutions, we can ensure electricians get the right parts at the right time, where they need them – with less packaging waste.
And as the industry continues to evolve, we can help customers stay ahead by providing education, training and samples of new products.
Contact us to learn how we can help you take on more – and more profitable – lighting projects. Just click here: Here's my calendar link to make finding time easy to schedule a 15 minute introduction call.