SSL Manufacturing in America – Cree Inc.

Originally published via the Solid State Lighting weekly Postings.

Although we don’t often hear about growth in U.S. manufacturing, the solid-state lighting industry has been steadily growing and establishing a manufacturing presence here at home, strengthening our country’s position as a leader in the technology. Solid-state lighting was not only born of U.S. ingenuity and R&D, but is also riding the crest of a worldwide trend toward greater energy efficiency. This presents a golden opportunity for U.S. companies to play an increased role in SSL manufacturing. From time to time, the Postings focus on SSL companies that manufacture here in the U.S. This is not intended to endorse or promote any of the companies, but rather to motivate and inspire other U.S. companies to follow suit. The philosophy and activities you’ll read about here are consistent with the recommendations set forth in the U.S. Department of Energy (DOE) white paper “Prospects for U.S.-Based Manufacturing in the SSL Industry.”

Cree Inc.

Durham, N.C.-based Cree Inc., got its start in 1987 and has been working with LED technology pretty much ever since, so its growth and evolution reflect that of LED lighting itself. Cree started out as a chip manufacturer and was the first company to commercialize blue LEDs. In 2006 it introduced its XR-E LED, which was the first LED designed for efficient and cost-effective general illumination, according to Cree Vice President Greg Merritt. He notes that shortly afterward, the first commercially viable LED lighting products began to hit the market — mainly in outdoor lighting and downlights, as well as flashlights.

Prior to this time, Greg says, Cree got into the business of packaged LEDs, predominantly for display backlighting, since the use of LEDs for general illumination was virtually nonexistent. But this move had the effect of pulling Cree into the LED lighting market, which was just beginning to stir. As a result, the company went from having a few customers — who were predominantly system integrators — to having lots of customers, who were lighting manufacturers.

In 2007, Cree acquired LED Lighting Fixtures, which transformed Cree from an LED component manufacturer into an LED lighting manufacturer. The company began to see the tremendous potential and opportunity for LED lighting. This, Greg explains, led Cree to start to focus on vertical integration of lighting products — that is, producing everything from the wafer to the luminaire — which he says has allowed the company to innovate in ways that otherwise wouldn’t have been possible. As a result, Cree began to recognize the promise of LED technology to go beyond the basic replacement of lumens and add new value to lighting.

But as Greg points out, LED lighting was a slow market to develop, and Cree was trying to get a large, conservative, entrenched industry to adopt a radically new technology. Then in 2011, Cree acquired Racine, Wis.-based Ruud Lighting, which broadened Cree’s offerings to include outdoor lighting and also gave it additional R&D and manufacturing capability. This, Greg notes, moved Cree from being an LED component company that sold interior lighting, to being an LED components and lighting company selling a broad range of lighting products.

That business continued to grow, requiring more personnel. Greg relates that since 2008, the company has hired more than 1,500 people, who fill positions ranging from manufacturing, to R&D, to sales, to marketing, to corporate functions at Cree’s North Carolina and Wisconsin locations. He adds that as Cree has evolved, its focus has switched from chips to entire systems — including such things as optics, thermal handling, controls, networking, and intelligence — that allow users to personalize the space and optimize building usage as well as increase energy savings. This, in turn, has changed the skill sets needed among its employees.

According to Greg, Cree makes all of its chips and LEDs in Durham and most of its lighting products in Wisconsin, but also uses overseas contract manufacturers for portions of its product line. As he explains, even though its first choice is to manufacture domestically, the company strives to optimize where and how it manufactures, based not only on the needs of the product, but also on its market. Products that are large or complex, Greg notes, tend to be manufactured in-house, whereas those that are smaller or simpler tend to be contracted out. He points out that lighting is a local business, in the sense that preferences and standards for fixtures vary from country to country. However, Cree’s LED component business is global and has to compete on a global market. As the company has grown, Greg says, it’s driven job creation throughout the supply chain, as well as in sales channels and for installation and retrofit services.

As Cree has evolved, he observes, its biggest external challenges have been overcoming market resistance to LED technology and then dealing with a growing number of competitors. This has pushed Cree to strengthen its value proposition and produce products that don’t just consume less energy, but are better than what people had before. Cree's internal challenges, Greg notes, include competing for new expertise and building up its workforce as other companies from various industries are hiring from the same talent pool for software, controls electronics, and the Internet of Things.

With SSL adoption only at about 10% overall in the U.S., there’s still a lot to be achieved, Greg notes. But whereas lighting products used to be viewed as consumables or construction materials, LED lighting today has become more like digital appliances that are upgraded whenever they become superseded by newer versions whose capabilities justify the expense. As Greg puts it, with SSL you don’t have to just sell lumens anymore, because the technology is increasingly showing the capability to provide something that’s better for your home or business than what you had before.

Cree is one of many companies that are helping to reinforce U.S. leadership in SSL technology as they work to create and strengthen a solid-state lighting manufacturing base here. This will not only help bring significant energy savings through more-efficient lighting products, but will benefit our economy by adding jobs at multiple levels of the supply chain.