Zumtobel Lighting is one of the premier architectural lighting companies, and architects and lighting designers worldwide have always looked to the manufacturer for its high-end luminaire solutions. Yet its presence in different markets has been somewhat of an anomaly, with strong brand recognition and market share in Europe and the Middle East, but not in Asia and North America. Entry and staying power in North America, particularly in the U.S. lighting market which has the added complexity of the UL process, is a challenge faced by many European lighting manufacturers. But, if everything goes according to Zumtobel’s latest initiatives, all that is about to change.
Since spring 2014, Zumtobel has been quietly working to restructure its operations in the Americas, with a particular focus on the United States. Kevin Maddy, a veteran of the automotive, aerospace, and semiconductor industries, joined the company in April 2014 as CEO of the Americas Region. Maddy has spent the past 16 months streamlining the company’s U.S. operations and marketing infrastructure in an effort that Maddy describes as a “relaunch” in the Americas. The company’s commitment to these efforts is evidenced by several key moves. The first was hiring Maddy and revamping of the structure of the sales team, which now includes a Global Key Accounts team in New York and Dallas in addition to the International Projects Group. Second has been the establishment of dedicated marketing and the reassignment and relocation of Nikolaus Johannson, formerly head of brand communication at the company’s headquarters in Dornbirn, Austria, to New York to take on a new role as marketing director for the Americas. Third, the company has made a serious investment—$10 million—to expand operations in North and South America. (Zumtobel employs 300 people in the Americas.) This move required board-level approval by parent Zumtobel Group and should dispel any concerns regarding comments made by chief executive Ulrich Schumacher in April 2014 that left it unclear as to whether or not the company would pull out of the U.S. market entirely. That is not the case.
In addition to the $10 million investment, the company has received a $1.3 million grant from the Empire State Development Corp., which will allow Zumtobel to make upgrades and improvements to its Highland, N.Y., manufacturing facility.
Zumtobel’s renewed focus on North America and commitment to the lighting specification community has already started to pay off. Delivery performance and product pricing, two areas of regular concern for specifiers, has been improved significantly thanks to streamlined production in Highland. (Zumtobel employs the Toyota Production System, or what’s referred to as “lean manufacturing” where inventory components are tracked and stocked depending on their lead times.) According to Maddy, orders are now being filled with a 98 percent on-time delivery rate (up from 70 percent), lead times for standard product lines have been cut in half (from eight to 12 weeks to four to six weeks), and the company has implemented a 10-day quick-ship program.
And the company’s commitment to the Americas is not limited to just North America. Zumtobel has opened it’s first-ever office in South America in Santiago, Chile. The Latin American market has the particular benefit of being able to use both North American 110V products as well as European 244V and 277V systems, which can easily be shipped from either the Highland, N.Y., facility or the company’s European factories. The Santiago office is led by managing director Pedro Rego and a multilingual (Spanish, Portuguese, English, and German) team is in place. The Latin American sales team has additional support from the Key Accounts Team in Dallas and New York along with the International Projects Group in the U.S. and Austria.
Zumtobel has clearly reoriented its course to not just exist in the American markets, but to be a major player. The level of monetary investment, coupled with staffing and marketing efforts suggests that the company is very serious in its commitment to the lighting design communities in the U.S. and Latin America.
In the following interview, Architectural Lighting sat down with CEO Kevin Maddy for his take on where Zumtobel Lighting is heading.
Where do you see the lighting industry heading?
There is a convergence happening in the professional lighting market where you have lighting, along with HVAC and building controls, moving from legacy standards and proprietary implementations to Internet-based standards. To date, Europe has been ahead in this area with digital standards such as DALI, while the U.S. has remained mostly analog-based, but now it’s catching up. Lighting is turning into more of system and for the upcoming generation of lighting controls in both markets we see alignment through Internet-based connectivity.
What role will Zumtobel Lighting play?
Zumtobel is embracing this change as it relates to faster installation processes, lower costs of ownership that actively drive standardization, and building a network of partners to innovate new products to take lighting beyond illumination.
What do you mean by “lighting beyond illumination”?
A system integrated approach.
Is the lighting audience ready for this?
Do you mean now, or in two years? Now, I don’t think so, but if we had something in the market that worked and was ready and serviceable it would be different. In time this will become more accepted across the industry.
As a company, how does Zumtobel communicate its message at a global scale and at the same time to local markets?
Zumtobel has a brilliant global marketing strategy but that hasn’t necessarily transferred locally yet. We’ve brought on experienced marketing professionals who will now work in collaboration with the global teams at Zumtobel to enhance the brand image and implement marketing, which serves local needs, all while incorporating the world-class marketing of Zumtobel that we see in Europe.
How do you communicate Zumtobel’s message to your audience in North America and particularly the U.S?
The past 12 months, I have been going door to door to establish support and develop relationships. Ulrich Schumacher has also invested time here, so that he can get a firsthand view of the market as well as to communicate the Zumtobel worldwide vision. We have a great global team in place, and I am very encouraged about Zumtobel’s future.
Do you think your U.S. audience has a comprehensive understanding about all that Zumtobel does beyond just product development, i.e. symposiums, research, etc. … ?
Not at all. Much of the North American audience has no idea what a gem Zumtobel is in this regard, particularly the younger specifiers who are vital to our success. The good news is that we know it and are working on it. Raising awareness is a key initiative for 2015.
Why do you think non-U.S. lighting companies find the U.S./North American market so difficult to break into and work in?
They fail to understand and adapt to the market. The North American market is truly different in that we have complicated certification requirements, many different ceiling systems than in other regions and very demanding specifiers, just to name a few reasons. In addition, sustainability is a key issue throughout the world, but in North America, [people] also want to understand the economic return benefit as well. Even branding, the way you communicate, is different than in other parts of the world.
How do you distinguish between an international company and a global company?
International companies adapt their designs and services to the international marketplace by modifying the product they design to fit other regions. Global companies integrate local market feedback into their business platforms from the beginning through the entire value chain. It’s a fundamentally different way of operating.
As Zumtobel seeks to redefine its North American presence, do you see a time when the company will exhibit at Lightfair on a regular basis?
Perhaps, at some point. Our first goal is to reach specifiers and to that end we are experimenting with different ways of reaching people via mobile and set locations. This past year, we shipped a booth to New York, Boston, Los Angeles, and San Francisco for special customer events. We also invited customers to Europe this past April to experience the Zumtobel DNA and see what new luminaires are in the pipeline. I like this way of presenting products because it’s more personal, it allows you to enhance your relationships and to gain feedback for the present and for the future. The voice of the customer is vital.
Do you see a time when Zumtobel might relaunch a New York City showroom or bring the Lichtforum model to the U.S.?
We are currently looking for space, and showroom designs are in the works. I am uncertain of timing but I do acknowledge that we need a medium to showcase our products and somewhere for our specifiers to create in collaboration with us. As I mentioned, we are exploring set locations as well as mobile opportunities, and even possibly something at the Highland, N.Y., facility. We also need to make sure we support our customers on the West Coast given that this is a growth area for us.
How is Zumtobel’s sales force set up in the Americas?
While we have made many changes in our sales force setup, our way to market in the Americas follows the market structure common to this region: agents. However, we are working to make this an even more efficient and collaborative process by focusing on urban areas and on agents that make the best use out of the potential of our brand. We are strengthening the sales process through direct marketing and direct specification support when required. We have added a Global Key Accounts Team in New York and Dallas whose focus is on retail and industrial applications and the support of customers who have multiple facilities in the Americas as well as overseas. We have also added to our International Projects Team for those specifiers in the Americas whose projects are outside of the region, such as Africa and Asia.
On the domestic front, we have added resources on the West Coast and added to our Lighting Applications Team who is able to provide specifiers with technical assistance. This team also has the capability and capacity to tap into the design talents at our headquarters in Austria and I see that kind of collaboration between Zumtobel’s internal groups continuing.
Regarding the investment that Zumtobel is making in North and South America, has this alleviated concerns that were expressed by the parent company in spring 2014?
The Americas and Asia are considered the top growth areas for the parent company. We had a very busy year and, over the past 16 months, we have been quietly restructuring the business in virtually every area. This has included expanding product lines, getting our costs in-line, improving on time delivery by retooling the Highland factory, improving our bench strength, aligning ourselves with agents (60 in the U.S. and four in Canada) who have the ability to be our strategic partners, and establishing a close collaborative effort with other parts of the parent company.
We also listened to our customers and broadened our core downlight (the Basys LED II 2.75” ) and linear product lines, which will be introduced this month. That’s just the beginning. By December of this year, North American specifiers will be able to purchase five more luminaire product lines previously only available to the European market. This includes Mirel, Diamo, Vivo, Iyon, Factor, and the Panos 68mm. And there’s even more in the pipeline for 2016. The parent company has total commitment to this region.
What will your business model look like in a year? Three years? Five years?
It is our vision to leverage the full market potential of Zumtobel by transitioning from an international to a global brand and we are currently expanding our product and service offerings in the regions outside of Europe to accomplish this. A good example of this is that we have changed our design process so that we can develop truly global products that consider the market requirements outside of Europe very early in the design stage. This means when we release a fixture at Light + Building, it will be available in the U.S. market at the same time. This is a fundamental change to our design process that has already occurred and reflects our commitment to globalization.
What kind of feedback have you been getting from lighting designers and architects regarding these new initiatives?
People are truly in awe of what we have been able to do in such a short amount of time. If you compare the first six months of 2014 to 2015, quote rates are up 90 percent, which is a signal from the market that they are recognizing our efforts. We are on a path that is directionally correct. I think specifiers see our commitment to the design community, and our willingness, even though we are a large company, to collaborate. A good example of this is how we have been able to reduce the pricing on our Slot light linear product line by 40 percent through production efficiency gains. Customers have been very surprised at our competitive pricing model even though we are a premium brand.
And I’m particularly excited that we have engineers in Highland, N.Y., and Dornbirn, Austria, working together and developing new luminaires. It’s never been done that way before and this allows us to capitalize on the assets of the entire company. We are here to support lighting industry professionals.