LEDVANCE Will Move Its Production Facilities to Smolensk

LEDVANCE, being a global producer of innovative lighting fixtures and intelligent lighting solutions (owned by MLS Co., Ltd., a Chinese lighting manufacturer), is going to transfer its production facilities into the Smolensk Region. This has been reported during the working meeting between Rostislav Rovbel, Deputy Governor of the Smolensk Region, and Laurent Dubuche, LEDVANCE JSC Plant Manager. The parties have also discussed the matters of legal and regulatory environment related to lighting equipment production, as well as the strategy for the plant development within the Smolensk Region.

At the beginning of the meeting Laurent Dubuche explained that the shutdown of plants in Augsburg and Berlin (Germany) due to their poor profitability resulting from high labour costs, made the LEDVANCE management transfer nearly 80% of production assets to Smolensk. According to the plant manager, this will allow for investing heavily in means of production and creating additional new jobs.

The details of the investment projects to be launched will be discussed in the near future.

The parties have also touched on implementation of the federal subordinate acts, which prohibit the use of cheap tubular fluorescent lamps, as well as the rest of LED and high-pressure mercury vapour lamps in Russia starting from July 1, 2018. Besides, starting from January 1, 2020 fluorescent lighting fixtures as well as high-pressure sodium vapor lamp will also be banned. Enactment of the new statutory requirements will entail a significant drop in production of lighting fixtures made by the Russian enterprises and will increase budgetary expenditures of municipal entities for purchasing new light sources.

Having faced the problem, LEDVANCE JSC appealed to Alexey Ostrovsky, Governor of the Smolensk Region, for supporting initiative of industrial enterprises aimed to defer the act’s entry into force. Laurent Dubuche pointed out that the risk of reducing the plant’s output is estimated at nearly 70% of the current yield.

Rostislav Rovbel underlined that there are practically no plants in Russia manufacturing LED lamps complying with the new requirements at present. “It might seem pretty logical that the start of their production will require complete retrofitting of industrial facilities, which will inevitably lead to appreciation of the finished goods. The Russian industry is expected to become much more dependent on foreign components for lighting equipment, which is contrary to the pursued policy of import substitution and increasing non-resource exports,” he considers.

For reference

LEDVANCE is a worldwide leader in innovative lighting products as well as intelligent lighting solutions (Smart Home) both for professionals and for the end users. At present there are nearly 400 people employed by LEDVANCE JSC in Smolensk, with the average headcount of staff amounting to 560 employees. Today the plant produces approximately 75 million fluorescent lamps a year. Besides, the plant in Smolensk makes specialty lamps and manufactures auxiliary equipment, ranging from starters to luminaires. The goods manufactured are not only exported to more than 30 countries worldwide, but also serve as a substitute for the imported products.