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November 12, 2010

Innovate or Die: Don't Let Stagnation Turn Out your Lights

Remember we first learned about entrepreneurship when we studied that Thomas Edison invented the light bulb? We grew up with it. It helped change the life of Americans for generations. This iconic American invention will now disappear from the American landscape.

The Washington Post reported on Sept. 12 that the last major General Electric factory in Winchester, Va., that was making ordinary incandescent light bulbs in the United States is closing this month, marking a small, sad exit for a product and company that can trace their roots to Thomas Alva Edison’s innovations in the 1870s.

The Post reports that "what made the plant here vulnerable is, in part, a 2007 energy conservation measure passed by Congress that set standards essentially banning ordinary incandescents by 2014. The law will force millions of American households to switch to more efficient bulbs,†and the resulting savings in energy and greenhouse-gas emissions are expected to be immense.

What’s ironic is that they will be replaced primarily with compact fluorescents (CFLs), and sadly, no American manufacturer produces CFL’s. Why?

After the 1973 energy crisis, a GE engineer named Ed Hammer and others at the company’s famed Nela Park research laboratories were tinkering with different methods of saving electricity with fluorescent lights. But GE decided not to develop and market CSLs. So, though they were first developed by American engineers in the 1970s, none of the major brands make CFLs in our country.

That torch will now pass to China. Why? Because as the reporter points out, Ellis Yan, a Chinese immigrant to the United States, who had started his own lighting business in China, in the early ’90s, turned his attention to the possibilities of CFLs.

"Everybody in the industry stayed back and was watching me,†he recalled. "No one else wanted to make the big investment for the next generation of technology.â€

The business prospered, and Yan’s factories in China employ as many as 14,000.

This is a story of the failure of entrepreneurship at one of the world’s leading American companies.

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