Challenges Facing the Lighting Maintenance Contractor: What to Consider

By Jacob Wright

The following article is based on Graybar’s May 2022 Market Insights report. LM&M simply highlighted points most relevant to the lighting maintenance contractor. A link to the Market Insights report can found in the original version of this issue.

The last few years have been marked by unprecedented challenges and disruptions. In 2020 and 2021, the COVID-19 pandemic was responsible for much of the struggle businesses experienced. Now in 2022, while COVID still lingers, the Russian-Ukrainian conflict is at the forefront of global supply chain disruption and uncertainty. These geopolitical challenges are exacerbated by high inflation, labor shortages, and rising commodity prices, forcing many businesses and contractors to make tough decisions.

Understanding the issues facing our industry is critical in order to adapt and plan for the future in a way that sets a business up for success. Below is a detailed breakdown of the issues mentioned previously.

Labor Shortages

• 650,000 more workers are needed in 2022 than 2021.

• More jobs available than people to fill them.

• Port closures continue to happen, furthering the backlog of containers. This is mainly due to the labor shortage and partly due to some COVID outbreaks in China leading to shutdowns.

• In 2023, it is predicted the industry will need to bring in 590,000 more workers on top of normal hiring to meet continued demand.

Raw Materials

• Russia is a big exporter of many critical raw materials commonly used in our industry, particularly copper, which is vital to the semiconductor market. Sanctions against Russia and supply chain disruptions leads economists to predict that demand will decrease for copper-related products. Russia also supplies 35% of the United States’ palladium, another ingredient in making chips.

• Ukraine produces nearly 50% of the world’s supply of neon, a key ingredient in making chips, and has stopped its operations. The semiconductor market was already seeing a severe shortage; the conflict has made it worse.

• Raw material scarcity can potentially lead to panic buying and inflated demand that causes more supply chain disruption.

Commodity Prices

• High inflation, caused by numerous factors including raw materials and labor, has led to an increase in commodity prices.

• All of these challenges have created a market where demand is high, but supply is low, leading to price increases.

All industries are experiencing challenges to some degree, especially the lighting industry given the prevalence of semiconductors in LED lighting. So far, our industry is showing resilience and adaptation to the global economic climate, with many companies reporting strong quarter results in 2022 and improvement over 2021. Announcements regarding expansions, new products and collaboration continue, giving reason for optimism in the future. For this trend of adaption to persist, businesses and contractors must remain vigilant and aware of the issues pressing our industry on an individual and holistic level.