With sales and earnings in a slump, Signify is reorganizing into four sales divisions, splitting out OEM as a separate group while continuing to operate three end user units — one each for professional and consumer LED, and the other for conventional lighting such as fluorescent.
The restructuring includes further layoffs in the Dutch company’s central organization, a process that began this quarter and that Signify hopes will save it €200 million.
“The changes will be implemented through 2024, with the majority achieved by Q2, and are subject to proceedings with Signify’s social partners, depending on local legislation,” Eindhoven-based Signify said.
OEM operations have been a particular trouble spot for Signify in recent quarters. The new focused OEM division could help the company figure out how to staunch OEM financial difficulties which have dragged down sales and earnings at other groups of which OEM has been a part, such as the professional and consumer divisions.
Signify’s OEM business consists of components such as LED drivers, ballasts, connectors, and modules, which other vendors build into luminaires. The company has three key OEM brands. Advance includes LED drivers, modules, and ballasts. Bodine includes emergency LED drivers, fluorescent emergency ballasts, emergency lighting inverters, and generator-compatible products to turn lighting fixtures into emergency lighting sources. Philips includes drivers and modules, with a focus on connected lighting solutions.
In Signify’s business structure, OEM does not include “white label” bulbs (see note below).
Signify makes most of its OEM products at facilities in the same regions where OEM customers sell or use the luminaires. (An earlier version of this story stated incorrectly that Signify partner Klite is heavily involved in OEM manufacturing. Again, see the clarification below).
With the new OEM division, Signify appears to be paring back OEM activities to a certain extent.
“For OEM, nothing is discontinued but there are some changes — where the customer is and remains an OEM customer, we will keep on serving them with lamps or luminaires where needed, via the OEM sales team,” a spokesperson replied when LEDs Magazine asked whether the company is pulling back.
The spokesperson said that some OEM products will transfer to other groups. As an example, the EvoKit line of LED replacements for fluorescent luminaires is moving over to Professional, he said.
The organization chart appears to keep the Professional, Consumer, and Conventional divisions the same as they were, except for name in two out of three instances. “Professional” is the new name for the Digital Solutions division, selling LED lighting products and connected lighting to the professional sector. Likewise, “Consumer” is the new name for the Digital Products division, selling LED lighting and connected products including Hue to the consumer sector.
“The Professional business will offer LED lamps, luminaires, connected lighting systems, and services to customers in the professional segment,” Signify said. “The Consumer business will offer LED lamps, luminaires, and connected products, including Philips Hue and WiZ, to customers in the consumer segment.”
The new names echo the past, especially “Professional”, which is the name Signify used until January 2020, when it changed the name to Digital Solutions. In that earlier reorganization, Digital Products (now “Consumer”) replaced a combination of “Home” and “LED”.
There is no change to the name of the Conventional group.
In both the 2020 restructuring and in the most recent one, CEO Eric Rondolat said the new organization heightens customer centricity.
In the new regrouping, Professional, Consumer, and OEM will have a customer focus, while Conventional will have a technology focus, he said. Conventional technologies like fluorescent are on the wane across the lighting industry.
Rondolat has been indicating since at least July that structural changes would be coming. The reorganization, announced late last week, delivers on that.
He has also been indicating that cutbacks would be continuing in the central organization.
The spokesperson declined to say how many jobs will go.
“We will further adjust and reduce our central organization,” he told LEDs. “We are not sharing a specific number of people affected, but we have been consistent in communicating that we need to bring our non-manufacturing costs to within the range of 25–29% of sales and we are committed to maintaining that ratio moving forward.”
Signify has been slimming down centrally since 2021, although not necessarily continuously.
Although the company is also planning to close some factories, those closures are not specifically part of the regrouping, the spokesperson noted.
EDITOR’S CLARIFICATION: An earlier version of this story stated that “Signify manufactures many of its OEM products at factories in China via its joint venture partnership with Zhejiang Klite Lighting Holdings Co., Ltd. (Klite).” This is not true under Signify’s classification of “OEM.” While the Klite/Signify partnership does indeed make “white label” lamps branded for other vendors, Signify does not categorize this as “OEM.” After our story ran, Signify clarified for us that this activity resides within the Consumer division, and that Klite makes very few of Signify’s OEM products. Signify makes most of these at sites closer to the OEM customer. LEDs Magazine apologizes for the initial mix-up, in which we applied a broader definition of “OEM” that includes the lightbulbs. Signify’s white label lamp business is believed to be sizeable. The company declined to share numbers. We await word on whether Klite/Signify also provide products other than bulbs on a “white label” basis.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
*Updated Dec. 15, 2023 12:30 PM for Signify distinctions on OEM and Consumer division products and Klite manufacturing partnership.
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