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August 2011 - Special Edition - Rare Earth Oxide Crisis
Update
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What is the Rare Earth Oxide Crisis that is affecting lamp
pricing?
Rare Earth Oxides are
a critical component in the making of the phosphors used in linear and
compact fluorescent lamps. China
controls the over 95% of the global market for these Rare Earth Oxides.
The Chinese Government has imposed taxes for environmental clean-up and
imposed limitations on the amount of oxides available for export. The
combination of limited production and imposed taxes to mine and produce
these elements has led to unprecedented cost increases that started in
January of this year. In addition, these metals are used in Smart
Phones, TV's, hard drives, microphones, batteries, computers, cameras
and more!
Another complicating
factor is that varying phosphor mixes at the individual product level
affect the amount of increase for that product differently. It is not a
flat increase across all products, but rather a variance by each
product depending on lamp color, lamp tube diameter, and lamp wattage.
As a result, every
major lamp manufacturer (GE, OSI,
Philips, TCP, Maxlite, etc.) has announced scheduled
price increases that will begin on July 5th and will likely continue at
monthly intervals for the foreseeable future through 2012. The
manufacturers have stated they will do all they can to manage and
control the price increases by tying them only to the inflationary
pressure associated with the rare earth elements.
FSG is committed to
helping our customers best navigate these volatile times. We are
investing in more inventory to ensure that you are not affected by the
scarcity and we will only be passing on the percentage cost increase on
a SKU by SKU basis as they occur.
We have also equipped
your account representative with all of the industry data regarding
this matter and they will be your best resource for staying current on
the situation, as well as how to best manage your lighting products to
minimize the impact to your business
Backorders are
occurring and quantity limits are being put on distributors by the
manufacturers as well. FSG Inventory Control has been
working closely with all of them to keep the highest amount of product
they will allow us. This continues to change and will until the
market stabilizes and the crisis lessens.
As always we
value your business and will do all we can to continue to earn it
during these challenging times.
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How
much is the Expected Price Increase?
All major manufacturers
(General Electric, Philips, Osram/Sylvania) and secondary manufacturers
(Eiko, Halco, TCP, and many more) have announced "rounds"
of price increases until the market stabilizes. Average
increases look to be:
- ROUND 1 - August - Average of
25% Increase
- ROUND 2 - September - Average
of 13% increase
- Monthly Increases to follow until market
stabilizes - into 2012.
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Which lamp families are
affected?
Rare Earth Phosphors are you
used in the following lamp families:
- ALL Linear Fluorescents - all lengths - all types
- Screw-in Compact Fluorescents
- Plug-in Compact Fluorescents
- Higher CRI Fluorescents effected even more
- Some Incandescent & Halogens
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Effect of the 2012
EPACT Lamp Legislation:
In 2012, many of the commonly
used lamps will be discontinued as new regulations come into effect to
improve energy efficiency and promote newer technologies. These
lamp technologies include newer, more efficient infrared halogen lamps,
LED products, compact fluorescents, higher lumen/energy saving
fluorescents, and many more.
While this is
a positive measure being taken to improve overall energy efficiency, it
unfortunately has DOUBLED the manufacturers demand for these Rare Earth
Phosphors as higher amounts are needed in higher efficiency bulbs.
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What can you do to
minimize the increase?
While FSG is doing our best to
buy-in inventory before the increase, the industry in general has been
limiting these large scale purchases to stop "hoarding" of
supply. Therefore your FSG representative can assist in analyzing
your program and offer energy saving and money saving options.
While some of these options
might have a higher acquisition cost, the savings per year are usually
more than the up charge.
For Example:
- If you switch to an F32T8-28 Watt Version, the up
charge over a standard F32T8, could be anywhere from .50 - 2.00
depending on the lamp.
- The Energy savings is $2.00, so you will either
save money or break even
- The new lamp will have a longer life, therefore
reducing maintenance costs by up to 50%.
These are the types of analysis
we can do for your facilities and your overall lighting program.
FSG is dedicated to minimizing the impact this crisis will have on your
bottom line. FSG can assist in reviewing your entire portfolio,
and analyze the impact this will have, while offering solutions to
minimize the impact and maximize savings.
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With such volatility in the market, how do you stay
informed?
This international crisis
has been covered by the Wall Street Journal, New York Times, National
Geographic, Financial Times, and more.
FSG has taken this opportunity
to continue to inform our customers as we accumulate the
information. We have dedicated a section of our website to post
articles, news releases, and letters from the manufacturers for our
customers to review.
This site is updated in real-time
as we receive them, so check back often.
Click on the link below:
FSG Rare Earth Update Page
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LED Flood Lamps available in PAR 20, PAR 30, PAR38, MR16, A19
and more!
- Save 90% in Energy
- Eliminate Maintenance for up to 7 years!
- Reduce Heat!
- 6 month payback
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NAUTICA USA
Ceramic
Metal Halide Lighting Retrofit
On-Bill
Financing
In 2 stores in California,
Nautica utilized the on-bill financing program offered by the
utility. By utilizing Ceramic Metal Halide technology track
heads, they reduced the amount of track heads in the store. Couple
this with the longer lamp life of CMH at
15,000 hours, they reduced maintenance by 87% and improved the overall
look of the store!
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DID YOU KNOW?
For 2011, FSG Lighting is Ranked in the top 1% in the
country.
FSG Lighting
Electrical Wholesalers Magazine -
FSG RANKED #61 out of 6500 lighting & electrical
distributors nationwide
FSG Electric
EC&M Magazine - FSG RANKED #18 out of tens of
thousands of electrical contractors nationwide
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