VOLUNTARY PROGRAMS HANDOUTS

FLUORESCENT LAMP BALLASTS WORKSHOP JUNE 20, 1996 COMMENT 0J
FLUORESCENT LAMP BALLASTS WORKSHOP JUNE 20, 1996 COMMENT 0J
FLUORESCENT LAMP BALLASTS WORKSHOP JUNE 20, 1996 COMMENT 0J
ack presidentof and chief

executive officer of Advance Jack ri®dy is the

TransformerCo., Rosemont, Ill., haslong 1^ been one of the industry's most vocal sell-appointed point

advocates of energy conservation. He

is spearheading an effort to launch a man in a crusade to generic public relations campaign

backed by the National Electrical

Manufacturers Association (NEMA) raise awareness

that would teach America's corporate

executives the economic advantages of among executives

energy-efficient electrical products. The

essence of Briody's "Re-electrify nationwide about

America" pitch is that replacing old y,

lighting systems, motors and other elec- the benefits of

trical equipment with state-of-the-art

products on the market today can save energy-efficient American businesses as much as $1 per

sq ft per year over an average product

products

By Douglas Chandler , Managing Editor

life cycle of 10 to 18 years. These newer

systems can pay for themselves in an

average of 2.5 years and return 40% of

the investment to the bottom line.

Widespread acceptance of this idea

will bring a bevy of benefits, he says,

incl udingim proved competitiveness for

end users via lower operating costs; reduced consumption of fossil fuels and

generation of pollutants from powergeneration; increased production of energyefficient products and creation of

production-related jobs; increased distributorsales revenues and profits; and

increased project activity for electrical

contractors.

Electrical Wholesaling caught up

with Briody to discuss the state of the

energy-efficient market today and the

prospects for his initiative.

EW. You have said the market for energy-efficientelectricalproductshasnot

lived up to its potential. On what were

you basing your expectations, and to

what extent has it fallen short?

JB: The percent of market penetration, based on the known installed base

of ballasts, lamps, motors, and related

products, as well as the Bureau of Census reported sales, 5s estimated at less

than 10% of the potential.

There is less than a 20% upgrade rate

for the estimated 6 billion sq ft of Green

Lights Program floor space committed by

corporate America and is a further indicator of the low level of upgrade activity.

EM What would you estimate the potential market for these products to be?

JB: $80 billion to $100 billion for lighting; $100 billion to $150 billion for other

electrical products.

EW: What impact do you expect a reduction of utility rebates for energy efficient products to have on the market?

JB: The reduction of utility rebates

will result in a lower level of retrofit and

upgrade activity, as utility rebates have

traditionally covered 30% to 50% of upgrade investments and cut the project

payback period by one-third to one-half.

Continued on p. 51

MAY 1996/ELECTRICAL WHOLESALING 3 3

FLUORESCENT LAMP BALLASTS WORKSHOP JUNE 20, 1996 COMMENT 0J
ENERGY UPDATE

Cont. from p. 33

LW What is your

appraisal of the

way electrical distributors havemarketed and sold

these products?

1B: Electrical distributors have played

the traditional role of supplying the products requested by the end user. The role

of educating end users to the high return on investment represented by the

upgrade of electrical products has been

provided by a limited number of ESCOs

and engineering firms that reach the

decision-makers in American business.

EW Are there things distributors

could do to improve the penetration of

these products?

J6: Absolutely. Distributors could significantlypenetrate their customer base

to deliver the value-added message of

energy-efficient electrical product upgrade and energy cost reduction.

A distributor, in my opinion, is the

best qualified player in the market to

provide the full ESCO package. He has

access to the products, to the manufacturers, to the contractor, and to the financial resources to make this work.

A distributor has existing relations

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with contractors, a warehouse to store

products, an ongoing business with

employees and support systems in

place. He could use those resources to

set up a separate, dedicated business

for end users he already sells a lot of

product to.

He has to look at it as a separate,

dedicated initiative to address this market. The people have to be trained differently and compensated differently

because these are slower, long-term sales.

LW Have you called on Advance

Transformer's distributors to change

their approach to the market? And how

have they responded?

JB: Yes. Response has been disappointing at best. A limited number of

our distributors have initiated independent ESCO-type activities, however,

with impressive results.

LW What do you mean by "ESCOtype activities," and what do ESCOs do

differently?

13: When we talk about ESCOs,

they're not selling lamps and ballasts.

They're selling a financial productthey're selling ahigh-return investment

in energy saving products and systems.

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investment does the ESCO order product, hire a contractor and arrange for

financing, if the customer wants it.

EW.. Why have electrical distributors

not taken advantage of this market?

16: They're not hungry. This is a pretty

successful industry. Maybe the profits

aren't as high and the margins aren't as

they might be, but they make a good

living. So the question becomes, 'How

do you get satisfiedpeople to take risks?'

You must appeal to the second generation, or to companies in need of

growth. Maybe there's a guy who wants

to own his own electrical distributorship some day and will look at this as a

vehicle to demonstrate his ability.

E1N: You 've said part of the problem

lies in not having people who can respond intelligently to interest from a

CFO and explain the energy-efficiency

story in financial terms. Will a generic

"Re-electrify America" message solve

the problem, or expose it to public view?

JB: A generic "Re-electrify America"

message to American industry will significantly increase demand for ESCOtype services and, in turn, the number

of distributors and contractors required

to satisfy the new demand level. q

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 FLUORESCENT LAMP BALLASTS WORKSHOP JUNE 20, 1996 COMMENT 0J