Brewed Fresh Daily

Talk about giving back: Dante restaurant, that Tremont hotspot, has made a hefty commitment to serving the homeless population. Once a month, for a year, Dante will cook nutritious, fresh meals for the men staying at Lutheran Metropolitan Ministry’s 2100 Lakeside Men’s Shelter. Over 200 meals will be delivered to the men on the first Sat of the month. We’ll take a wild guess and say this food will blow the shelter’s food outta the water.

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ANNOUNCEMENT

On Monday July 12th, at 1:00 pm, Cleveland City Council’s Community and Economic Development Committee will resume discussions regarding Ord. 829-10 (LED lighting), and feature independent expert testimony on Economic Development Strategies and LED technology, products and industry.

Guest speakers will include:

Susan R. Helper
Chair of Economics and AT&T Professor of Economics
Weatherhead School of Management, Case Western Reserve University
http://faculty.weatherhead.case.edu/helper/

Laszlo Kozmon
The Cerulean Group
http://realneo.us/system/files/Laszlo_Kozmon_Bio.pdf

Jason Tuenge
LC, LEED AP  [by teleconference from the Richland, Washington]
Sr. Lighting Engineer
Technology Planning & Deployment
Pacific Northwest National Laboratory
http://www.pnl.gov (DOE)

Monday’s meeting is only the second time Council will hear from independent speakers since Ord. 829-10 was introduced on June 7^th.  Last Wednesday, Council heard from representatives of Case Western Reserve University, Eugene Matthews, the school’s facilities services director and Frank Merat and engineering professor.

Brian Cummins
Cleveland City Council, Ward 14
bcummins[at]clevelandcitycouncil.org

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UPDATE  re: Ordinance 829-10 LED Lighting

GE CEO speaks out against City’s Ordinance

Michael B. Petras Jr., President and CEO of GE Lighting was featured in today’s Plain Dealer; LED Ordinance No. 829-10: same proposal, different packaging.

He called on Cleveland City Council to amend the ordinances and expressed concerns such as the ordinance’s lack of technical specifications; a requirement of bundling four separate products into the bid requirements; the length of the contract (10-years) for a technology that is rapidly changing; requirements to include linear tube (fluorescent) light replacements which are seen as not viable alternatives yet by the Department of Energy.

Petras also stated that the ordinance is written, “to steer a long-term contract to the administration’s favored supplier”, alluding to the previous ordinance, number 496-10 that would of provided a Chinese LED maker Sunpu – Opto, a contract with virtually the same conditions as the current ordinance with exceptions it would not have had to compete for the contract.

Industry experts and municipal officials offer insight

Other industry professionals and municipal government officials have also recently expressed concerns and opinions about the proposed ordinance.  The following are excerpts from recent communications:

Paraphrasing from a conversation with an LED lighting expert affiliated with the Department of Energy’s Solid State Lighting Program –

“a company may be able to provide 50 to 100 jobs as related to sales, distribution and assembly of LED products, but 350 jobs [for which the ordinance specifically calls for by the 5^th year]…these are phantom jobs”.

Multiple persons familiar with LED technology, manufactures and the general industry concur that the top of the supply/value chain is the most likely area where jobs can be created with the least cost and risk exposure for a company, but with also the lowest wage jobs being created.

A City official from a municipality that was one of the first adopters of LED lighting had the following comments regarding our Administration’s plans and strategies –

“…Municipalities are excellent laboratories for this because of the wide diversity of lighting we maintain and because we have a long-term vested interest in both energy and maintenance savings since we generally own an asset for its entire lifetime once installed in one of our facilities.  When we started the partnership in late 2006, high brightness LED’s had been available less than a year…

…We often have vendors coming to us with claims regarding their products that we will benchmark against what the technologists at Cree [LED City program] know about that product, and they will often bench-test its performance before we make any commitments.  In return we are always trying new solid state lighting applications.  We keep good data on our installations and try to document our results, then discuss these results among our peers and at conferences.

…the landscape of products available in this market space is totally dynamic right now.  There are probably 4-8 times as many high-quality low-bay fixtures available now as this time last year.  Interior LED retrofit lighting, which was barely on the radar screen two years ago, now shows up in Home Depot.  Those manufacturers who introduced high quality fixtures in 2008 have already gone through a second generation of design and now are working on a third…  Also now many more companies, particularly the large lighting manufacturers like Kim Lighting, GE, etc. are now jumping into the design business with both feet.  That being said, making a commitment to one company for 10 years seems highly risky.  Unless that company happens to be on the forefront of innovation in this field you might be left with inferior products for a long period of time as the rest of the industry leaps ahead of you.

…LED is probably not a great space to do this [leverage purchasing power for jobs with a single supplier] in because so many players are producing such innovative products, the products are changing and evolving very fast and the standards world is struggling to keep up, and they are not all the big boys like Philips, GE or Sylvania.  Also companies tend to specialize in certain LED applications (you may have some companies focusing on industrial lighting – high bay and low-bay fixtures and wall-packs, while others specialize in interior decorative lighting) so it is going to be very difficult (read:  impossible) to find one company who can effectively supply the highest quality LED products interior and exterior, big and small, industrial and decorative.

 Right now I am VERY wary of Chinese fixture imports, particularly from companies that do not have a big presence in the US.  I’d rather somebody else try them out first.  Our facilities people have become rather expert in this technology now, and they know quality when they see it.  If they have questions they will ask the techies out at Cree.

As far as the job creation requirement, I am no politician, but though this will likely be good politics, I think it is likely to result in either inferior products going into your municipal applications or the company begging off on the deal somewhere down the road.  This industry is very likely to go the way of the rest of the semiconductor industry, with R&D happening in the high-tech R&D centers in this country, fixture design in Europe or elsewhere in the US, manufacturing of components in Asia, and reassembly either in Asia or the US depending on the product.  To hamstring a company into developing an assembly line in Cleveland when their competitors are taking advantage of the global supply chain network will put them at a disadvantage…  I will simply say that we have benefited from buying things in small quantities from a variety of manufacturers.  As the landscape continues to rapidly change we will continue to use this strategy to get the best, most innovative products installed for our needs.

We are looking at some wholesale streetlight changes but our strategy will probably involve a multi-year rollout and may not involve the same fixture from beginning to end.  If you have GE headquarters in your market it is probably a lot better to leverage them to bring their R&D operation to Cleveland for LED products as a way of being a good corporate citizen, since this end of the business is not likely to be outsourced, and I would not think that trying to leverage this with a sole source contract for all your LED fixture needs would be a wise way to try to achieve this, since GE is not the industry leader in all these sectors (yet!?!)…

The DOE on the performance testing of LED linear tube (fluorescent) replacement lighting

“DOE’s CALiPER program has tested 12 different LED T8 replacement lamps to date, and finds that their performance falls short of fluorescent benchmarks…

Average initial bare lamp light output of the LED T8 replacements tested was about one-third the average for fluorescent T8s. On initial two-lamp system efficacy, two-lamp fixture output, luminaire efficacy, and CRI, the LED T8 replacement performance was significantly below that of the fluorescent T8s. Average fixture efficiency was higher with LED T8s because LEDs are directional, so less light is lost inside the fixture. This was not enough to compensate for the much lower light output…

To provide equivalent light output to fluorescent T8s and also save energy, LED T8s will need to become two to three times more efficacious than they are today.”

See the DOE’s June 11^th, 2010 warning regarding these products.

Technical Standards for LED lighting

DOE sited current general LED industry and specific Energy Star technical standards –

Energy Star criteria for LED traffic light signals:
http://www.energystar.gov/ia/partners/product_specs/eligibility/traffic_elig.pdf

Energy Star criteria for incandescent light bulb LED replacements:
http://www.energystar.gov/ia/partners/manuf_res/downloads/IntegralLampsFINAL.pdf
Lighting Facts label from DOE: http://www.lightingfacts.com/

Fluorescent T8 linear tube LED replacement lighting:
http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/t8_replacement-lamps.pdf

Outdoor LED street lights:
http://www.designlights.org/solidstate.manufacturer.requirements.php
www.drintl.com/temp/ENERGYSTAR_SSLCriteria_V1_1.pdf

Economic development strategies and procurement practices that can limit competition and risk poor quality of product

The economic development and jobs creation strategy the Administration is utilizing seeks to leverage the City’s buying power, as pertains to lighting needs, in order to create jobs – 350 within 5-years. JOBS NOTE: there is only a limited 20% (70 jobs) requirement for residents of Cleveland of the total 350 jobs to be provided.

The strategies and conditions of the ordinance, although they are claimed as being beneficial to the City, could have an impact at limiting competition and result in higher risks to the City in terms of ensuring for the 10-year term, the quality of each individual product and their efficiency and costs saving value.

Some of the procurement strategies being proposed to achieve this and alternatives are:

1. extraordinarily long-term contract (up to 10 years); [alternative: break the terms down to one 3-year contract with two 3-year renewals.]
2. award to a single source supplier; [alternative: award contracts to lowest and best bid per product and seek jobs creation from each.]
3. bundling or tying together products to be bid on and awarded for purchase; [alternative: allow companies to bid on one or multiple products.]
4. inclusion of a product sited by the US DOE as not viable for full commercialization; [alternative: eliminate the T-12, T8, fluorescent LED linear tube replacement lights until such time their technology is more developed and proven in the maketplace.]
5. oversimplified and restrictive job creation requirements – 350 within 5-years; [alternative: by allowing multiple vendors to compete for single or multiple products, and requesting job creation proposals for each, the competitive nature of the contract would be greater and the jobs creation component more likely to succeed.]
6. lack of specific technical standards requirements: [alternative: clearly stated minimum technical standards and requirements and requirement of US DOE Energy Star rating for products when available (Energy Star certification standards are established for two of the four products; incandescent bulb and street light LED replacements).]

Questioning assumptions of jobs creation requirement and goals

Most industry experts agree that the claims and assumptions of being able to create 350 new jobs in the way this ordinance is framed are doubtful. The 350 jobs are not required until the end of year 5. This is assumed to take into account that the first requirements of setting up an assembly facility (by the 18th-month) will likely generate between 50 and 100 low wage jobs. The next phase, of initiating manufacturing is required to take place by month 36 (end of 3rd year). Ultimately, by the end of the 5th year the 350 jobs are required to be created and with them, a research and development (R&D) operations established. But, there are no total payroll requirements, nor any requirements to delineate the specific types of jobs or their estimated wages. And, while 350 jobs are required, only 70, or 20% need to go to actual Cleveland residents.

Many critics of the plan state that the assembly, and affiliated sales and distribution and administrative jobs are could likely be created. But, most agree that the actual manufacturing, engineering and R&D jobs would be difficult to create due to the industry’s norm of using cheaper labor off-shore in Asia and Mexico.

The plan does not allow for jobs to be created outside of Cleveland proper, i.e., within the region. Nor, does it permit other potential related jobs that are created be counted, i.e., GE ostensibly could hire positions related to other technology they are or would be involved in and the company, Green Mill Global, based in Akron, who has been developing a relationship with South Korean LED maker Fawoo, through Fawoo North Tech America, could establish the jobs within the region as well as establish additional jobs for their affiliated wall-systems manufacturing.

See the image below that describes the general value and supply chain for LED products. Note that per industry experts the materials, components and finished product process (manufacturing) involve the highest level of expertise and highest costs associated with the product. Whereas, the end-line assembly, warehousing, sales and distribution are the lowest valued, costs and wages associated with the operations.

City of Cleveland Administrative Code requirements

The following citations are provided to draw attention to the various requirements by the City Administrative Code to ensure a fair and competitive process as pertaining to procurement and performance bonds.

181.20 Specifications for Purchases

Specifications for the purchase of supplies, materials or equipment shall be prepared by the Commissioner of Purchases and Supplies… In conformity with the requirements of Charter Section 102 he shall see that such specifications do not unduly restrict competition and are so prepared as to secure the supplies, materials or equipment required for the operation of the department requesting the same at the best available price. (Ord. No. 1119-61. Passed 6-12-61, eff. 6-14-61)

181.32 Bonds to Secure Performance of Purchase Contracts

Except for a purchase contract awarded in the amount of fifty thousand dollars ($50,000) or less, or where by reason of the nature of the purchase the Commissioner of Purchases and Supplies, with the approval of the Director of Finance, has determined that it is impracticable or unnecessary to require a bond, or for contracts anticipated to be under $500,000…based on standards promulgated by the directors to protect the City’s interests, has determined that to reduce or waive a bond requirement will enhance contract competition by making City contract awards equitably available to all qualified contractors and will benefit the City’s interests, the performance of contracts for the purchase of articles, commodities, supplies, materials or equipment, or services shall be secured by a bond with good and sufficient sureties, approved by the Director of Law, and in an amount equal to at least twenty-five percent (25%) of the contract price. Said bond shall be substantially in the following form:… (Ord. No. 793-03. Passed 6-10-03, eff. 7-20-03)

181.04 Standard Specifications

The Commissioner of Purchases and Supplies shall prepare or cause to be prepared and shall adopt and may alter, change and amend standard specifications for each class, grade or description of the various articles, commodities, supplies, equipment and materials ordinarily required by the City, in every case where it is practicable to do so. Standard specifications shall be such as will procure for the City articles, commodities, supplies, materials and equipment of the best quality and character and design of the goods required for the purposes to be served, and shall be so drawn as to facilitate the making of bids therefrom, and as to encourage bidding from as many persons, corporations and concerns as may be prepared to furnish the articles, commodities, supplies, materials or equipment, as the same may be needed by the City. (Ord. No. 1119-61. Passed 6-12-61, eff. 6-14-61)

185.14 Performance Bond

Except for contracts awarded under the Small Business Rotation Program established under Section 187.032, or for contracts anticipated to be under $500,000… based on standards promulgated by the directors to protect the City’s interests, has determined that to reduce or waive a bond requirement will enhance contract competition by making City contract awards equitably available to all qualified contractors and will benefit the City’s interests, the contractor shall be required to furnish a bond with good and sufficient sureties approved by the Director of Law, in an amount equal to at least fifty percent of the contract price, which bond shall be substantially in the following form:…(Ord. No. 793-03. Passed 6-10-03, eff. 7-20-03)

In 1998, three of my colleagues and I started on an ambitious journey. After a number of years of working in China, we decided to launch a small Chinese joint venture focused on providing mineral water to Xi’an, the ancient capital of China and the terminus of the famed Silk Road.

For five years, I had been providing guidance to a Chinese joint venture soybean factory in Lantian County, one of the six counties surrounding Xi’an. Local officials approached me about assembling an investor group to help exploit the county’s mineral water resources. Our initial group was international, two Americans, one Japanese and one Chinese with investors in Japan and the U.S..

After eighteen months of drilling a well and testing its water, we began operations. At that time, corruption in China, although evident, was minor. Occasionally, our trucks would be stopped and given bogus tickets. In perhaps the funniest incident, I had to fire off a letter to the mayor of Xi’an when a group of thugs invaded one of our nine retail shops and held our staff hostage demanding some money.

From the beginning, our investor group has refused to pay bribes. Beginning about five years ago, the environment in Lantian (the next county over from the terra-cotta warriors) began to shift. Organized crime began emerging.

In the past three years, we’ve been locked in a struggle with organized crime syndicate, headed by the former deputy police chief in the county. They have been using fraudulently issued documents to confiscate our factory property. The reason is simple. By converting industrial property to residential development, the gangsters can make a lot of money. In the county over the past two years, 17 factories have been torn down. By our reckoning, the criminal gang has netted between $6 million-$7 million. They want our factory because of its location. As one of the first industrial properties in Lantian, we sit on a prime piece of land with easy access to the highway into Xi’an.

Beginning three years ago, the criminal gang approached our Chinese joint venture manager to try to negotiate their way into our Joint Venture. We have steadfastly refused even to meet with these gangsters.

Last July, I travel to the factory and recorded how the gangsters had physically cut off the factory from the road, all in an effort to squeeze us out of business. I even took a video of one of the thugs as he tried to push me off our Joint Venture property. To file a complaint, I went to the police station around the corner from our factory. Again, I had the video in hand. The police, fearing exposure, scattered.

My visit bought our factory some time to continue to try to get help from local government officials.

Now that time has now run out.

In the past two or three weeks, the pressure from the gangsters has increased. They threatened to tear down our factory. About a week ago, I recorded a video appeal to the mayor of Xi’an and posted on our website, where I’d been collecting documentation of what’s been taking place.

We really have quite an extraordinary story. For the first time that I’m aware, we have detailed inside information about how a Chinese criminal gang works. We have this knowledge by virtue of the fact that over the past 12 years we’ve built up an extensive network of good and honest people and former officials. They are our eyes and ears on the ground.

We are posting what we learn to this web site:

http://www.lantiancorruption.net

Using lessons I learned from my good friend Valdis Krebs, we began mapping the criminal networks.

Three weeks ago, when it appeared that our battle was just about over and the gangsters would win by tearing down our factory, we moved into high gear and alerted everyone we knew about the challenges we faced.

I’m not sure how it happened yet, but the dynamic is shifting. Four days ago, the Xi’an mayor summoned the Lantian mayor (where our factory is located) to a meeting about our factory. Subsequently, the Lantian mayor convened an extraordinary evening meeting with his vice mayors and department heads to discuss our joint venture.

The next day, a deputy mayor called our factory manager and scolded him for taking our dispute to the Chinese Foreign Ministry.

(Interestingly, we have not yet made a formal complaint to the Chinese Embassy, but we are preparing one.)

Our factory manager, a very smart and tough young man (who sleeps with an iron par under his bed in case he’s attacked by the gangsters), did not waver. He blamed the local government for colluding with the gangsters. He told them that none of this would have happened if the local government had responded to our calls for help.

On the next day, we learned that the barricade around one of our factory gates would finally be opened. We are waiting to see whether the other barricades are taken down.

On Monday, our lawyer will be going to the local Land Management Bureau to file a formal application to reestablish our property rights, which have been confiscated through the fraudulent documents issued by this office.

In preparation for these meetings I have prepared three letters. I will be posting them on our project website.

The only thing I can attribute our change in fortune to is the Internet. By publishing facts about our case, including video recordings, we are effectively combating corruption in China. We have not yet won our case, and we have suffered tremendous damages. Yet, we are shining the light on the underbelly of the Chinese economy, and the picture is not pretty.

In practical terms, we are striking a blow for many of the good people that we know in this rural county. Over the past four years to criminal gang has severely beaten over 20 peasants who have protested the criminal gang’s takeover of the county’s economy. When I visit, my meetings with these good friends are held in safe places. My driver is a former police official from Xi’an.

We will continue to push hard. Our China joint venture manager and our factory manager, as well see other people who work with us, are extraordinarily courageous and determined to save this county.

We just did not know fully the power of the Internet in our hand.

P.S.: Pass on the web site, if you think you can help: http://www.lantiancorruption.net

Innovations are taking place in the strategies to build wealth in poor communities. The key obstacles right now include:

Lack of political focus: Too few political leaders willing to commit to a sustained focus on innovating new solutions to reduce poverty by building wealth and re-imagining neighborhoods.

Inaccurate mental maps: Too few business leaders see poverty as a business issue. The traditional view is that poverty is a social challenge that someone else takes addresses. (“That’s why we pay taxes”). Even fewer see poor communities as a market opportunity. (See, for example the work of the Initiative for a Competitive Inner City, and the book, The Fortune at the Bottom of the Pyramid.)

Command and control mindsets: To few foundation leaders are willing to give up their control mindsets, abandon their gatekeeper roles, and open themselves to deeper, more transformative innovations.

Cleveland could become a national leader in incubating these strategies, but that requires a civic leadership that recognizes wealth creation among the poor as a business issue, as Daniel Dodd of Savannah notes.

Daniel Dodd of Step Up Savannah, who pioneered a program to reduce poverty in the urban setting of Savannah, Georgia, also addressed the need for long-term, big-picture solutions to fight poverty in ways that involve the broader community. Dodd explained how he has made significant progress by framing poverty as an economic issue and thereby involving organizations, corporations, and business interests in anti-poverty efforts. In Dodd’s own words, “Poverty is a business issue as much as it is a human issue.” Especially in urban communities, doing what’s right may depend on making it clear to all members of the community that fighting poverty is in their own best interests.

Developing Place-Based Solutions to Fight Poverty

Here’s a presentation on Savannah’s initiative:

Step Up Savannah


For the past four years, I have been working with a pioneering group in Shreveport, LA that focuses on rebuilding neighborhoods through an explicit focus on rebuilding networks of relationships and strategic doing. Community Renewal International is now gaining national attention with a recent grant from the Hewlett Packard Foundation.




Also:

Developing Place-Based Solutions to Fight Poverty Download slide presentation here.

Poor Suburbia: Rethinking the geography of American poverty

Brookings report is available here: The Suburbanization of Poverty: Trends in Metropolitan America, 2000 to 2008

Wed 7/14 @ 5:30 – 7:30PM

Water|Craft is the Cleveland Urban Design Center’s newest cutting-edge Urban Infill anthology. This collection of essays examines urban and regional water issues in Cle and seeks out the best water-related practices to propel our city into the future. This is gonna be good — CUDC is behind everything cool in Cle. Join the release party on Wed 7/14. Details…

Enjoy great views of Lake Erie and the Cuyahoga River from atop the Superior Viaduct as we celebrate the release of Water|Craft, the third volume in the CUDC’s Urban Infill Journal series. The amazing local band the Buried Wires will perform and appetizers, beer, wine and dessert will be provided. The event is free and the new Water|Craft book will be available for purchase at half price – only $10!

Oh…we’re also having super fun water-related activities, which may or may not involve squirt guns and acting like a kid again

Superior Viaduct b/tw Stonebridge Apts & Ponte Vecchio restaurant – 2100 Superior Viaduct

More info here.

On Monday, we are heading to Brevard, Florida, where we are using Strategic Doing to focus citizen involvement in a regional strategy. The Obama Administration wants a strategy by mid-August for submission to the President.

Laz Kozmon, who teamed with me to develop the Cuyahoga County Innovation Zones, is also helping on this project, as are our colleagues at Penn State.

You can view the project web site I built yesterday here. We use a platform developed by a Research Triangle-based company who is now supporting our work in Strategic Doing.

For some background on Strategic Doing, you can read this white paper.

Strategic Doing PCRD Staff Publication.final Draft


If you’re curious, here’s a map of where Purdue has given presentations and workshops in the past year.



View Strategic Doing Presentations and Workshops in a larger map


Fri 7/16 @ 6 – 10PM

A new gallery is opening up in Midtown Cle. Say hello to Proximity Art Gallery! Check ‘em out at their opening reception on Fri 7/16. Read about their opening exhibit below…

This self-titled, first exhibition will feature the artwork of Proximity’s curators/directors. The opening show will introduce the public to one of Cleveland’s newest galleries and the work of the four local artists behind it: Beth Whalley, Alex Kelly, Andy Curlowe and Laura Skehan. The exhibition aims to show cohesion through juxtaposition, as in the law of proximity, which states that objects near one another are perceived as belonging together. This show includes new works of art ranging from installation and paintings to prints and sculpture.

Proximity is located in the LOFTWORKS Bldg – 1667 E. 40th St., Unit 1A

http://ProximityCleveland.com

This web site provides an overview of the scientific evidence of human health and well-being benefits provided by urban forestry and urban greening.

Benefits Science: Recent research has revealed the environmental benefits provided by metro nature, such as improved air and water quality, energy savings, and reduced urban heat island effects. The social sciences provide additional evidence of benefits. Nearly 40 years of research shows that the experience of nature is profoundly important to human functioning, health, and well-being.

Human Health and Well-Being Benefits: We may intuitively accept that urban nature is important for public health. This web site presents supporting evidence, confirming intuitions and expanding our knowledge. Given the high population densities of urban areas, every bit of nearby nature has the potential to benefit hundreds to thousands of people daily.

Planning for Nature: People have long recognized that nature in cities and towns provides beauty and respite. However city green improves public health – ranging from individuals to entire communities. Taken as a whole, metro nature is a “green infrastructure” system that can be planned and integrated with built systems (such as transportation and housing) to create more sustainable urban environments.

The site includes interesting research, such as:

7% higher rental rates for commercial offices having high quality landscapes;

Shoppers claim that they will spend 9% to 12% more for goods and services in central business districts having high quality tree canopy; and

# The presence of larger trees in yards and as street trees can add from 3% to 15% to home values throughout neighborhoods.

Green Cities, Good Health

Thu 7/22 @ 11AM – 1:30PM

Join Crain’s Cleveland Business on Tue 7/22 to honor Cle’s leading business ladies. Hear their inspiring stories of success and get an opp to network with them.

Landerhaven – 6111 Landerhaven Dr. – Mayfield Hts

http://CrainsCleveland.com/marketing/wonregister.html

How will the story end?  Stay tuned.  And, no this is not a comedy…

We’ll be continuing hearings on Monday (7/12) at 1:00 pm and then we expect a vote on the ordinance on Wednesday (7/14). The authority for what could be a 10-year single-source exclusive contract is not approved yet. This second ordinance, although requiring the contract to be competitively bid still is very flawed having little credibility to the promises of 350 jobs (within 5-years) or the hopes of procuring quality products from a major proven manufacture.

See the new ordinance at:
http://realneo.us/system/files/Ord._829-10_-_Mayor_Jackson__Req_K_LEDs.pdf

The basics of the deal are:

1) First 18-months after signing; initiate an assembly facility – no specific job requirements but 50 to 80 could potentially be created, all relatively low skilled, low pay. First order for product is made. No quantities will be provided to Council before a vote so we do not know what the cost will be for the first to last order for the 10-year period. We’d be giving the Administration a blank check for ten years for these products. LM79 testing (light performance, efficacy and efficiency) is required within this time but there are no specific standards to meet in the current ordinance. We’re working to try to include some minimum generally accepted standards for each product. LM80 testing (lumen depreciation – how long will the product last for) is not required to be completed until the 24th month; the test can take 8-months, and even then like the other test there is no minimum standard to meet, so even if a product tested poorly we could purchase it.

2) Within 36-months (3-years) manufacturing of lighting products is required by the winning bidder. This will prove challenging as manufacturing of LED with few exceptions takes place in China and other parts of Asia where labor rates are as low a $1/hr compared to US labor wages of $17/hr. No specific job requirements kick in yet.

3) By the 60th-month (5th-year) 350 jobs are required to be generated and Research and Development should also be taking place in Cleveland. 20% (70) of the jobs are required to go to Clevelanders and 25% of the product’s components should come from within the region.

Some of the amendments we’re working on are requirements to have the City review pricing and product quality and performance specifications for comparable products on a minimum of an annual basis but preferably every 6 to 8 months. LED products continue to make steady gains in efficacy, efficiency and quality ratings and prices continue to drop. The administration was suggesting reviewing this every two years. Also, some form of minimum technical standards or reference to nationally recognized industry standards

Due to the evolving market and the fact that each product (street lights, linear replacements for fluorescents), bulb replacements and traffic lights) is in a different stage of development with often unique design challenges, I would prefer to have a bidding process whereby any company could competitively bid on a single or multiple products, but not be required to bid on all four.  In addition, the bid requirements should be technology neutral, i.e., if a company can offer superior savings in energy costs with say the most recent and more market-proven fluorescent  technology and can create jobs that are related to that product that should be able to count in the equation of the bid requirements.

The main reason for this is that linear replacement lights for fluorescents are generally recognized by the US industry as not being ready for widespread usage (the return-on-investment calculation does not make sense yet) and the bid requirement to offer this product will likely inhibit competition – companies will not submit bids because they won’t be able to realistically offer that product with confidence in the next 18 months.  By allowing a company to offer a like product but different technology the Administration would receive more competitive bids – more competition!

Many companies in the industry make claims of having this product (linear replacement tubes) available currently but the Department of Energy (DOE), as recently as June 11, 2010 has issued warnings that as much as 2/3rds of the dozens of products they have tested in this class have failed to meet their manufacture’s claims. The Administration is claiming they’ve seen products in this class ready now and that companies have made large advances in the last year.

Most of the products the Administration was touting from Sunpu-Opto in the last go-around were rated by the company as having roughly half the lumen output and none of the products had been tested or sold in the USA. Meanwhile the DOE is stating generally that all products in the industry are continue to make modest gains in advancements and this contradicts what the Administration here in the City of Cleveland is saying.

This current ordinance, although requiring bidding looks very much like the old Sunpu-Opto ordinance and one can not help but wonder if it is not just a re-set for clearing-up some process concerns but still written so that it is ripe for a company like Sunpu-Opto, with their un-proven claims to come Cleveland and get their toe hold in the USA. In fact this new ordinance actually gives the Administration even broader authority than before in terms of having fewer details as to quantity of products planned for purchase. Once Council signs off on this there is no oversight and control on millions (50 – 100+ million) of potential planned purchases for a ten-year period.

In addition, this contract would not make any requirement for the products to actually attain the DOE’s Energy Star rating – this gets back to the lack of any meaningful technical standards requirements.

Getting back to an alternative strategy, by allowing companies to bid on a single or multiple product class that is technology neutral, they could still be asked to quantify potential job creation numbers. Who knows what could result in terms of multiple companies being able to competitively win bids and then provide some level of jobs creation. It could be lower than the 350 the Administration is trying to create, but it could be possible the payroll amounts could be relative, so not all jobs are created equally.

Another change to consider would be dropping the ten-year contract and breaking it down to a 3-year with 2, 3-year renewable terms. If the company(ies) do well with job creation and quality and competitive products there would be no reason to not provide renewals.

See other arguments against the current ordinance and calls to work more collaboratively with our existing businesses in the region as well as our non-profit regional development agencies at:

New legislation introduced for LED Lighting Procurement for City of Cleveland, Brian Cummins, June 7th, 2010
http://www.brewedfreshdaily.com/2010/new-legislation-introduced-for-led-lighting-procurement-for-city-of-cleveland

UPDATE 7-8-2010

Since learning more about the LED industry and technology behind the products, I’ve been trying to turn some attention to the issues and proven strategies of economic development and jobs creation. Experts in the field are voicing opinions that business retention and growth are often more successful than chasing after attraction as the case with Mayor Jackson’s Administration.  The Administration states it would seek out companies that could collaborate in the manufacturing value chain but the contract only requires that 25% of the components be from within the region and that is not required until the 5th year.

Ohio is ranked in the top 10-states for LED suppliers, a strategy of working with our regional economic development organziations as well as State Department of Development and putting a premium on the participation of local and state manufactures could prove more successful in strengthening our regional and state economy, producing higher quality products and creating more jobs.

REF:  http://www.brewedfreshdaily.com/2010/more-on-led-lighting, posted by Ed Morrison

A simple example and point to be made would be to look at the 14 high skill jobs being offered in East Cleveland by GE – see below.

East Cleveland, Ohio, United States | GE JOBS – Posted: June 2010

1. Lead National Account Manager
2. Technical Service Leader
3. Electrical Engineer – LED Systems
4. Electrical Engineer – LED Systems
5. Product GM – Commercial Ceilings & Display
6. Lead National Account Manager
7. Electrical Engineer – LED Systems
8. Technology Manager – Lighting Controls
9. IT Supply Chain Lead – Lighting Solutions
10. Systems Engineer – HID
11. Systems Engineer – HID
12. Design Engineer – CMH NPI
13. Lead Design Engineer – OLED Process & Equipment
14. Purchased Material Quality Engineer – Lighting

GE currently has over 100 jobs posted on its site for 9 or so locations in Ohio.  In addition, Green Mill Global from Akron is currently working with Fawoo North Tech America to bring jobs to Northeast Ohio.

With the Administration touting a sustainable procurement process why has the Administration not included local and state LED related companies in its strategies to move to this greener technology and grow more jobs around it?  Ohio is ranked in the top ten states for LED suppliers – see Ed Morrison’s post from July 4th – http://www.brewedfreshdaily.com/2010/more-on-led-lighting

The answer that came back last month, was that they (GE and Green Mill Global/Fawoo North Tech) can’t provide the City with the all of its product needs.  Then they pointed to a Chinese company that had no products tested or sold in the USA, with product and company claims that were un-substantiated and with no staff located in the USA or participation in the Dept. of Energy’s Solid State Lighting program

Also related, why has the Administration not utilized our region’s economic development organizations to assist in strengthening the local and regional advanced technology/lighting industry? It’s not just all about the end products, i.e., traffic lights, street lights, linear and bulb replacement lights. As lighting moves further and further into the technology sector, i.e, semiconductors – LED diodes, there are more and more jobs and synergies to be created.

Brian Cummins
Cleveland City Council, Ward 14
bcummins[at]clevelandcitycouncil.org