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expanding the business

CRS Electronics worker Stan Signt test MR16 LED lights at the factory in Welland, Ontario.DAVE CHAN

For decades, lighting was a business where nothing much happened.

Incandescent bulbs, invented in the horse-and-buggy age more than a century ago, were used in homes, while fluorescents, a technology of 1930s vintage, dominated in stores and offices.

But with the imminent death by government decree of the energy-hogging incandescent bulb, the lighting industry has become a surprise area of innovation.

CRS Electronics, based in Welland, Ont., is hoping it's on to the next big thing: the commercialization of a long-lasting, energy-sipping light bulb. The company is betting that light-emitting diodes (LEDs) represent the future. "It's just clear as a bell. This is going to take over," predicts Scott Riesebosch, an electrical engineer who is president and founder.

CRS is the quintessential small company with big dreams. Even though it is a tiny player compared with lighting behemoths such as GE or Philips, it has developed what experts contend is the best LED on the market for replacing two-pronged halogen light bulbs.

In a project to illuminate the outside of the Banff Park Museum, CRS bulbs cut energy use by about 88 per cent compared with halogens, and they are expected to last about 25 times longer, while having a brightness and intensity close to standard lighting. "That particular product is actually better than anybody else's in my experience," says Kevin Hooper, principal at Lighting Solutions Inc., a Calgary-based design company that used the LEDs for the renovation unveiled last month.

Mr. Hooper says the biggest competitive advantage of CRS bulbs is the quality of the light compared with other LEDs, which often give colours a faded look.

LEDs are made from silicon, just like computer chips and solar panels. They're incredibly efficient because about 80 per cent of the electricity they use is converted to light. Incandescents convert only 5 per cent, and the rest becomes heat, as anyone who has ever touched one while it's operating can attest. Compact fluorescents, which are often touted as a green product, are in the middle of the efficiency range, converting about 25 per cent.

The huge energy waste is the reason Canada, along with many other countries, has decided to ban incandescents. The Canadian ban goes into effect in 2012.

CRS went public last year with a listing on the TSX Venture Exchange, and it had sales in 2009 of about $2.5-million. Despite its small size -- only 20 employees work for the company -- it has managed to attract one savvy institutional investor, Dynamic Venture Opportunities Fund, a subsidiary of DundeeWealth Inc., through a $1-million stock purchase announced in January. Dundee declined to comment on its investment.

Mr. Riesebosch is the company's major shareholder, with about 50 per cent of the stock.





That LEDs may be the up-and-coming thing in lighting isn't apparent from the niches they currently hold, such as the power lights on electronics, bike lights, and Christmas lights. All told, only about 10 per cent of the lights sold in North America and Europe are LEDs. But that may be about to change because they have major consumer-friendly attributes. Besides being miserly on energy usage, they typically operate for least 50,000 hours, or more than five years of around-the-clock usage, before needing to be replaced.

While many consumers have turned to compact fluorescents to save money and help the environment, lighting industry officials expect the bulbs will soon be replaced by the more efficient LEDs. The head of lighting in North America for Philips, Zia Eftekhar, says his company expects 50 per cent of lights sold in Europe and on this continent to be LEDs by 2015, and 80 per cent by 2020. Philips, which considers itself the leader in the market, says sales are experiencing "triple digit" growth.

It is a similar story at CRS. The company says its LED sales for the first two months this year are running 269 per cent above the pace of early 2009.

About the only area LEDs are not expected to make quick inroads is in the long, tube fluorescent bulbs used in office lighting. They're reasonably energy efficient, cheap, and for now, not vulnerable to competition.

To position itself for the switch to LEDs and other new lighting technologies, Philips has spent about $4-billion over the past three years acquiring other players in the industry, including Vancouver-based TIR Systems for $75 million in 2007.

CRS is going head-to-head in a David-and-Goliath battle with Philips for halogen replacements. Both companies make the LED-based bulbs, known technically as the MR16, that can be used in halogen sockets. CRS has had some surprising commercial upsets in its battle for sales. One Beacon Court, a tony Upper East Side Manhattan condominium, recently used its bulbs. So did another upscale condo in Toronto, the Palace Pier, on the city's waterfront.

But LED lights don't come cheap. CRS bulbs cost around $60, or about 10 times the retail price of typical halogens and about double what the competition charges. Mr. Riesebosch says the company is trying to compete based on the superior lighting quality of its bulbs, rather than on cost.

Despite the high initial price tag, LEDs pay for themselves in applications where lighting needs to be left on for long periods, which drives high energy usage and the need to replace burned out bulbs.

Humber College in Toronto bought about 1,000 bulbs from CRS in September, and it estimates that over their nine-year operating lives, each one would save the school about $500. Although a cut in electricity demand comprises part of the savings, the college says the long lifespans mean it wouldn't have to send about 3,000 regular halogen bulbs to landfill each year, cutting both its installation and maintenance costs.

While the high costs mean LED's aren't currently economical for most residential uses, Mr. Riesebosch said the lighting field resembles the heyday of computer chip development, when prices were dropping rapidly, just as capabilities were expanding.

With the semi-conductor business also making the diodes, Mr. Riesebosch says prices are sure to come down rapidly and fairly soon. He expects high-quality LED replacements for compact fluorescents to be on the market within 18 months, and consumers will notice them. The LEDs, he says, "are coming now in a big way."

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