Electrical lighting equipment production in Turkey
In parallel with the technological advancements developed at full speed on a global scale, lighting systems are also in a process of radical change. There are revolutionary developments such as replacing traditional lamps with LEDs, using electronic components and smart lighting systems spreading from buildings to city lighting. Use of energy efficient lighting systems has also gained significant importance.
Findings of the Istanbul Chamber of Industry show that Turkey’s lighting production sector has noticeably expanded recently and has provided steady improvement of the value-added structure. The sector has a strong potential, especially in terms of product and quality standards, human resources and logistics infrastructure. If this potential is utilised in an effective way, experts believe that Turkey will be able to greatly improve its market position. Turkey’s lighting equipment sector is in need of a breakthrough in terms of technological development in order to catch up with the new global trends and remain competitive with Asian manufacturers in particular.
The advancement of the general lighting industry in Turkey depends strongly on the progress in the development of product standards and technologies, as well as on the needs and quality preferences of the public and private sectors creating the demand. Within this framework, the country’s lighting equipment industry complies with EU requirements and carries out its whole production according to the standards minimum. This grants Turkey superior competitiveness, especially in the field of general lighting equipment. The sector has the capacity for manufacturing almost all products up to exceptionally high standards.
Furthermore, a rapid transformation is being experienced in the lighting sector – products are becoming increasingly smart and automated. The Turkish general lighting sector follows this trend and currently it is focused on the production of LEDs, fixtures and devices including electronics with higher added value, rather than on the manufacturing of conventional luminaires. As stated, essential factors determining the development of the general lighting industry are the demand and quality preferences of the constructors in the private sector. However, the standards which the public applies and the regulations they have brought in the field of energy efficiency are considered to be more important aspects by the Istanbul Chamber of Industry. The general lighting sector has a great development potential, in terms of both quality and quantity, which will allow meeting the needs and demand of the private and public sectors over the coming years. Companies in the field need to focus on technology and product development, industrial design and engineering activities in order to adapt to the new EU norms, evaluate the potential of the domestic market and get a larger share in the export markets.
Another general trend in the global lighting industry is the decrease of demand for standard fixtures, and instead, the increase of demand for special and boutique luminaire types. Also, all fixtures are becoming electronic and software embedded. Therefore, the general lighting sub-sector in Turkey should also increase its competence in this field.
The automotive lighting sub-sector continues to show a trend of rapid development. Companies in the sector apply the most advanced manufacturing technologies and at the same time their R&D centers provide numerous technological innovations. While the sector meets Turkey’s domestic needs, it also exports to a significant extent.
The engineering infrastructure in the automotive lighting industry has also improved. Accordingly, product development activities are increasing. This allows Turkey to meet global expectations in terms of products and at the same time offer engineering services for lighting systems manufacturing abroad.
The Turkish automotive lighting sub-sector has at its disposal modern moulding solutions, plastic moulds and sufficient amount of advanced technologies for the production of reflectors. The country holds a highly competitive position in the field of component moulding for automotive lighting. Major players in the automotive lighting industry also contribute to the development of their suppliers’ facilities. Turkey’s automotive lighting sub-sector has high export potential and supplies a lot of the European automotive manufacturers. A significant limit for the automotive lighting sector is that the automotive production is carried out by foreign brands in Turkey and major decisions are taken by their HQs.
This sub-sector is the oldest and most traditional one in the Turkish lighting industry. However, it has lost some of its power, especially with Chinese competition. Today, the decorative lighting sector has turned to manufacturing high value-added, small-scale, boutique and designer products. The sector develops and produces project- and customer-specific lighting systems.
Over the last few years the decorative lighting sector has been increasingly focused on e-trade and cooperation with architecture designer companies. It has also started to integrate with the furniture industry. The growth in the furniture manufacturing also supports the decorative lighting sub-sector.
The commercial lighting sub-sector carries out boutique production and manufactures systems for architectural and corporate identity applications, which are often considered urban furniture. Companies in this sub-sector work on a project basis and in most cases offer engineering and contractor services as well. A separate project is prepared for each job and products are manufactured accordingly. Turkish commercial lighting producers are characterised by high capacity, broad experience and knowledge. They use mainly LED technologies and imported electronic components and parts. The software that is used for smart commercial lighting systems is predominantly foreign but Turkey is making progress in this field and is increasingly developing software locally.
Components and software
Turkey’s lighting parts and components sub-sector follows global technological development and is strongly foreign-dependent, especially in terms of new generation products. Conventional parts and components used in the general lighting subsector are being replaced by LED-compatible electronic elements. Competitiveness in the field of lighting and parts manufacturing is high and some Turkish producers are struggling to hold their market position. Technology development and production of critical components and parts should be realised in cooperation with major companies in this field.
Day by day, software is becoming a more integral part of the lighting equipment production industry. Nowadays, every lighting project or product requires software. The compatibility of software and parts to be used in the project or product is also of great importance. Each state-of-the-art fixture now features embedded software, which makes luminaires smart and allows their integration in automation systems. The structure which will meet the increasing software demand in the Turkish lighting equipment manufacturing industry has not been formed corporately yet.
Potential for development as a regional production centre
One of the most significant opportunities for Turkey is to become a regional production centre of the lighting equipment industry, as it has the necessary capacity, features and advantages. First of all, there is sufficient manufacturing infrastructure and experience in the country. The second factor is that product and quality standards are in line with EU regulations. The country has a fast growing domestic market potential. Close and neighbour markets also offer significant opportunities and there is sufficient logistics infrastructure, engineering services and human resources.
There are two major challenges that need to be overcome in order to utilise Turkey’s potential to become a regional production centre of the lighting equipment industry. The first one is the improvement of the country’s investment environment and conditions. The second challenge is to reach larger scale of collaborations in the sector and to provide capital accumulation.
The competition in the lighting equipment production industry is becoming more and more technology-focused. Therefore, technological development in the sector should be one of the priorities and targets of high importance. The first step is the integration of the products and manufacturing with the software and electronics sector. This requires the establishment of platforms which will enable the cooperation between the lighting equipment production industry and the software and electronic sectors in Turkey, as well as the development of partnership models in the terms of both product design and manufacturing. Institutional structures are needed for the development of advanced technologies and high value-added products in the lighting manufacturing industry. This encompasses the establishment of specialised engineering universities, research institutes and industrial design centres. Cooperation between the industry and these institutional structures should be ensured in the fields of education, technology and prototype development. Another opportunity is to acquire foreign companies with high technological competencies which will be able to contribute to technology activities.
Turkey’s lighting equipment production sector could also benefit from non-competitive collaborations among companies in the technology field. This would involve for example 8-10 companies in the sector, coming together and working jointly on technology development projects with the support of public institutions.
The lighting equipment sector is becoming more and more dependent on software. The industry needs software products which are compatible with different features and functions. In order to facilitate this, Turkey needs to establish a platform where representatives of both sectors can meet and discuss each others’ needs and requirements. Secondly, software engineers should be acquainted with the specifics necessary for lighting systems and joint software projects should be carried out with the support of the public. Thus, a pool of software developers to work in or to serve the industry should be created.
Export and domestic market potential
Turkey’s lighting equipment production industry has a significant potential for export. The sector has shown its advantages in terms of small-scale manufacturing of specialised and high value-added products and small shipments. Therefore the industry should focus on the export of small-batch solutions for decorative lighting and high value-added equipment and devices in the general lighting category. In the field of automotive lighting, Turkey should also aim to increase the production and export of high value-added and advanced technological products. The Istanbul Chamber of Industry recommends that the country’s lighting equipment sector should focus on export of project-specific solutions and prioritise working in close partnership with the Turkish construction sector.
The domestic market for electrical lighting equipment also offers significant growth potential. Assessment of this potential is particularly closely related to policies and projects to be implemented by the public. According to the Istanbul Chamber of Industry there are 4 scenarios for the development of the domestic market over the next 3 years. In the first scenario, Turkey’s domestic market for lighting equipment is estimated to grow by 3% annually, reaching USD 2,29 billion in 2023. In the second scenario, the Turkish domestic market is estimated to grow by 5% annually, similar to the 2013-2018 period. This growth will allow the domestic market size to reach USD 2,47 billion in 2023. In the third scenario, it is assumed that the public sector has tightened the minimum requirements for lighting equipment in line with the energy efficiency targets and has imposed obligatory systems renewal, thus creating an average annual market growth of 10%. With this growth the size of the domestic market is expected to reach USD 3,12 billion in 2023. In the fourth scenario, it is assumed that the public sector has set ambitious energy efficiency targets and has implemented smart city projects focused especially on the transition to LEDs, which will lead to a 15% average annual market growth. In this way, the size of the domestic market will reach USD 3,89 billion in 2023.
LEDs market development
In 2013, Turkey initiated an ambitious project to replace street lights with LEDs in order to decrease the energy consumption by as much as 75% and to contribute towards balancing current deficit of the country. Since then, the country’s lighting market has been witnessing a huge shift from traditional light sources to non-conventional LED products. Although the product manufacturing companies still have to rely heavily on imports for LED supply, the market is witnessing high growth owing to government support in terms of favourable import policies for LED chips. A similar trend has also been witnessed in other LED product markets as well, where LED displays are replacing the traditional displays and LED sign boards are replacing conventional boards, changing ways the marketing is being done.
According to a study by Kenneth Research, over the next two years the Turkish LED market is expected to grow at a CAGR of 15,6% reaching USD 344 million by 2022. The lighting segment is expected to contribute the largest share towards the growth whereas the highest growth is expected from signs and boards segment which is expected to benefit from technological development, decreasing LED prices and the industrial development of Turkey’s economy.
The Turkish market is not only focusing on building the domestic demand for LEDs but is also eyeing to cater export markets in the European region in order to fill the void created after the ban of halogen lamps import by the European Union. The LED products manufacturing capabilities in Turkey are constantly improving. Many international players have established their manufacturing set-ups in Turkey in order to reap benefits of growing market opportunities. Some of the prominent players in Turkey’s LED market are Osram, Philips, General Electric and Metsan Lighting.
There are a few organisations facilitating the development of Turkey’s lighting equipment market. AGID – the Lighting Equipment Manufacturers Association was established by 19 lighting fixtures and components manufacturers in 1997. Its goals include creating the identity awareness of the sector, developing individual and collective connections between the sectoral representatives, enhancing institutional/academic connections through joint efforts and agreements, completing the process of compliance with international standards, representing Turkish manufacturers at international markets and protecting consumer rights.
Another major organisation, ATMK (short for Turkish National Committee of Illumination), supports national and international scientific research in the industry. It was established in 1995 and is one of the members of the Commission Internationale L’Eclairage (CIE). The committee organises symposiums every two years, and aims to bring together scientists, designers, professionals and producers. These events facilitate the exchange of information and knowledge between parties in the industry, as well as support the development of the Turkish lighting sector.
Since 2002, AGID and ATMK have regularly organised the international lighting and electrical equipment trade fair IstanbulLight. The event’s 12th edition, which was held between 18 and 21 September 2019 at Istanbul Expo Center, brought together 7757 visitors from 77 countries and 220 exhibitors. Having managed to grow 12% on square-meter basis, IstanbulLight will once again gather the global lighting sector under the same roof on 7-10 April 2021.
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