In 1990s, as publisher of Electrical Contractor, I was asked by a marketing fellow for one of the industry's bigger companies for numbers on the one-man companies in the EC business. I had to admit that I did not know. I went looking, and was not successful in finding government data.

Those were the days before the web.

Now, the government makes these data available (since '02). The rest of this piece covers what we can know about these "nonemployer" contractors, with data from 2002 to 2008.

Info from Occupational Projections

First, a detour. Every two years, the Bureau of Labor Statistics emits its 10-years-ahead outlook for employment in what seems to be a gazillion industry types and occupations. Most recently, the info flood included: 

• Employment in 2008
• Projected employment in 2018

. . . and with that, a bunch of data form the BLS on employment in each niche in 2008, with projections of the 2018 total. No, I don't know how they do it. I don't know if the BLS economists and statisticians are just plugging assumptions and numbers into a spreadsheet or actually considering each and every occupation and industry niche. 

Will they be wrong? Of course, almost certainly. But consider: There are research firms (for-profit companies) out there that spit out numbers on the future -- projections of the dollar value of lighting fixtures sold in 2017, or the number of home energy management systems market's condition in 2019, etc. These are never correct, either. Some have not even been close. However, all of these companies remain in business. Some of the reports they spit out go for one heck of a lot of money.

[How do I know all these reports are wrong? I've been reading them for 30+ years. I've never -- never, ever, ever, ever -- seen a release from a company, 5 or 7 years later, trumpeting how they got it right!] 

Here, by way of contrast, is the U.S. government, providing very similar data (10 years out) -- for free. And just last week, you said your tax dollars never brought you anything -- except drones that drop bombs on people who don't take a lot of showers!

2008 numbers from BLS

Here's what BLS came up with for 2008:

• 694,900 electricians at work in that year (all industries, not just those working for ECs)
• 9.3% of them are unemployed.

That 9.3% = 64,626. I'm willing to bet that each of those self-employed electricians is a one-man (or one-woman) comp

You will note (shortly) that this info is not even close to what the Census Bureau came up with for 2008. I can't help that.

What's a 'Nonemployer?  

For the years 2002 to 2008, the Census site will provide you with data on the number of Nonemployer companies that existed in the U.S. The data is available for every doggone type of company out there, inside construction and (mostly) outside.

That leads to the question: What's a Nonemployer? It's a company with zero employees. How can a co. have zero employees? If the owner or owners of the enterprise are the only workers. You've seen companies like this all of your life -- the "mom-and-pop" deli, the one-location dry cleaner in which 100% of the employees come from one family, and so forth.

Here's a BIG nonemployer number: In 2008, there were 2,528,014 construction establishments in the Nonemployer category, generating $143.9B of receipts.

While $143.9B is a heckuva big number, it's not that impressive when divided by 2.5 million. In fact, it comes out to an average of $56,922.15 in annual receipts for all of these companies. "Not too shabby," you say? Now, wait just one doggone minute. Most construction companies (even one-man bands) must buy materials to get their work done (I believe distributors know something about that).

With $57K as the average gross income for 2.5M construction workers who employ themselves -- before buying tools, materials, insurance, a truck, and more -- I'm afraid that, even combined, these companies just ain't much. And, of course, there are electrical contractors in there somewhere.

Who are these people? They are the professional-looking types buying stuff early on a weekend morning in a Lowe's or The Home Depot (or on a Friday evening). I see folks of this ilk driving around the Washington (D.C.) Beltway -- their trucks whitewashed (to paint over the previous owner's name).

'08 nonemployer electrical companies

In 2008, the Census Bureau says, there were 127,890 "nonemployer" electrical contractors and other wiring installation contractors. This is 5% of the one-man bands in construction. It's also almost exactly DOUBLE the 64,626 self-employed contractors identified -- for the same year, 2008 -- by the Bureau of Labor Statistics.

What explains the discrepancy? I don't know.

These one-man ECs generated $5,518,839,000 in sales in 2008. That's $43,153 per company. As noted above, the average for all construction was close to $57K. So the electricians who worked for themselves took in less money than the others in construction doing the same thing. Yet electrical work has a higher skill level. What's going on?

I can't prove it, but my guess is -- weekend work. Moonlighting. Part-time 2nd jobs. Semi-retired electricians who are "just keeping my hand in." And so forth. 

Of the companies, 117,976 were individual proprietorships (which makes sense); 8,347 were incorporated (which makes even more sense, legally); and 1,567 were partnerships. A nonemployer company owned by partners? Yes - a small handful of two-man bands.

[Considering all of the bad legal things that can happen to you in the U.S. these days, the fact that most of the nonemployer ECs in 2008 were not incorporated tells you a lot -- most are out there, doing a small amount of work each year, and they don't see the need to protect their assets, a lifetime of savings, their houses, or whatever.]

Let's focus on the dollars for a second. Not only is the gross $ for each nonemployer EC in 2008 below the national average for all of construction, at $43,153 (which includes materials, tools, equipment rental, a truck, insurance, etc.) . . . it's actually $3,250 LESS than what an electrician (on average) earned in '08 working for someone else.

In other words, these nonemployer ECs paid to work for themselves. I regard that as unlikely. That's why I'm thinking we're talking about weekend warriors and semi-retired folks here. Yes, I recognize that many electricians "love" working in the field (I've met what seems like hundreds and maybe thousands of them over the years).

But I've noticed most of them were smart fellows. They probably wouldn't put their families at risk of a lawsuit that deprives them of everything they've saved just for the love of doing the work.

2007 figures

Of course, 2008 was a sucky year, economically. How about 2007? There were 133,524 of these nonemployer ECs one year earlier, according to the Census Bureau. They combined for $5.9B in annual gross revenues ($44,180 per company). The numbers, including the per-unit revenue, are all higher than they were for 2008.

This jibes with what we all think we know about 2007, doesn't it? To check on that guess, I went to the bigger number. There were 2.657M nonemployer companies in all of construction in '07 (5% higher than in '08). These companies combined grossed $159B, 10.5% higher than one year later.

ANOTHER REASON to look at the 2007 number is that, in that same year, the Census Bureau conducted the every-5-years Economic Census. So we have numbers for the "real" electrical contracting industry (provided, by the way, in the July print edition of tED). 

Let's look at those numbers next to the nonemployer figures:

Companies:

• "Real" ECs = 72,761
• Nonemployer companies = 133,524

Employees

• "Real" ECs = 828,120
• Nonemployer companies = 133,524

. . . this makes me wonder how much "interface" there is between those two employee numbers -- electricians who work during the week for a contractor (or other type of company) and work for themselves under another company name on the weekend. I know I've met several of these in the past.

Revenues, '07

• "Real" ECs - $127.14B (this includes all sales of any kind, including construction + "other")
• Nonemployer companies = $5.9B

. . . on the revenue side, the nonemployer contingent grabbed a 4.4% market share with 13.9% of the total workers in the industry (i.e., 133,524 nonemployer companies as one-man bands = 13.9% of the total 961,644 EC industry employees).

Were you analyzing it, you'd say a 4.4% market share with nearly 14% of the industry's workers is pretty damn sad. But if these folks are working odd jobs and weekends, it isn't really (I don't think).

2002 numbers vs. '08

2002 is as far as the Census online data lets you go back. In that year -- which was, economy-wide, a lot like 2008 -- there were 102,219 nonemployer EC establishments, with $3.834B in sales. That's $37,511 per company, which sucks.

Construction-wide in 2002, there were 2,071,317 companies, with $115.27B. Again, these figures are much lower than in 2008.

Let's focus on the electrical contractors and see what's happened over a 6-year period:

Nonemployer companies -- from 2002 to 2008, the number of electricians who work for themselves increased from 102,219 to 127,890, according to the Census Bureau. That's 25,000+ new one-man bands. Times WERE good from 2003 to 2007, weren't they? This increase might reflect more opportunity, more weekend warriors, more moonlights, or more semi-retired folks who didn't quite want to walk away completely.

Revenue -- these electrical one-man bands went from $3.834B in '02 to $5.519B in '08. That's a 30% bump up, which certainly surprised me. Can that be mostly attributable to copper? 

What does all of this prove?

You are an electrical distributor who sells material. You acknowledge that the local "home center/big box stores" are competing with you on electrical sales (at least to DIYers, and probably to some small contractors). You are closed Saturday (or maybe you are open, but you're not happy about it).

What do these numbers tell you about all of that?

First, what's your guess as to the fraction of the $5.519B gross in '08 by these folks that went to materials? Let's say 20%, to be conservative. That's $1.1B in material purchases made by these semi-retired folks, moonlighters, and weekend warriors. Probably most of that is going to The Home Depot and its ilk, local hardware stores, and elsewhere.

$1.1B sounds like a lot of money, but it's $23 million per weekend (divided by 48 weekends) -- across a nation of 50 states, 360 or so local metro areas, and 308M people. It's not a lot of business, is it?

In fact, if this back-of-the-envelope math approximates something in the real world, the material purchases of the nonemployer electrical contracting companies do not really come very close to the electrical sales in one year of The Home Depot, now do they?

Answering these questions -- and that original question, from a guy working in the 1990s for Square D -- is the reason I wrote this piece. It does not seem as if the small mom-and-pop EC companies out there would be very good weekend customers for your distributorship. And if someone wanted to figure out from where the demand is coming from at THD and Lowe's, they'll have to dig much deeper -- and look in some other place.

This is the 3rd of three Special Report entries on what I heard in the 8/10 phone conference on electric vehicle charging sponsored by the Electric Drive Transportation Assn. Mike Dixon, product line manager at Eaton for EV chargers, was one of four featured speakers.

My notes on Dixon's words indicate much of his early discussion was on the National Electrical Code and what 625 has to say about EV charging. He spoke a bit about Level III charging, noting that -- in the U.S. -- the trend is toward "a DC quick charger" of more than 100 amps.

[DC makes sense. Batteries need DC power. If you think too hard on this, you come up with thoughts of wind turbine-to-EV or solar-to-EV ideas, as both of those alternatives produce DC power, too. If you go DC-to-DC, you don't have to bother with transforming from DC to AC and back again -- and the resulting expense and loss.]

I found myself thinking about what size an electrical service in a house with a quick charger would need to be in the year 2011. It's an idle thought, generated by the fact that I am, right now, looking to buy a house. Most EV experts, however, are talking Level II chargers for houses, Level III for public spaces 

Dixon said the expectation was that Level III would be realized as "a pedestal application, from a service station to a retailer to a highway rest stop."

Residential vs. commercial

As it turned out, Dixon was also thinking about residential installs vs. commercial (public) charging. He noted that the NEC specifies that an EV charger will get a dedicated circuit sized at 125% of the connector's ampacity. "The Level II charger, which we suspect will be quite ubiquitous, will be configured with a 30-am connector. By Code, you'd need a 40-amp service for that charger. In a lot of homes, you may [already] have that excess capacity," Dixon said.

Yes, he really did say "ubiquitous."

For some homes, though, that 40A of new power draw might mean a service upgrade, he added.

But we're in a whole 'nother world when we think and talk about a commercial facility (say, a parking garage). "If you put 10 of these [Level II chargers] in, buy Code, you now require a 400-amp dedicated service specifically for these chargers," Dixon said.

OK. Let's envision a public parking facility. The facility owner has elected to set aside 10 spaces (initially) for EV charging. If they are Level II chargers, there's 400A in service requirements right there. Nice work for some electrical contractor, and a supply gain for the distributor involved.

But don't stop there.

Dixon talked about a for-instance -- a strip mall. "There's a cost to dig up the concrete, and that cost can easily be a multiple of the cost of the charger. For that reason," he continued, "many people have concluded that if you were to do a scaled deployment, the logical way to do that would be to install a number of DC quick chargers.

"While the cost-per-charger for these is quite substantial, you can support [charge] a lot more vehicles."

 Also, let's think about the cost of ripping up concrete. It's high. If you're going to do only 10 spaces for charging, why not amortize that cost over as many cars as you can service. If it takes 3 hours to charge one Chevy Volt at Level II charging, one can charge perhaps NINE of the same car in the same time with Level III.

And let's go one step further. I'm a strip mall owner and I'm going to add some big new electrical service to my facility (of some size). I'm going to get a contractor in to rip up the concrete. I'm going to erect pedestals. I would think that I would put it all in at once. That is to say, perhaps in 2011 I'll only really want to provide 10 charging stations . . . but ultimately, I might want to be able to provide 30 (or 50).

Would I do all of the concrete work UP FRONT? Would I do all of the underground electrical installation NOW? I think so. I'd put in 50 slots, and go "live" with just 10 pedestals, leaving the others for later. If demand materialized for the other 40 spaces, I'd call the EC back up and tell him to install the other pedestals . . . in 2011, or 2013, or 2015 -- whenever.

Importantly, if you're thinking along with the owner, the cost of ripping up the concrete does NOT go up if one installs Level III chargers instead of the Level II units (the cost of the chargers will go up, of cost -- but not the site prep work). If offering EV charging in a garage ends up being a competitive advantage, offering "fast charging" is going to be an additional leg up.

Maybe.

Questions on operations

My questions about the parking-garage scenario are operational (not electrical). One would want to maximize the use of any given resource, I hope. With 10 Level III chargers in my garage, getting the best "bang for the buck" is a matter of scheduling. Just how is this going to work?

a. At a shopping mall: 

1. Will EV owners be asked to stay with their cars for the complete 15- to 30-minute charging cycle? You'd need them to drive away immediately upon completion, so the next guy can pull up to the "electrical pump."

2. Instead, will each EV owner be given a beeper? When the charge is complete. he/she will be beeped -- in the mall -- a notice to come back and move the car. I'm sure this will work. I'm just not so sure why a shopping mall would want to lure a shopper AWAY from the stores and back to his/her automobile (!!!).

3. What will happen if someone lines his EV up for a charge and then "forgets" and wanders away and shops for three hours? Owners of the cars that might (or might not) line up to be charged will be mighty ticked off, doncha think?

4. Will there be cars lined up in the parking lot, waiting to charge up? After all, a charge could take as little as 15 minutes. The waiting around is just plain dumb -- wasteful of energy (if the cars are left idling, with their AC or heating running) -- and destructive of the time of the EV owner(s).

b. Instead, perhaps the EV charging stations will come with an attendant. The lot owner hires a guy, Freddy, to run the 10 stations. As the EV owner, you sign up to get your car charged in one of the 10 Level III charging spaces (Spots A to J). You let Freddy know that you plan to be in the mall for roughly two hours, and that you parked your car in Spot 256. You give him the keys. He figures out the rest.

c. Change this from a shopping mall to the parking lot of a company HQ. It gets complicated, in a different way. I'm working at my desk at 11:20 in the morning when I get a call from Freddy: "Mr. Salimando, your car is scheduled to be charged from 11:30 to 12." I drop everything, run out of the building, and move my car to the Level III charging-station spot -- staying with it, so I can move it back to the non-charging spot in 15/30 minutes.

The alternative to Scenario C is that the company puts Level II chargers (cheaper) at numerous spots in the parking lot, so as many EV owners who want to charge can do so. This sounds expensive.

AND: There are other nightmares in the public charging-station scenario. At PlugIn2009, there was talk about high maintenance having been experienced at public EV stations in the past. Folks would charge their cars and forget to detach the electric cords when done, driving away with them (this was destructive of course -- and, if you've paid attention, you might have seen people do it at gas stations, too).

Additionally, folks get distracted or are in a hurry. It was NOT atypical (I learned) for people to leave the charging cords lying on the ground and drive away. When the next fellow drove up, he ran over the cord (or the connector). Result: Lots of damaged cords = charging stations that were not functional = lots of (really expensive) service calls = lots of expense for replaced connectors and cords.

That all happened in the past. Will the future be any different?

Parking management

Dixon works for a company with deep electrical expertise AND fairly important vehicle knowledge. While he sits in the electrical area, this internal know-how seems to inform what Eaton is doing on EVs.

He spoke about "hardware configurations" and "whole-product solutions." There will be problems for some people, which Eaton is prepared to solve via charging products "integrated . . . with authenticated solutions." What does that mean? A suite of tools and applications that, kinda-sorta, resemble a "Smart Grid" customized just for one customer.

What does that include? Monitoring. Control. Reporting. Alerts on chargers that need attention. Real-time condition reporting. Hey, if Freddy is attending 10 Level III charging stations, he might need to hear a "beep" from the ones that have completed their charge -- so he'll know that the car in Spot D is now done, and it's time to move it.

From Dixon: "If you were Coca-Cola or UPS, and you decided to deploy a fleet of EVs and, similarly, an EV charger fleet, you'd want to do things intelligently . . . to monitor them, to know if they're working, receive alerts, reporting on the amount of charging [you had done], control the amount of power you were consuming."

Yes, I would. But until he said all that, I hadn't thought about it.

Dixon threw in a final note: "Parking management." A company that owns/operates a public parking lot already has in place operations (and an infrastructure) to collect payment for parking, and to provide security. He said Eaton is working to create a solution for such companies "to fit into [the company's] existing business model."

"Charging 101: What consumers need to know about charging their plug-in vehicles at home, work or on the go" was the title of a phone conference held Aug. 10 by the Electric Drive Transportation Association. The most recent Special Report covered the GM speaker at the event; this one (below) provides info about two EV program vendors and what they had to say; the next posting will deal with Eaton's speaker.

 
Steve Schey of ECOtality

I felt stupid listening to Schey, in that I'd never heard of ECOtality. The company has obtained beaucoup bucks from the government -- to do an infrastructure study (as he described it) on how people use EVs. "How do they connect? What impact does that have on EVs?" he described the questions.

Schey's company is working with Nissan (Leaf) and GM (Volt). Part of the deal: 8,300 people who have decided to own or lease a Volt or Leaf will obtain $1,200 each in assistance from this "EV Project" to get their in-home charging stations installed.

[Yes, it's actually called The EV Project, and that's the URL]

Additionally, an assortment of charging types will be installed in public locations. Then, ECOtality will study on how the folks with EVs use their home chargers AND how the public charging stations are used, and report back to the rest of us (via the DoE, of course).

Let's review the charging-station sitch:

Level I charging takes 10-12 hours (to fully charge a Chevy Volt, with a 40-mile range). it's called "trickle charging." It can be done with a 120V receptacle. It can take 20 hours to recharge a Nissan Leaf (which is battery-powered-only and has a 100-mile range).

Level II charging is faster. It can recharge a Volt in 3-4 hours and a Leaf in 6-8 hours. It's 240V. This is what you want in your house, I think. And it's -- pretty obviously -- the minimum we're going to want in a public charging station. ECOtality is trying to figure out the question: Where do people spend 3 to 8 hours? ANSWER: Restaurants, shopping malls, movie theaters.

Now, I know teen-agers "live" at the mall. I guess if an adult's agenda is to go shopping, see a movie, eat at a food court, and then do some more shopping, a man, a woman, a couple, or a family might well spend 4 to 6 hours at such a place. However, I have heard something about a recession . . . I'm wondering if this part of the study might go very sour.

What about Level III, the "fast charger" and its use in public? We're talking here about being able to "juice" your car's batteries in 15 to 30 minutes. Schey said there was $ in the plan for 310 fast DC chargers.

Where, the next question goes, do any of us spend 30 minutes? The thinking here, Schey said, is to put fast chargers at gas stations and convenience stories -- "places where the owner would like to have a large turnover of people rather quickly."

Perhaps the reasoning here is perfect. But I have to tell you, spending 20-30 minutes at a filling station or C-store is my vision of HELL.

ECOtality's project ends in 12/12. I'm not sure whether there will be interim reports along the way.

Coulomb Technologies

Perhaps because I went to Brooklyn Technical High School, there is a soft spot in my brain (there might be many soft spots!) for the word "Coulomb." You see, BTHS offered only 3 foreign languages -- French, German, and Russian. The idea was: Only "technical" (scientific) languages were worth learning. I took French. The French classes were taught -- I kid you not on this -- using French high school science textbooks. The result was that no one learned French (from what I saw).

Scott Miller of Coulomb spoke at the EDTA thing. He is director of the Eastern region for the ChargePoint America program, which is funded by DoE. ChargePoint seeks to install 5,000 free "smart network charging stations" in nine metro areas.

NOTE: There was a question in the Q&A about why there were TWO programs funded by DoE. I thought the question somewhat dim. It's laudable that our energy people -- given a bit of funding for a change -- used some of it to walk down several avenues of research on a brand new thing.

Miller's time (yes, I know) was short, because he was the final speaker. My notes on his segment are limited. He said that ChargePoint America is pursing those 5,000 locations with 3 main criteria:

1. In a metro area.

2. Public access (anyone can get to the charging station).

3. High likelihood of usage ( . . . to which I thought, "there's the rub").

Miller said the program was still accepting applications for local installations.

Additional stuff 

Before moving on, here's stuff you might already know -- I'm putting it here just in case:

Leviton + Coulomb. 

GE vs. Coulomb -- that's how the EnergyWise blog at the IEEE Spectrum website headlines this piece.

Coulomb gets $37M from DoE (from Edmonds.com blog).

ECOtality program expanded by DoE (from a "transport sustainability" website)

Fact sheet prepared for an international meeting (2-page PDF, 7/23/10) by DoE on EVs.

Info on a 7/22 workshop DoE held on EVs for 150 city officials.

Next time: A look at what the Eaton speaker had to say.

"Charging 101: What consumers need to know about charging their plug-in vehicles at home, work or on the go" was the title of a phone conference held 8/10 by the Electrical Drive Transportation Association.  Find a recording here.   Here's a recap:

Speakers:

• Brian Wynne, President, EDTA
• Gery Kissel, Engineering Specialist, Plug-in Vehicle Charging Equipment, General Motors
• Mike Dixon, Product Line Manager, Electric Vehicle Chargers, Eaton Corporation
  
• Steve Schey, Director of Stakeholder Services, ECOtality
• Scott Miller, East Coast Director, ChargePoint America, Coulomb

Wynne presented the following factolitos:

1. You'll soon be able to purchase a Volt (GM) or a Leaf (Nissan), in just a few months.
2. In 2011, another 15 plug-in vehicles are coming to the mass market!
3. 20,000 public charging stations are being installed NOW in selected cities across the country.

  Which cities? I wrote down 14 of them: Austin, Charlotte, Chattanooga, Dallas, Detroit, Eugene, Fort Worth, Los Angeles, New York, Orlando, Phoenix, San Francisco, Seattle, and Washington, D.C.

GM Exec On The Volt

Kissel is from Government Motors, so -- naturally -- his version of the EV world consists of the Volt. It gets 40 miles on battery power, he said, but has a "range extender." Once that thing kicks in you get another 300 miles, giving the vehicle, on average, 340 miles of range on one charge and one . . . tank of gasoline. It turns out that "range extender" is a gasoline engine.

Some (i.e., the people from Nissan, whose Leaf doesn't have a "range extender" and goes 100 miles on a single charge) might not appreciate that a supposed EV gets the bulk of its per-fill-up range via fossil fuels!

From Kissel: "This puts the Volt in a unique position. It's an electric car that doesn't have to be a person's second car."

That's true, but if you're analytical or skeptical, you'd be a bit less confused about what this thing is. The Volt is a gasoline-powered automobile that gets 40 miles of its range from battery power. If you're an environmentalist, or you want to tell the Arabs to keep their crude oil, the Volt amounts to a Great Big So What, doesn't it?

"Why did we pick 40 miles for the Volt's battery range?" Kissel asked himself before the Q&A, perhaps indicating he gets this one a lot. It turns out that a 2003 U.S. DOT survey indicated that 78% of the commutes by citizens were less than 40 miles. So, in theory, you could drive to work, drive home, and recharge your Volt four nights a week -- and get to and from work via battery power.

GM will roll the Volt out in 2010 in CA CT DC MI NJ NY TX. Kissel said the nationwide expansion of the thing's marketing comes within 12 to 18 months. If the company gears up for full production in 18 months, that would mean Volt output hits full-bore by February 2012.

I have read that, by 2012, GM and Nissan together will be able to produce 195,000 Volts and Leafs, combined. If that happens, and if the things sell, there appears to be the potential of 1 million Volts/Leafs alone on the road by 2016 (without considering other makes/models from these two car-makers, and what the  other guys produce and sell).

 The Volt, he said, "is not a fast-charge vehicle." I'm not sure why, he didn't explain, and no one asked in the Q&A (I stayed for only part of that, though). Fast charging is EXTREMELY convenient; it can take as little as 15 to 30 minutes. That's out the window with GM's first EV. But there's an interesting diversion here.

 When you buy a Volt, he said, you'll get with it a 120V cord set. You can charge the thing by plugging into any standard household receptacle. How long will it take to provide a 40-mile (full) recharge, from a near-empty battery state, at 120V? Eight to 10 hours.

 Before moving on, let's dwell on that: No special equipment is needed to charge a Volt in 8 to 10 hours. Kissel said the load placed on your home electrical system from 120V charging would be the same as a blow-dryer. OK, so in this case it could take 10 hours to dry your hair.

 [His use of a hairdryer as an example touched a cord with me. In the 2nd half of the 1980s, I lived -- and owned -- a house in Maryland. It was built earlier. It had a very small electrical service. We had no money to upgrade it. But every time my wife dried her hair, the electricity blew out -- or so it seemed. We found the money and did a heavy up!]

 GM will also sell an optional 240V wall-mount charging station. Owners can use this to charge the car faster (3 to 4 hours to get the 40-mile full recharge). The load on the house in this case, he said, would be "more akin to a water heater or home spa."

 Yes, he really did say "akin."

 The EV for those who don't want one

 Essentially, the Volt boils down to the EV for people who really don't want to be bothered with an EV. Let's assume you do have a 35-mile daily commute. With the battery charge AND a full tank of gas, you won't need to gas up and/or recharge the battery more than once every eight or nine working days. You won't need special equipment. You won't need to mess with your house. Your house won't need a heavy-up.

 MORE: Of course, you could just drive around with the gasoline-powered engine and be able to "say" you have an EV. Talk about greenwashing!!!

 Am I disparaging the thing? Perhaps I should not do that. The key thing for people like me (a guy with a greenish tint) to remember might be MARKETING. The Chevy Volt can be seen as a STARTER electric vehicle. Many people will buy it pronounce themselves environmentally aware, and perhaps recharge the batteries only 30 or 40 times a year. It's not great; it's a start.

 So be it. No one knows what will happen when EVs are unleashed upon the public (and vice-versa). Maybe this is the way to tip-toe into The EV Age . . . if such a thing is to come to pass, perhaps it happens one baby step at a time.

Surprise on the way

 One big hurdle in getting the EV into mass-market use -- I've referenced this previously here on TEDMAG.com -- is getting charging stations purchased, heavy-ups done on homes, utility hook-ups to those homes, contractor training & recommendation, municipal inspections, etc.

 Despite the trickle-charging, GM has a plan for this. It sounds like this, as described by Kissel:

 a. Buy a Volt and you get the right to call 888-VOLT-4-ME. That's where you'll find a "Volt customer advisor." This is, he said, "a one-stop focus for a Volt customer to call to have charging equipment installed."

 b. Here's the knock-out punch: "We [GM] will be partnering with a provider that will take care of our home installations on a nationwide basis."

 That "provider" will get electricians, or electrical contractors, into those states (see list above) where the Volt is being sold. Who will the partner be -- NECA? IEC? Sears? The Home Depot? Mr. Electric? TEGG? I waited with baited breath . . . there was a drum roll . . . the clouds parted . . .

 . . . and Kissel said: "We're not quite ready to announce that yet. I was hoping to, but . . . "

  Next time: A look at ideas from the ECOtality and Coulomb speakers.

I can't present myself as a lighting genius. I have not attempted to become an expert on anything, really, except the doings of the Knights Templar, the possible Marian descent of the Merovingian kings, one heck of a lot of weird stuff about Rennes-le-Chateau, and the Albigensian Crusade. And I accomplished almost all this learning BEFORE that idiot wrote his first book!

What all that means: I am completely prepared to discuss Pepin The Short with you, should you wish such a conversation.

As a generalist on most other things, I generally stumble around. If there's something to be said for a reporter/generalist serving people who want to know something in electrical distribution, then perhaps the best thing to say right now is that he/she should be focusing, thinking, talking, asking, and writing about LEDs.

So I'm hoping to carve out a slice of cyberspace, right here, to provide what's new in LED-land. Excuse me if this piece tends to bounce around a bit; there's a lot to cover.

CREE falls off a cliff

Cree, Inc., is the flagship company of the LED revolution these days -- for investors. That's because you really can't buy stock in GE or Philips on the basis that one of these companies is some kind of "pure play" on LEDs, I don't think (those companies are so much bigger than any one thing).

CREE is the stock symbol. On 8/3, the last trade in it (from Yahoo! Finance ) was $73.83. Just a few days later (8/16), after the company provided a quarterly report to the financial community, it closed at $56.60. This is the kind of thing that gives The Stock Market a really bad name and makes people cry over their 401(k) balances, isn't it?

To figure out what just happened, I read the company's earnings release  (it's good) and the transcript of its phone call with the Wall Street types. Here's what Chuck Swoboda, the boss at Cree, had to say (among other things):

Cash and investments increased to nearly $1.1 billion. We remain in the strong position to continue to invest in our business and lead the adoption of LED lighting. We made good progress building momentum in our business, and delivering on our four key objectives for fiscal 2010. We grew the LED lighting components business more than 100% year-over-year. We further established our leadership in LED lighting and disrupted the market with customer wins like Wal-Mart, we turned power and RF into a profitable and growing product line.

 That's a whopping good paragraph. You've got "we . . . disrupted the market" in there, and $10/share in cash. What's not to like? What caused a 23% decline in CREE's stock price (a market value drop of nearly $2B)?

 "Weaker-than-expected revenue guidance."

In other words, the Wall Street folks (who have been reliable, now haven't they?) thought Cree's future guidance on earnings would be one thing, and it was another. On the basis that most people who invest in stock are adults, you might think everyone knew about the "no tree grows to the sky" part of life. But the 23% decline leads one to believe some group of geniuses bid up the price of CREE -- up there, near the sky -- based on what some creeps on Wall Street guessed that Cree's executives might say in this quarterly thing.

 Yes, I typed "creeps," and I'm not apologizing.

 It's a funny thing: No matter what one might think, and whether you tend to get enthusiastic and thus forget the no-tree-grows-to-sky thing, and no matter what the analysts might have said, every once in a while Mister Market awakens from his slumber and commences to whacking people upside the head.

 But the bottom line here, for the rest of us, is this: The decline of CREE stock probably means absolutely nothing about the future of the LED business.

Catching up with DoE

 DoE held its annual SSL Market Introduction Workshop in July. I didn't go. Maybe you did? If not, we can still get a firm grasp of what went on via these handy-dandy items:

 Jim Brodrick's "Postings" (PDF bloggy things) on the DoE site. See the 7/7 posting for a preview of the event, and 7/28 and 8/5 pieces for reports on what went on.

Presentations from the event are downloadable (free), as is material from pre-conference tutorials. It's a lot of stuff -- two days of handouts, and reference items.

Perhaps you're really interested in a niche-within-a-niche -- street lighting? Click that link for a recording of Evaluating LED Streetlighting Solutions, a webinar held as a piece of the July SSL workshop.

The market

 If you need a reminder about what LEDs are bringing to the electrical distribution industry, check out this GreenBiz.com article, written shortly after LightFair (which some folks referenced as "LEDfair").

 Someone worked hard on the piece, because there's a lot of info crammed in there. Perhaps the most important factolito is the bit about a study (from Pike Research) forecasting that, by 2020, "LEDs will account for almost half of a $4.4B market for lamps in the commercial, industrial, and outdoor stationary sectors."

 I didn't purchase Pike's research; maybe the forecast is just wrong. One thing a veteran B2B journalist might have noticed is that being wrong doesn't hurt research companies (do you want to go back and look at all of the "smart house" research from the first half of the 1990s?). 

 On the other hand, it might be worth a moment to consider what has to happen between 2010 and 2010 for LEDs to get to "almost half" of that market for lamps:

 1. What changes will come in customer expectations over the period (which is fewer than 3,700 days, by the way)? 

 2. What happens to the lamp replacement business, when the stuff being put in won't burn out for 25,000, or 40,000, or 50,000 hours?

 [yes, yes -- that's an obvious question. I didn't want to omit it here.]

 3. There's a lot of LED product out there. Some of it sucks. Do you know the difference between X and shinola? Do your lighting people? Considering how fast the LED market seems to be moving, is what you think you knew about LEDs just 3 months ago still valid?

 Just asking.

This is the 3rd of three blogs on green construction magazines. 

Typically, these magazines feature case studies of green buildings. I don't really have a problem with that, except that when it comes to green and sustainable, doing a case study of a building right after it is completed is MEANINGLESS.

You'd want to wait. You'd want to come back in 5 years. Or, maybe, 10 or 15.

You'd want to talk to the building owner, see every energy bill, talk to occupants about comfort. You'd want to talk to occupants of a building built in 2009 along about 2017.

Really. "Green + sustainable" is not about how the damn thing was constructed -- it's only partly about that. It's about how the thing PERFORMS.

Now, the articles aren't all bad. And they don't all banish Electrical to the corner and stick a "dunce cap" on the technologies. There can be some stuff about lighting in the articles. However, most of it, in the stuff I've read, is en passant (yes, I was a member of the Chess Club at Brooklyn Tech)

-- i.e., lighting is not even close to the focus of the article.

Daylighting gets play in the articles (and in some advertising). In green circles, daylighting is (or has been) "hot" lately. It's hard to include daylighting in building retrofits, of course, which is why I lose interest.

Why lose interest? Sum it up like this: This year, we'll build buildings. We'll add maybe 1% or 1.5% to the building stock. The energy-saving and sustainability work that MUST be done if our country is to become smart about being green is 98% in existing buildings. AND: Getting daylighting to work in existing buildings can be impossible.

Missing (inaction)

Interestingly, in Part 2 of this thing, I took a look at 210 pages of March/April issues (3 magazines). There was little or nothing about Solar PV or Wind in all of those pages. Consider: Time-wise, those issues represent one-sixth of what the three magazines together will present to readers.

Is there anything hotter than wind and solar PV? I guess so!

Note that the lighting trade-show ads I called out are typical. There are a number of ads for other trade shows and other "educational" opportunities in the green magazines. 

You might get depressed over the sum of the three magazines at which I looked: 3 electrical industry suppliers (each with one ad) and the only thing from a distributor was, for chrissake, from Grainger. Is Grainger an electrical distributor? Well, yes and no. The company did put a LIGHTING ad in the green publication, didn't it? 

That's not necessarily the point here -- I'm not trying to implicitly criticize electrical suppliers or distributors. Every company has a different marketing plan. Print ads aren't necessarily a part of such a plan in 2010, in part because of the cost of print, in part because of the Web, and in no small part because we're in a freakin' Depression.
 

 
The medium is the message

That's what Marshall McLuhan had to say, 100,000 years ago. I studied his thinking when I was in college, back with T-Rex, Romulus and Remus, and those cavemen you see in the Geico commercials. What McLuhan said is true here. The content of the three March/April green magazines is communicating something to us (other than the over messages in the editorial and advertising).

What is that?

a. The audience of people who read green magazines is not the least bit interested in saving energy. "Green" means something to these people -- but not saving energy. Does this seem a radical conclusion? Think about it. Try to make it come out any other way.

b. Architects, who dominated the green movement at its beginning, are still (to a large part) calling the tune. And architects, as almost anyone in the electrical products biz will tell you (including contractors) know little or nothing about electricity.

c. And (it seems) they don't care to learn anymore, whether green is hot or not. They'll make green + sustainable about bronze door handles and railings on decks before they'll learn about lighting control. This is why only 1% of existing commercial buildings contain lighting controls. Based on what I'm seeing in these magazines in 2010, I'm not thinking we'll get to 10% of new commercial buildings with lighting controls in my lifetime.

Or in the lifetime of anyone else!

d. Potential advertisers in these magazines aren't stupid. They read the magazines. They read the circulation statements. They know that architects pretty much want to learn more about things with which they are familiar (i.e., flooring and wall coverings) . . . and don't want to know about things they don't want to know about. After all, the readers of these magazines eat based on the work they are hired to do. 

And architects -- even green ones -- apparently aren't hired to make buildings more efficient -- with energy-smart electrical installations, other energy-saving equipment, solar, wind, or what-have-you. I also wonder how many architects ever are asked to work on retrofits of any kind (green or otherwise). 

e. Understandably, the editors of these magazines won't run a lot of material on electrical stuff. Picture yourself as a publisher of one of these publications (I used to be a publisher, so I can do that). Here's what you will say to your editors:

"Don't waste your time with lighting, for Pete's sake -- go after more articles on deck railings!"

 Even if the boss does NOT say such things, editors are responsible for knowing their audiences. If you are talking to people who know nothing about lighting (other than daylighting, maybe) -- and care less -- that's what you are going to write about. 

 ALSO: 

 f. I don't believe Web advertising is the reason there aren't electrical ads in the green magazines. While I am as old as the hills, and I know that Web ads are cheaper than print ads, more and more marketing people are realizing that the old saying -- "You get what you pay for, and you pay for what you get" -- remains true.

 Just the other day, for example, the sky-high viewership numbers for a site called Hulu were revised -- down. Hulu went from #2 to #10 on the top-visited list. Why? The numbers-crunchers rejiggered how they crunch the numbers!

 My favorite quote on this development, which comes from the L.A. Times, and was attributed to Tim Hanlon, a digital media strategist in Chicago:

 "It's maddening . . . you would think 15 years on, we would be in a better place. But we're still talking about fundamental discrepancies in things like page counts."

 
 
What's the upshot?

 Now, what's above might sound like carping, but it adds up to a lot more than that. Magazines lead their readers in new areas. There's stuff going on in the green movement (behind the scenes) that's indicative of something . . . perhaps some of it is caused in part (or reflected by) what's between the covers of these publications.

 What am I talking about?

 1. The USGBC keeps losing members. According to RealLifeLeed.com , a blog, it's down from 20,000 to near 16,000. Yes, I know -- there's a Depression going on. Still, reflect on this: Did you expect USGBC to take gas like this? Did you know about it before you read it here? 

 2. A lot of "green" buildings aren't energy-efficient. This is to say: The buildings are built; the LEED credit is awarded; and, later on, it turns out the structure is an energy-WASTER!

 You have to work very hard to find stories about this, but they are out there. Is this a result of letting architects run the place? You can't blame it on magazines, but the magazines reflect the environment in which their readers operate (they do that, or they go out of business).

 3. One building that earned LEED credits really . . . sucks. At least one. There's a brouhaha out there about a Wisconsin school . It's ugly stuff. I first learned about this in March. Here's what follows learning about this:

 (a) you ask yourself -- do you believe it; and

 (b) if you do, you then end up asking yourself -- how many OTHER buildings with LEED certification out there . . . also . . . really . . . suck?

 There's more to green buildings than deck railings and door hardware. In this 3-part blog, I've made the case that it is possible (no indictments here, just possibilities) -- that the publishers, editors, and readers of the major green construction magazines aren't interested in lighting and matters electrical. Perhaps as a result, advertisers in the electrical industry aren't using them. Few articles talk about power, lighting control, energy-smart retrofits, solar PV, wind, etc.

 And, not as a result but certainly as a reflection of the ambient green construction "environment" (if you will) -- there are legit questions about LEED, about the performance of LEED buildings, and much more. 

 When you stare at this hard enough, you might end up thinking that the green construction movement hasn't really taken the nation anywhere.

In yesterday's Special Report, I addressed the strange phenomenon that electrical products are at the core of energy efficiency, but aren't top of mind in the Green movement.  In this next report, let's look specifically at the absence of electrical products in three recent issues of different Green magazines.  

 EcoHome

"Your source for green products + technology" is the slogan of this publication. I happen to like EcoHome, it's a fine publication. I have the March/April issue here. Here is the complete list of advertisers relevant to electrical distributors, their customers, and anyone interested in electrical stuff:

Panasonic (ventilation fans) -- full page

That's it. There are several ads touting the energy-efficiency of products that, for all intents and purposes, are architectural dingbats.

My favorite "you gotta be kidding me" advertisement is from Feeney Architectural Products -- a full-pager on Design-Rail aluminum railing systems. These things appear to exist in order to keep homeowners from falling off elevated decks. The ad claims they "add to LEED credits," but if there's something energy-smart about these things, it's not completely transparent.

Editorially, there are features about row-house condos and mixed-use rehab. There's not much about electrical stuff at all (windows and solar water heaters are the featured product areas). A Cree LED downlight is included in the product section, on page 50; it was a 60-page issue.

Eco-Structure

I spend some time with this magazine, mostly because my client does NOT advertise in it (it runs with the competitor, which is below). If you're doing your job as an ad buyer, you should look closely at future options.

Like EcoHome above, Eco-Structure  is published by Hanley-Wood, which is a fine publishing company. You might be familiar with the magazine BUILDER, the #1 pub in the home-building niche. E-S's March/April issue weighed in at 60 pages. Advertising that might be of interest to electrical folks:

Lithonia Lighting -- full page on LEDs

Half-page vertical ad (p4) for "light + building," a trade show held in Frankfurt (as in Germany)

LightFair also had a full-page ad.

That's it for electrical ads. It's possible that the two trade show ads were there as ads that "paid" for the company's booths at each of the shows (that's an educated guess).

My favorite non-green ad is from Nora, a flooring company; it's on the inside front cover. There's not much copy, and none of it is about environmental or energy anything. It's just a flooring ad. It's targeted, of course, at -- architects! But from the ad's look and feel, it's not necessary aimed at GREEN architects!

Two editorial pages have Lighting products on 'em. Companies represented: BetaLED, Dialight, Xicato, and a product titled "Artemide Tolomeo LED," which seemed to be a desk lamp. The copy beneath it said it was "distributed in U.S. by Humanscale."

I know that I don't know a lot about a lot of things, but the names Dialight, Xicato, Artemide Tolomeo, and Humanscale are all new to me. Of course, I last went to LightFair in 2009, and I'm not very smart -- so this might be my fault.

GreenSource

As "marketing coordinator" for the NECA-IBEW national marketing cooperative, I place advertisements in this magazine. I meet with the Mid-Atlantic rep for the publication, who is the area rep for McGraw-Hill Construction (which publishes GreenSource, Engineering News-Record, CONSTRUCTOR, a bunch of Dodge regional monthlies, and a lot else).

NECA-IBEW is not in every issue in 2010, but it is in a few. I read every issue closely anyway, to see what the editors are doing. I also look at the ads. This is routine, I think, for someone being paid to do this work; it's what I am supposed to do for my client.

Note that GreenSource has some kind of relationship with the U.S. Green Building Council. Additionally, it was the thickest of the three magazines discussed here, with March/April coming in at 96 pages. Advertising:

Toshiba Lighting, page 8 (faces contents page)

Call2recycle.org -- recycle batteries and cell phones (yes, I'd call this "marginal" as an electrical ad)

Grainger -- yeah, this might seem marginal, too. But read the ad copy: "Think of us as one part lighting system, two parts penny-pinching account."

Siemens -- "our green building solutions"

Lutron -- asks "how smart is your lighting" with its ad on the back cover (nice position!).

Editorially, the last inside left-hand page of the magazine -- the last page not covered by an ad -- was about buildings and electricity. Specifically, it covered green electricity purchasing. Again, this is marginal for the interests of most people reading this; but it was an electrical article.

Favorite non-green ad: Page 18, RockyMountain handcrafted bronze hardware. I stared at this ad for a very long time; there were very few words. The ad essentially was a pretty picture of a bunch of door hardware. I tried to figure out how the heck that stuff was "green" in any sense of the word as currently used. What's sustainable about bronze hardware? Perhaps the fact that the company is named after a bunch of really big hills that were not constructed by man?

Next time: Conclusion to the three-parter on green magazines and the lack of electrical anything within their pages.

Answer: Electrical Products
By Joe Salimando 

Before getting into some things you might not know, let's agree on some ground rules, assumptions, and facts:

1. I assume that electricity, at the point of use, is Green. It does not pollute your house or workplace. It's not all that long ago (before Edison's 1881 wiring of lower New York City -- which is only 130 years ago) that "the environment" was polluted by the emissions of gas lamps. Illumination was spotty, even with gas. 

2. As we all know, electricity can become EVEN MORE GREEN. There are 2-million-plus commercial buildings in the U.S. that have out-of-date lighting (it's not efficient, it uses too much power for the illumination given, and probably the lighting itself sucks). Motors can be a lot more efficient; buyers seem to focus on first cost, which makes little sense. Building controls can make a building's energy use more intelligent.

And lighting controls, one of the most underutilized ways to save energy, are (I hear) . . . available.

3. Right now, the most exciting thing to happen in electrical distribution circles is advancing every day. It's the LED. It's a new technology. It's got enormous promise. It's still developing. The government is actually behind it. There's news on the LED front every day. And there's a scheduled ban of incandescent lamps (unless they become a lot more efficient) set for the 2012-2014 period.

4. Certainly, the source of "incremental" business in construction itself (and probably in electrical construction) in 2010 is the green niche. This may well be the case as we go further into this . . . depression. Green construction might grow on into 2013 and 2015 and 2019 . . . and the other kind of construction might keep shrinking. While commercial buildings just aren't being built, green retrofits ARE going forward (and even getting government funding).

Now, you don't have to agree with all of the above. But these are the assumptions behind what follows.

Green construction magazines

I receive, skim, and READ a significant number of magazines about things green and, specifically, green construction. In addition to my professional interest -- as a writer who hopes to inform and entertain electrical people -- I have a personal interest. And if that's not enough, I have a "due diligence" kicker: I buy advertising for a client, and that client has green advertisements. If I'm doing my job for that client, I'll at least look at the ads in the green publications.

Here's the thing: Over time, I've noticed that these publications essentially IGNORE electrical products. In other words, the editors and writers don't spend a lot of time on things electrical. This is interesting, because one of the things I've learned in recent years is that a lot of the people who advocate green construction, renewables, energy efficiency, and such . . . do not know very much about electrical stuff.

Additionally, of course, these publications ignore electrical because not very many electrical manufacturers (or other suppliers) buy advertising within their pages. Now, this might be "unfair," because electrical manufacturers aren't buying many advertisements anywhere. 

Recent history

At first, when the green movement came to the fore and green construction was fresh and exciting, the lack of electrical content (and focus) in these green magazines was comprehensible to me. Why?

At least at first, architects dominated the green construction movement. And, as most electrical people have experienced, architects know next to nothing about electrical. As it turns out, they know very little about anything else having to do with energy.

At the beginning, there was the U.S. Green Building Council and its annual event, GreenBuild , which dominated the green construction thing. I'm not sure of the composition in 2005 of the USGBC's membership, but -- from the outside -- it seemed like an architect-oriented thing. An examination of the exhibitor list from GreenBuild 2008 (I did this personally) showed very few electrical companies with booths.

Evolution in the revolution?

Over time, however, the green construction movement has . . . seemed . . . to evolve. USGBC itself revised its LEED program to emphasize more energy-oriented stuff, including electrical. Plus, if LEDs were a really wonderful idea back in 2005-2008, right now learning about them before thinking about a new building or a green retrofit seems to be an imperative. I've had electrical distributors involved in these LED installations tell me something along the lines of: "It didn't make any economic sense for this project, but it's what the client wanted."

So you might assume that the era of purposeful electrical ignorance in the green construction area would have passed. But I can testify (and will prove in the 2nd part of this 3-part blog) -- that's just NOT the case.

In leafing through the green magazines this spring and summer, I've seen NO CHANGE. There are few, if any, electrical ads. There is little electrical content (sometimes VERY little). It runs contrary to my expectations and, I would argue, it runs against common sense.

However, I am aware that the best of human beings can be wrong. One can look and not really "see" anything objectively; that group includes me.

So I purposefully put aside green magazines into a pile. In part 2, I'll tell you what I found when I leafed through them.

Even though I sometimes do it, I'm not in favor of comparisons of "today" with a place in the past we refer to as "the best ever." For example, the S&P 500 twice hit highs over the 1,500 mark (in calendar 2000). Today, it's below 1,200. Comparing the all-time high with what's happening right now isn't constructive.

For one thing, as stupid as most of us have been about investing, few of us committed 100% of our money in early 2000 and have just sat back and watched since then. Right?

In theory, this should go for everything. In practice, I'm going to do it right here and now. This short blog compares the recent (July 2010) national employment data with where we as a nation were 5 1/2 years earlier, in December 2004.

Ignoring the fantasy years

WHY pick 12/04? Quite simply, because it was "in the middle" of our credit-infused boom. Our economy hit its 2nd bottom in late 2002 (there was one immediately after the 9/11/01 attack, you'll remember). In 2003, we were still climbing out of it. By 2004, we could see that we were going to get better.

I believe 2005, 2006, and 2007 were fantasies. In perfect hindsight, most should be able to agree that Alan Greenspan screwed up, and that the credit boom went much too far. There was a lot of spending fueled by booming prices of houses (including dollars folks removed from their houses via the convenience of refinancing). The Federal Reserve seems to have totally abdicated its responsibilities (previously described as "taking away the punch bowl just as the party is really getting started").

SO: Comparing now with 2007 isn't constructive. It's comparing reality with fantasy. It's depressing as all get-out. PLUS: If you're a Realistic, you don't expect to get back to where we were in 2007 . . . at least, not anytime before maybe 2016-2019.

But 2004 wasn't yet crazy. Getting back to 2004 seems reasonable. So I decided to look. There's some interesting stuff here, I hope you'll agree.

Big numbers

Bureau of Labor Statistics numbers put the U.S. labor force at 148.2 million in 12/04. In the 7/10 report, it was 153.56 million. That's an increase of 5,360,000 people (+ 3.6%) that our nation needed to put to work in the period. I honestly don't think that it's too much to ask of an economy . . . grow employment enough to put roughly 1 million new job-seekers to work every year.

Do you?

How many folks were employed? This is the really dismaying number here. The U.S. had 140.16M employed as of 12/04. But 5.5 years later, it was 138.96M.

Simple math gives you the number of unemployed -- from 8.05M in 12/04 to 14.6M in 7/10.

That's a lot of slack in the economy, of course. And, of course, providing unemployment benefits for some of those people, and supporting them, creates a drag on the part of the economy that is still productive. What's more important, though, is the potential -- imagine how well we could be doing if we found jobs for the 6.55 million extra unemployed that we didn't have 5.5 years ago!!!

FINAL BIG NUMBER: Citizens not in the labor force. I believe the BLS counts people between the ages of 16 and 65. The number of these not in the labor force as of 12/04 was 76.4M. As of 7/10, it was 84.3M. Some of these are "discouraged workers," some are disabled (temporarily or permanently), some are staying home voluntarily (some are mothers!). Some are retired.

Yet when you look at it as a "whole" -- we've got almost 139 million employed people providing the wherewithal for another 84.3 million adults that are not contributing. It's no wonder that those who work for a living feel the strain!

Where the jobs were/are

I looked at three subcategories of employment for some additional perspective. These are smaller numbers, but I think they tell a story:

CONSTRUCTION -- down from 7.03M at 12/04 to 5.57M at 7/10. I don't think construction is integral to today's production figure. But, if it's about anything, construction is about the future. This is a bad number. I think you might be able to conclude that even if your industry wasn't dependent on construction growing.

MANUFACTURING -- down from 14.4M at 12/04 to 11.72M at 7/10. Now, the decrease here could be as much due to more efficiency in manufacturing facilities as it can be credited to jobs going somewhere else. I'm not sure this is a bad number. I am certain, of course, that we're in a hole in the global economy right now, and -- assuming we all climb out of it somehow -- U.S. manufacturing OUTPUT will increase in the future. Whether that creates more jobs is something we'll all have to look at in the coming decade. Perhaps no matter how much we make, Manufacturing just isn't going to provide a lot of jobs.

GOVERNMENT -- here's the upsetting number. As you might have heard, local governments have been cutting back. But the number of government employees nationwide has gone from 21.7M at the end of 2004 to 22.5M now. That's only a period of 5.5 years. In theory, 2004 was the beginning of good times; mid-2010 is a time of economic retrenchment and stagnation.

Had you not already seen the numbers, you'd guess that a reasonable nation would have taken employment in ALL of its governments, total, DOWN from 12/04 to 7/10 . . . doncha think? Note that, as the BLS has a separate category for Education employment, I don't think this number includes teachers and school administrators.

Where this leaves us

I present these numbers -- a comparison with a reasonable time period, not fantasy -- to make the following points:

1. A while ago, a four-part blog posted here on The Big Shrink. I believe the fact that the gross number of people employed is DOWN by nearly 1.2 million compared to 12/04 demonstrates that things economic are, indeed, Shrinking. I think this makes the point better than comparing today's numbers with what happened in 2007.

Essentially, what happened then should NOT have happened; we made mistakes to get there.

2. What really surprised me in looking at these numbers, side-by-side, was not the slack in the economy . . . the unemployment numbers are well-publicized. What shocked me? The 84.33M not in the labor force. Those are not babies, they are adults. They're not all in prison. They're not all handicapped. They are not "on welfare," and they are not unemployed (this number does not include the unemployed 14.6 million).

Some, of course, are retired. As more people my age choose to retire, they add to the drag on the economy's productive segment. It's something to keep an eye on and, perhaps, think about (in terms of where you choose to put your investment dollars).

3. I believe the government employment number is SCREAMING a simple sentence: The people of the U.S. have not yet taken this economic downturn seriously.

Whether #3 changes will depend on how the economy fares in the next few months. There's an election, you know, in November.

Our government emitted the employment numbers for July on Fri. 8/6. Let's leave the current national numbers alone, as a 12,000 increase (without taking into account the temporary census-taker losses) is punk and doesn't need more comment than you probably have already seen.

Here's some stuff that, maybe, you ain't seen yet. 

CONSTRUCTION -- I look at the database on the BLS site for the total # of productive workers in the industry. These are the productive people, the workers on construction jobsites. These figures eliminate the Overhead types (estimators, project managers, accounting people in offices, executives, etc.). The raw numbers:

July 2010 = 4,468,000 (subject to revision).

June 2010 = 4,402,000 (still subject to revision)

July 2009 = 4,769,000.

What you need to know: July's initially report number is down 6.3% from last July. As you know, construction worker employment tends to approach a PEAK in the summer. The best July we've had since the year 2000 was July 2007, when 6,202,000 construction workers were reported as employed.

I'm looking here at a table of monthly reports from Jan 2000 to July 2010, and the July 2007 number was the all-time peak. We're down 1,734,000 construction workers from that peak.

. . . and that doesn't count the illegal aliens who have gone home, been left unemployed, or found some other form of non-legal employment. There's no estimate of how many of them worked in construction in July 2007, and no longer are able to do that. But that shouldn't be forgotten!

ELECTRICAL CONTRACTING -- the BLS is one month behind on employment data in niches like this one (and the next). I looked for the data on field workers in the EC industry.

June came in at 586,300. The figures reported by BLS have ranged from a low of 555,600 in March to the high in June. It's a tight range.

June 2009 was 42,400 higher.

June 2007 was 156,200 higher. That's a lot of people employed to do electrical work (electricians, helpers, etc.) now doing something else.

Best June on record was in the much-loved year of 2001, in which 774,000 people were employed in the field by electrical contractors. That year averaged 759,400, an all-time high.

ELECTRICAL DISTRIBUTION -- the numbers for NAICS 42361, "wholesale trade, electrical equipment and wiring," will have to do for distribution. I looked at ALL EMPLOYEES here -- and again, the BLS is one month "behind" (the new number reported 8/6 was for June 2010).

June's 135,900, subject to revision, was down 1,000 from May. That's a dip of 0.70% (7/10ths of one percent).

June 2009 was at 142,300. So the decline year-over-year is 4.5%.

In the 11 years of data in front of me, employment in NAICS 42361 NEVER went below 140,000 -- until October 2009. Now, it's been below that figure for nine straight months.

Highs on the table came in the year 2000, in which the industry averaged 162,900 over the 12 months.

CONCLUSIONS -- my conclusions might be different from yours, which is why I presented the data first. You can think for yourself.

Here's my take on these numbers:

a. Construction -- I'm kind of surprised the number went up in July. Then again, "construction" takes in a whole range of activities. Are HVAC contractors in construction? Yes. Do HVAC contractors perform one heck of a lot of maintenance, repair, and renovation? Yes. Does some of this go on in summer? Yes. The bounce in July construction numbers wasn't big. Perhaps service contractor gains and increases in renovation of existing buildings account for some of it.

b. Electrical Contracting -- I'm very surprised that this number has held up so well. Residential, as we know, is bouncing along the bottom. Nonresidential is down BIG. Even public construction is down this year. Obviously, the ECs out there have found a lot of work for electricians and others to perform that has little or nothing to do with New Construction.

c. Electrical Distribution -- is it consolidation-plus-economic-malaise that has taken the number employed in the field down from 162K to 139K in 10 years? That's a decline of 14%. I don't know. Are we at a bottom here?

I'm not sure whether the industry can go down to 135,000 employees if times get even tougher. I'm kind of hoping the 2nd half of 2010 isn't as bad as it looks like it could be . . . so we don't have to find out that I'm wrong.

Our current economic and financial Great Recession began in the fall of 2007. So when the Census Bureau emitted first-half 2010 "construction put-in-place" data (a/k/a/ "construction spending") -- I thought I'd go back a few years to see what the current woeful set of numbers looked like before the bottom fell out.

Below, see the resulting table. A few notes:

a. "Commercial" is a catch-all category which, according to what I've seen + heard over the years, is comprised mostly (65% or thereabouts) of Retail construction.

b. The thing says "Private Residential" because, believe it or not, there is a "Public Residential" subcategory. It's not very big ($4.4 billion in the first half of 2010). Think: Public Housing.

c. I'm pretty sure the government does the best that it can, but that it probably misses some significant piece of the rehab and modernization work that goes on. I'm not sure how it captures lighting retrofits in these data, for example. And I'm fairly certain that electrical maintenance and repair -- a fair share of business volume for some electrical contractors these days -- isn't anywhere in the Census "put in place" numbers (and therefore is unrepresented in the table).

Observations

While the table surely can "speak" for itself, there may be a few surprises in there. Allow me to point out three:

1. Look at Health Care. Look at the two separate lines for Education. These things are in retreat, but not Recession.

2. Check out the gains in the Manufacturing and Power subcategories of Nonresidential. I'm aware that most electrical distributors do NOT serve power plants and powerline construction. And, of course, many areas of the country do NOT have a lot of local manufacturing.

If you subtract Manufacturing + Power from the Nonresidential total, here's what you get: A 38.5% decline in the remaining Nonres categories, instead of the 18.9% dip shown in the table.

3. It's interesting (I think it is) that, despite all of the stimulus money, the Highway + Street category has barely budged. Why? A reasonable guess would be that the county and state highway agencies were cutting back just as fast as the federal government was borrowing money and throwing it at roads, bridges, and streets. 

So then, you ask -- why didn't the whopping gain in the Transportation category similarly disappear? For the simple reason that the local folks resolutely don't budget money for mass transportation, and the stimulus included some billions for high-speed rail and more.

By Joe Salimando 

INDIANA & AFCIs -- why is IN the only state in the U.S. that does not require AFCIs in its building code? Some are asking, including a local TV station -- see this 2,090-word write-up. 

You already (I hope) know the "pro" side of this argument. Here's the other point-of-view:

"You can mandate every safety device ever created for a new home but no one would be able to afford it, so you have to draw the line somewhere," said Rick Wajda, chief executive officer of the Indiana Builders Association. "We have to balance safety and affordability in the code. This is a product that should not be mandated in a home."

SELF-ORGANIZING WIRELESS MESH -- a feature posted to Industrial Automation Asia (under the headline "Of Costs and Cable-Cutting") includes these two interesting statements:

A study by JDI Contracts of Cohasset, Minnesota (USA), working in conjunction with an engineering procurement contractor (EPC) and a major US chemical company, concluded that wireless devices could replace wired instruments for non-safety related low-speed control and monitoring applications on about 25 percent of the points in a proposed process plant.

and

In a separate study, Emerson wireless consultants calculated that wireless devices could be used on up to 44 percent of all points. Using data from a near-6000-point actual greenfield project, savings of up to 36 percent on the cost of engineering and construction of the process automation system were made possible by utilising WirelessHART networks.

BUSWAY & FIRES -- Fire Engineering's short article (with photos) on Electrical Busways delved into practice fire-fighting issues that fire companies face when fighting a fire in a facility that contains busway (I added the bolding below): 

Do not use hose streams in manufacturing occupancies with energized busways; the risk for electrocution is high. Protect yourself and the exposures until the power supply to the busway has been deenergized and locked out, as required in Occupational Safety and Health Administration’s 29 CFR 1910.147. Note: In large manufacturing facilities, there may be more than one busway installation, and each run of busway must be de-energized and locked out separately. (The plug-in switches on the busway can be operated from the floor with a hook stick to isolate individual pieces of manufacturing equipment. The busway itself will remain energized.)

If there is a fire in a manufacturing facility that is not controlled by the automatic fire sprinkler system and that will require offensive operations, work with the plant manager to deenergize and lock out the complete electrical system for that section of the facility. This may require deenergizing several power sources, such as lighting, housekeeping, and maintenance power circuits, and the circuits supplying power to busways for manufacturing equipment.

Although noting the location of every switch for every type of circuit in a manufacturing plant will make your prefire plan so bulky as to make it useless, the presence of electrical busways in the building is a hazard that should be noted on the preplan for your protection.

SOLAR PV INVERTERS -- here's what IAEI Magazine is telling the nation's inspectors, in "Connecting The Inverter:"

Proper grounding connections at the inverter are critical to a safe and properly operating PV system. These connections may be the only connections that the entire system has to earth. All connections must be made and that may prove difficult if manufacturers have not included the proper number of terminals.

SMART METERS GO 'BOOM" -- OK, they didn't explode exactly. instead they "blew up" right in the face of the installing utility, Pacific Gas & Electric of Northern California (and another in Texas). From the San Jose Mercury News report, "PG&E acknowledges thousands of inaccurate SmartMeter bills:"

. . . state Senate Majority Leader Dean Florez, D-Shafter, chairman of the Senate Select Committee on the Smart Grid, characterized the utility's latest disclosures "more as slow crawl toward the truth than anything else."

Florez, in a statement, complained that it took a directive from the California Public Utilities Commission, which has launched an independent investigation of the SmartMeter program, to force PG&E to release what he described as "very basic" information.

"And there is still the unanswered question as to why so many customers have seen a spike in recorded energy usage following the installation of a SmartMeter in their residence," he said.

 ADD: SmartGridNews.com contributed this helpful advice , in the aftermath:

Too bad PG&E didn't have EPRI's recently released Accuracy of Digital Electricity Meters white paper. In addition to discussing meter accuracy, it addresses a number of customer perception issues that should be mandatory for utilities to talk to their ratepayers about. As the new meters come online, the paper says, there are several opportunities for error during the transition, billing periods and rate structures can change and extraordinary changes in weather also can affect customer perceptions.

We’ve got to think the thrashing PG&E and Oncor in Texas have taken are enough motivation for utilities to get it right and talk their customers through meter deployments.  

TEAR OUT 35,000 FEET OF CABLE -- from Pittsburgh's Tribune-Review:

Port Authority of Allegheny County needs to spend up to $1.2 million replacing wires in the North Shore Connector that don't meet fire-safety standards, officials said Wednesday.

About 35,000 feet of cable installed at the North Shore light-rail station has insulation that doesn't meet the National Fire Protection Association's standards for smoke and toxic gas emissions in a fire, said Winston Simmonds, rail operations officer.

Removing and replacing the cable for the station's electrical, lighting and ventilation systems should not affect the 1.2-mile light rail extension's March 2012 opening date or its $528.8 million budget. Time and money for minor setbacks were factored into the project, Simmonds said.

The article claimed that 157,000 feet of "the wrong cable" had been delivered. That's "nearly 30 miles." 
 

By Joe Salimando 

I was 4 years old when the Dodgers left Brooklyn. I never got the chance to ride the bus to Ebbets Field (or walk there -- we did a lot of walking as kids). As a boy, I never knew what I had missed. All of us were fanatical baseball fans; we in the younger continent mostly were raised with the Yankees.

But I did see something in the eyes of the older kids -- guys who were 16 and 17 when I was 10 and 11. There were, for the most part, former fans of the Dodgers . . . they didn't leave the team, the team left them.

I know what it was, now. It was LOSS.

Dodgers fans in Brooklyn had a famous saying, the result of so many World Series defeats at the hands of the New York Yankees. It was "Wait 'til next year." As it turned out, "next year" came only once, in 1955.

Now, to my surprise, that's what the American Institute of Architects is saying about construction's prospects for a recovery, in a recent update of the construction consensus forecast that Kermit Baker (the AIA's chief economist) assembles.

If you check it out, the intro says:

"A steeper-than-projected downturn this year will lay the groundwork for growth by the second half of next year."

In other words: It's not just "wait 'til next year" for construction. It's something like "wait until October 23, 2011."

Numbers in the consensus

Last week, a blog posted here provided a peek inside the McGraw-Hill Construction updated forecast. The AIA consensus rounds up data on 2010 and 2011 from MHC, Reed, and others.

If you went to the AIA post in the above link, you might have -- or might not have -- seen a graphic on the upper right-hand part of the page. It was the consensus graphic, and it's neat. If you click on it, it increases in size and gets to its own page.

Check that out! You can look at the assemblage of numbers that Kermit, who is a Ph.D, put together. OR: You can mouse over the sources on the right-hand side (MHC, Global Insight, Moody's Economy.com, FMI, RCD) -- and see what each of the individual forecasts, as of mid-year 2010, sees for this year's numbers and guesses for 2011.

I don't really have a problem (for once) with the economic forecasts. Why not? Because you can fairly characterize the consensus Nonresidential Total for 2011 as a Dead Cat Bounce:

2010 will finish down 20.3%, the assembled mavens believe.

And then the uptick in 2011 will take us UP by all of 3.1%.

I find this easy to believe. I am NOT cheered by this. I am, however, happy about the fact that Realism is starting to be the new knee-jerk reaction of economists and forecasters.

Realism starting to pop up elsewhere

Now, it's startling to me -- as a realist for a long-time on the economic nightmare in which we find ourselves -- that others are starting to mirror my thinking. Take, for an amazing example, the Federal Reserve Board. It recently issued its semi-annual Monetary Policy Report to the Congress. 

You might want to read, or skim, the whole dang thing. For one thing, it's free. For another, you paid for it. The pieces that shocked me were in Part 4.

Page 37:

" . . . participants generally made modest downward revisions to their projections for real GDP growth for the years 2010 to 2012, as well as modest upward revisions to their projections for the unemployment rate for the same period."

The April 2010 first MPR included the Fed's guess that the headline unemployment rate in 2012 would run from 6.6% to 7.5%. Now, after a revision, the official guess is 7.1% to 7.5%. In other words, after all of the stimulus, all of the Fed money-printing -- and maybe more of both to come -- the best these folks can hope for 2.5 years hence in unemployment of 7.1%, on average, for the full year.

But wait. Get over to page 39, and there's more -- and it's a frickin' doozy!

"Participants generally anticipated that, in light of the severity of the economic downturn, it would take some time for the economy to converge fully to its longer-run path as characterized by sustainable rates of output growth, unemployment, and inflation consistent with participants' interpretation of the Federal Reserve's dual objectives; most expected the convergence process to take no more than five to six years."

Now, that sentence (it's one long emission) does meander down the road, but here's what it means for you and for me:

1. The thing was issued on July 21, 2010.

2. The Fed is the chief economic actor in the U.S. economy.

3. Fed "participants" are the boys and girls who run things.

4. They allowed a staff member to insert this sentence in there.

5. The sentence says "take no more than five to six years."

Six years from July 2010 is July 2016.

Dovetailing outlooks

Fact is, the economists at MHC, Reed, and the other orgs who contributed updated forecast numbers for '10 and new guesses at '11 into the AIA consensus mixing bowl went first (they took their swipe at a forecast before the Fed's report came out).

However, the two outlooks dovetail in a wonderful way. The construction folks see a dead-cat bounce in 2011. They weren't asked to look at 2012 and 2013, but they might well see flatness, or doldrums, or a narrow move up (perhaps followed by a bounce down).

Fed people looked at the broader economy at about the same time -- and said, politely:

"Please wake me up in 2015. Probably late 2015." 

So if you're the kind of electrical distributor exec who does 3-year and 5-year plans, you have to either plan for Much More Of The Same . . . or hope against hope that these economists are all dreadfully wrong, way short of the mark, and so on.

What if they're all too . . . optimistic?

No one asks me to do economic forecasts. Sure, I've been right more than wrong since the end of 1999 -- but so what? Economists don't get paid for being Right, do they?

For what it's worth, here's my take:

a. Nonresidential construction is actually in better shape right now than I thought. It really has NOT fallen off of a cliff. If there's a chance for a surprise (for me) coming down the pike, it might be another dip.

I'm sorry, I know that sounds terrible. But it's possible.

b. I believe the Fed people might be wrong, too. They might have come closer to the mark with "wake me up in 2019."

T8 replacements -- turning customers off?

By Joe Salimando

This is the 3rd of three July 2010 Special Report items on LEDs. If you missed the first two, start here: 

LEDs -- Is It Caveat Vendor?
Selling LEDs? Take A Deep Dive

By the way, in case I've assumed too much -- that Latin phrase ("caveat vendor") is the twin of the more-famous "caveat emptor." "Caveat" means, more or less, "be on your guard." Emptor means buyer.

Guess what vendor means?

Plug in LEDs for fluorescent tubes?

While there is HUGE potential for screw-base LED replacement lamps -- supposedly, 4 billion places to put 'em! -- there is also powerful potential in the T8 replacement market. The fact that Jim Brodrick of DoE tackled this subject was mentioned in the first blog here; download his June 11 Postings from here ("Design and application issues with LED T8 replacement lamps").

LEDs Magazine, also mentioned earlier in this three-part ditty, tackled the T8 contretemps in its May/June 2010 issue. Again, you'll have to go to the magazine's website and download the entire issue (which is free, I think) to see the piece.

My reading of the article in the printed publication is as follows:

a. Brodrick again. He's quoted (from a March "Postings" piece on the same subject) noting that some manufacturers of SSL linear replacement tubes were (at least, before that time) "promising as much as 50% more lumens than their product delivered" in CALiPER round-9 tests.  Yes, it's possible that the average customer can't tell 22 lumens from 31 lumens. But 50% underperformance might be something the average guy notices. 

b. According to the article, the LED T8 replacements "aren't generally true drop-in replacements" in that all of those on the market as of the time the article was written -- except one -- of the units tested by DoE "requires that the fluorescent ballast be electrically removed and the AC line connected directly to the electrical contacts in the tube connector base." 

In other words, someone has to go up into the ceiling and rewire each fluorescent fixture to accommodate an LED T8 replacement tube. There are all kinds of issues here -- including, as the article notes, maintaining a given fixture's UL listing. This, the article noted, was the subject of "an ongoing debate" at LightFair 2010 in Las Vegas.

 c. Energy Star specifically excludes LED T8 tubes. Did you know this? AND: Do you blame them? 

d. "Some companies supply a dedicated AC/DC power supply to replace the ballast rather than trying to cram the power converter inside the tube. The logic is that if you have to rewire the fixture anyway, you can just as easily add the converter."

 I can't share the bulk of this article with you (against the copyright laws) -- so go to the magazine's site, download the entire issue, and find and read the thing.

Do that only if T8 sales are important to you or if you have customers who occasionally use the Internet. 

Miscellaneous Other Stuff

1. With any new technology, there will be miscellaneous UNanticipated stuff. Call it "the usual unusual." Heck, the idea that cell phones could brain cancer is STILL bouncing around, with the latest on that front being a formal action by the city of San Francisco.

With LEDs, the big small story was What Happens To Traffic Lights in Winter. Or, rather, what does not happen; the snow that gets on the lenses of the lights (which are, after all, supposed to be visible) doesn't disappear when LEDs are used. Apparently, no one thought about this.

The upshot: LED replacements in traffic lights didn't generate enough heat to melt the snow that falls in winter, so where the RedYellowGreen was clearly discernable previously, it was covered in some places.

Result (I really can't believe this, but here it is) -- some people drove right through intersections. One death, at least, resulted. Headlines followed.

Now, you might well say -- when the power is out, and you're driving down a street toward a traffic light, what's your response when you see NO color? Mine is to stop and look around (and, I believe, that's the law). This isn't theoretical; I've actually done this.

Your response, on the other hand, might well be to hit the accelerator. I can't speak for you. However, after 31 years of living here in the Washington, D.C. area -- a place where driving styles from around the world come together in an unattractive, unbelievable manner -- I have seen a lot of very strange behavior by people driving 3,000-pound vehicles. Accelerating in winter weather because the traffic light can't be clearly seen wouldn't necessarily be unusual here. 

It's NOT a laughing matter. According to reports, at least one winter death can be attributed to someone not seeing a red light due to the snow cover. The blame went to LEDs.

2. There's a lot of loose advice rolling around; we are, after all, in the era of the Internet. Your customers might find it and come with it to you.

PRIME EXAMPLE: There's a guy who has been writing about things electrical; he's a software person of some sort. In furtherance of a "series" of pieces on green construction, he penned an article in mid-April on how great LED replacements for T8 tubes are (I kid you not).

It had all kinds of numbers in it; it appears -- appears -- authoritative. It looks like the result of some sort of research effort.

As adults know, appearances can be deceiving. BUT: As you probably know, adults aren't always careful when it comes to crap posted to the Internet; they saw it, they read it, they refuse to engage their brains.

SO: Notwithstanding the fact that this was "published" in April, and that Brodrick's initial "Postings" column on LED linear replacement lamps posted 3/16, here's what the guy had to say about the DoE's detailed, painstaking LED testings efforrs:

As for the USDOE being hesitant towards embracing LED technology, it may be as much from the influence directed by the legacy lighting industry lobbyists in D.C. as it is from science.

Categorically, I think it's worth saying THIS: That's an unjust, inaccurate, stupid, unthinking, unanalytical -- in other words, totally bogus -- reading of the situation.

Now, your response to that note might well be: But, Joe, I'm in the electrical biz and, up until your earlier blog, I didn't know Jim Brodrick from Marion Mitchell Morrison (that's John Wayne's real given name!). 

OK. But you didn't write an article about LEDs and post it on the Internet, didja? If you expect to dismiss any government effort, you first will do a lot of research. In fact, all of the CALiPER rounds, I believe, have had interesting revelations about LED performance. Some of it is, unfortunately . . . distressing. And, in the specific case, Brodrick's efforts have been totally pro-LED -- he's trying to keep the things from getting a horrible reputation in the first few minutes of life. 

What kind of research was done for this software guy's article, then? The kind that one engages in when one has "heard" something or other, and wants to bolster that position. The kind of research that one does when one knows almost nothing about . . . research. The kind of effort that results from someone in another business (software?) tries to make oneself into an expert on a very hot topic (green). 

Therefore, if anyone is reading this software guy's stuff -- say, an end-user or electrical contractor who did an uncareful, non-selective search on LEDs via Google -- what they have in front of them is a GLOWING report on LED T8 replacements. The things are great, they save money, and they are better for the planet, blahblahblah. And -- oh yeah -- ignore any criticism, it's the result of a pay-off!!!

Boil it down, and the phrase "horribly misleading" seems apt. The words "poorly researched" fit, too. AND: The word "ignorant" comes to mind. 

Ignorance, it turns out, is NOT bliss.

- - - - -

Perhaps after reading the above section, you'll conclude that I'm angry and I'm "piling on." NOT THE CASE. Stuff stays on the Internet (this article is still there). People are MISLED by what they read.

The duty of someone who writes something that claims authority is to be responsible.

Isn't it?

3. There's more. If you read the first blog, you saw where Brodrick took on a manufacturer over the content of a press release.

Misleading product marketing? It is the state-of-the-art in LEDs.

Why?

Remember: Some LED products claim 70,000 hours of life; some claim 50,000. There are 8,760 hours in a year (that's 365 x 24). SO: How many LED products of any type have been tested over 50,000 hours???? ZERO.

AND: There was another supplier that, having had some level of success in one of the CALiPER test rounds, spit out a press release immediately thereafter -- only to withdraw it a few days later. Why? The specifications for participants in the CALiPER tests, per DoE's instructions, are that the results cannot be used for marketing purposes. DoE told the supplier to withdraw the release. 

There's more to think about in the LED product category than I've fit in here (and we're at 3,000 words in these three blogs put together).

And: It seems as if there will be MORE in the future.

I'll post stuff on LEDs -- reliable stuff, not bogus baloney -- in the future, as I can find accurate, trustworthy info.

You can't know everything, but . . .

By Joe Salimando 

Of course, you can't know everything about anything. In an area like Lighting, things change all of the time. They do in Energy Efficiency, too. And in a fast-moving new technology -- in this specific case, LEDs -- you can't really know what there is to know. The state-of-the-art (the state of knowledge) changes, every day.

One big issue with LEDs now on the market is QUALITY. There's a bit of back-biting, catfighting (that's a nice word for it), and mud-slinging out there.

Take, for example, this public exchange. I found it in a transcript of the March 30, 2010 Nexxus Lighting earnings conference call with Wall Street analysts:

ANALYST: "A couple weeks back, there was a real problem in Wal-Mart about their General Electric lights and the returns that they were having. Have you noticed any fallout from that . . . "

MIKE BAUER, Nexxus's president & CEO:

I can't really comment. I mean, that is not our business. We have heard different comments made in the industry specifically related to what I would term as 'underperforming lamps' that we feel don't do anything to help the growth and adoption of LED lighting.

When customers have expectations of good color and meeting light levels that they are replacing lamps off, and they get a product that is significantly dimmer as far as brightness levels -- and/or has poor color rendition, is not dimmable, some of those features -- the feedback is that 'these LED lamps don't work.'

That is not what we want in the marketplace.

So as we move forward -- and the commercial market is much more sensitive to performance metrics, and that is why we have specifically positioned Array to the commercial lighting market, and the electrical wholesale industry is these customers -- number one, they want a differentiated product.

The electrical wholesale industry . . .

want(s) a differentiated product.

They don't want to have to be buying the same light bulb from a name-brand manufacturer that they are then going to compete with that same light bulb on the shelf at a Wal-Mart or a Home Depot's or a Lowe's.

So they want to have some differentiation. They want quality, they want performance, and they know that that usually is a little higher price. But their customers -- specifically commercial customers -- they can't afford to make a mistake.

While there is a little more, that's the part I thought TEDMAG visitors might want to see. And we've got to keep the "fair use" to a minimum, to avoid going to the wrong side of the copyright laws.

Health problems?

A 2-page article in the Nov/Dec 2009 issue of LEDs Magazine (for which I pay and get a paper copy) carried this headline:

Outdoor LED lighting benefits from PG&E

Efforts, but health concerns are surfacing

You can get the article free, I think, if you download (big PDF) the Nov/Dec issue (from www.LEDsmagazine.com ) -- look around. PG&E is, of course, the northern California utility.

Here's the part that I read with a bit of nervousness, from someplace in the middle of the piece. Note that IDA = the International Dark-Sky Association:

IDA states that the bluish-white light can have significant environmental impact, causing light pollution and sky glow, as well as glare and the compromising of human vision in the aging eye.

The piece went on to quote from an IDA statement:

"In addition, blue light has a greater tendency to affect living organisms through disruption of their biological processes that rely upon natural cycles of daylight and darkness, such as the circadian rhythm."

[Note: I've recently read a book that blames the current boom in folks suffering from diabetes on the invention of artificial light. I have diabetes, and I know it's my fault; I never dreamed of blaming T. A. Edison! The book's author presented some data that show the onset of millions of cases of diabetes dates from the onset of lots of people "burning the midnight oil" via electric light. It's damn tough to prove those data points are related,and not just two things that happened at about the same time.]

I give LEDs Magazine credit for calling this to the attention of the reader, putting it in a headline, and devoting 2 pages to it. While the article did not poo-pooh (or slam) the IDA's contentions, it did produce a conflicting expert witness -- a guy from the Lighting Research Center -- who came to conclusions other than those to which the IDA quotes above might lead you.

Download the pub and read the article. Be forewarned, it's not easy reading. There's stuff in there about "cones and rods," the stuff that the Darwin followers think evolved into your eyes (and the Intelligent Design people say just kinda happened).

MY POINT IN BRINGING THIS TO YOUR ATTENTION: I'm no scientist (neither are you). But there is at least one organization out there pouring cold water on LEDs from a health angle, You should know about it.

Next time: Part 3 of 3 in this LED ditty -- more stuff about LED replacements for T8 tubes.

Stuff you should be reading (part one of three)

By Joe Salimando 

When I listen to electrical distributor execs talk about LEDs, some of what comes through is this: Times aren't great. Some of my customers want LEDs. We just about have to give them what they want, even if it seems stupid. Certainly it is NOT news to you, but your customer is NOT always right.

Even taken by itself, the simplest sales pitch on LEDs sounds like it leads to the word WAIT. And the more you learn, the more you start to think that Patience is not necessarily over-rated.

However, you can't count on basic respect for your caution and judgment. Your customers SHOULD have that, but they probably are skeptical; after all, you're just a typical middle-man, aren't you?

Therefore, you might need to get your hands on information about LEDs. This Special Report, and two that follow, attempt to put some of that in your hands.

Start with cost

Begin at the beginning: The sales pitch on LEDs boils down to -- yeah, they cost a lot, but . . . they are green, they'll save on your electric bill, and you won't have to spend money replacing them. It's tough to pencil this out to a positive ROI.

As a result, the price of the things is dropping. I've heard recently at least one company saying the price of a replacement bulb (a screw-in) would be more like $20, not the $40 generally heard on the market.

As an electrical industry observer for 31 years, I find this . . . exciting, if true.

As someone with a lot of light bulbs in his house (I work in the basement, I need to see!), I find the $20 price point . . . less than stimulating. I might not be in this house long enough for the LED ROI to pay off for me.

I'm not sure I'd pay more for a house that was 100% equipped with LEDs rather than, for example, CFLs. Would you?

Air Force bans outdoor LEDs

I picked this up on the EdisonReport.net site . That site sometimes has rumors and gossip (that doesn't make it a bad thing!) . . . but this item came with a link to a 26-page Air Force technical document. From the site's short write-up:

. . . the intent is for the replacement LED fixtures to produce the same 'light footprint' as the current fixture with a new lamp. The intent is not to claim lower wattage by reducing light output.

Jim Brodrick

He is a Department of Energy official who specializes in solid-state lighting. He regularly produces "Postings" -- PDF documents with his comments on the latest developments in LEDs. As you might already know, there are a TON of "latest developments in LEDs."

But as you might not guess, Brodrick's words are not only NOT officious, but also are informative, someone pointed (backed by facts, not opinions, it seems to me) . . . and easy to read to boot.

Find "Postings" here. A few samples:

- From the May 28 piece on CALiPER testing round #10:

So even though in Round 10 some SSL products at the lower end of the performance spectrum fell short of the mark in terms of uniformity as well as efficacy and output, the overall trend is heartening, because we're seeing well-designed parking- structure and wallpack luminaires that are as good as, or better than, their metal halide, high-pressure sodium, and induction counterparts.

- from the June 11 piece on LED T8 replacement lamps:

. . . in this country alone there are tens of millions of recessed troffer fixtures with 4' fluorescent T8 lamps in use in commercial and institutional applications – and a ton of LED products being touted as energy-saving "drop-in" equivalents that can be substituted right off the shelf. Since at this stage of the game those LED products are a far cry from matching the performance of fluorescent T8s, it all adds up to a surefire recipe for consumer disappointment.

Additionally, Brodrick (I've never met him) is NOT a shy guy. He penned a letter-to-the-editor of LEDs Magazine on a release from Lighting Science Group. Read it here. Basically, his statement-of-facts was not so very advantageous to the case of LSG. His letter ended with this:

Are we setting the bar high for this new technology? You bet. It’s a good time to reiterate recommendations from DOE’s fact sheet referenced in the announcement above: early adopters of LED replacements lamps should be sure to evaluate samples of LEDs in their intended fixtures, review available LM-79 test data, note that performance and life are highly dependent on design and thermal management, and confirm the product warranty or return policy.

You have got to admire a government official who seems interested in shepherding a new technology to market stardom. I've not previously seen a lot of this (have you?).

It's just Joe's opinion, but it appears that Brodrick's "Postings" are now MUST READING for the lighting people who work for electrical distributors. All of them! It's clear that, if you are ignoring what this guy is writing -- FREE -- on pretty much a weekly basis, you're allowing yourself to be left in the dust.

More - on LED products now on the market and Quality - next time.

Updated McGraw-Hill outlook 

By Joe Salimando  

McGraw-Hill Construction has updated its forecast for 2010 construction. This is not an earth-shaking event, it happens every year -- and the MHC people (esp. Bob Murray, the chief economist) are very professional about it.

As a result, I can take the 2010 forecast released last fall and compare it to the mid-year update. Remember, this is the "$ value of construction starts" . . . which means these are NOT completed construction jobs, but projects that have been initiated in 2010. That means this has more meaning for your future business (the near-future, anyway) than the government's "construction spending" data.

Let's see what's changed:

Single-Family Housing

2006 actual: $272.4 billion

2009 actual: $94.3B

2010 initial forecast: $126.2B

2010 revised: $121.4B

What's eye-catching here, of course, is the 65% decline from '06 to '09. There's a decrease in the "bounce" the MHC sees for this year -- it's now almost 29%.

Multi-Family Housing

2006 actual: $69.8B

2009 actual: $17.4B

2010 initial forecast: $21.1B

2010 revised: $19.2B

Yes, it's only a revision of $1.9B, and MF is small beans. But the downshift here is 9%.

2006 actual: $92.9B

2009 actual: $45.6B

2010 initial forecast: $46.1B

2010 revised: $43.1B

The change here is from "dead count bounce" to "the decline continues, albeit it's now gradual."

Institutional Buildings

2006 actual: $110.7B

2009 actual: $109.4B

2010 initial forecast: $111.1B

2010 revised: $110.9B

Interesting how this holds up, isn't it? When I was Editor of Rexel's magazine, POWER OUTLET, Frank Bisbee of Wireville.com wrote a piece (years ago) on how the markets to target were GEMs -- government, education, medical. That was back in the first half of the 2000s. It's time to give Frank the trophy for prescience.

Manufacturing Buildings

2006 actual: $13.5B

2009 actual: $10.0B

2010 initial forecast: $9.4B

2010 revised: $8.2B

Interesting to think that this category is SO DAMN SMALL, isn't it? This tiny nature contrasts with the government's current (spending) numbers, which show Manufacturing to be the largest (and best-performing) category in nonresidential. Perhaps the difference has something to do with the spending numbers capturing Renovations + Rehabs (which the MHC figures, based on Dodge reports, notoriously are not-so-good at getting).

Public Works

2006 actual: $112.5B

2009 actual: $120.5B

2010 initial forecast: $136.3B

2010 revised: $137.6B

Yes, there's the stimulus feeding in here. But I would have guessed (before seeing these numbers) a decline from the October 2009 forecast from MHC -- as many states are in dire financial circumstances (and there are reports that states are cutting waaaaaay back . . . did you see the WSJ article about a North Dakota road where they are converting from pavement to gravel ("back to the stone age ").

Electric Utilities

2006 actual: $17.7B

2009 actual: $19.3B

2010 initial forecast: $16.09B

2010 revised: $17.3B

What's "hidden" in here is a surge in 2008 to $31.3B in construction starts for utilities, and then a fall-back last year (down 38%). On the table in front of me, the 2010 forecast number is the smallest, including 2006, for the 5-year period 2006-10. I don't think this low level of spending can be sustained, as there needs to be a lot of rehab, renewal, new lines, and Extra-High Voltage power systems built in the next 20 years.

TOTAL CONSTRUCTION 

2006 actual: $689.4B

2009 actual: $416.5B

2010 initial forecast: $466.2B

2010 revised: $457.7B

Overall, the revision is a minor correction. Some points to ponder:

1. Institutional building is 24.2% of the total. That's pretty amazing, ain't it? With about the same amount of construction in 2006, Institutional was 16.1% of the total.

2. MHC's "starts" figures do not capture all of construction. The number above is a bit more than half of the $800B-plus in construction put-in-place ("spending") to which the government's numbers seem to be headed. WHY IS THAT?

a. There were projects started in 2009 (and even 2008) that are still active today. They contribute to the government's numbers but are NOT included in the MHC 2010 figures (for "starts").

b. MHC doesn't capture everything. Lots of electrical contractors to service, maintenance, and repair, for example. That may not even get into the government's "spending" figures . . . but it certainly does not get into the MHC total.

c. MHC doesn't focus on small new construction projects.

d. MHC may or may not have a hard time getting rehab/renovation projects. This probably applies especially to smaller ones.

e. If you look at b-c-d, there is probably a significant piece of the market (esp. for your electrical contractor customers) within those areas right now. 

A few other notes

Here are some other notes from a quick look at Murray's slides (from a 6/16 appearance):

COPPER -- the producer price index for copper wire is up 44% from May 2009 to April 2010. The only commodity tracked that has had a higher increase was Iron & Steel Scrap (up 113% in the same time frame).

SINGLE-FAMILY HOUSING STARTS -- Murray last October had forecast 560,000 of these, now he says there will be 555,000. Not much of a revision!

COMMERCIAL BUILDINGS -- 2007 construction encompassed 314 million sq. ft. In 2009, MHC now says it was 95M. For this year, the initial forecast was for 95M; now it's for 89M.

WAREHOUSES -- initial forecast for 2010 was for 70M sq. ft.; now it' for 60M.

HOTELS -- in October 2009 Murray penciled in 30 million sq. ft. here; now, he's put down 23M. That's a big drop (in 2007, it was 85M sq. ft.!!!).

OFFICES -- MHC revised its figure for 2009 from 80M sq. ft. to 71M sq. ft. (that's a big change in 8 months, which means new information emerged that led Murray to correct an earlier too-large guess). If you assume the 2009 market wasn't all that big, you have to monkey with your estimate on 2010. So his 2010 prediction went from 73M sq. ft. of office construction starts in October to 65M in June.

INSTITUTIONAL -- we saved the best for last here, as this is the "good news" (it seems).

Educational: 220M sq. ft. in 2007, 172M sq. ft. in 2009, 150M now forecast for 2010. That last figure was revised down by 5%.

Healthcare: Was 104M sq. ft. in 2007, is forecast to be up 5% in 2010, at 71M sq. ft. Initial forecast for this year, back in October, was for 72M.

Religious: 23M sq. ft. is the new 2010 forecast, down from 26M initially penciled in for 2010 back in October. The 2007 total was 31M sq. ft., so the decline here is not dramatic. 

Airport terminals: Kinda surprising to find this in Institutional, but it had to go somewhere. This niche category has increased from 2.2M sq. ft. of actual 2007 construction to an estimated 4.0M sq. ft. this year. What's more, Murray's original (October) figures have been revised -- up!!! -- 2009 actual from 4.1M to 4.4M, and 2010 forecast from 3.7M to 4.0M. 

Where this leaves us

I'm humiliated to say that, because of conflicting commitments, I did not get out the door on 6/16 and listen to Murray's presentation. There's nothing in the slides about 2011. I don't know if he let slip any guesses about next year; I would like to think that his audience, at a construction user-oriented event in Arlington, VA, at the very least ask.

UNCONNECTED with the MHC outlook, Engineering News-Record (a MHC publication!) ran, in its 6/28 issue, an article on the ENR Construction Industry Confidence Index. The survey, including the responses of 555 construction + design firm execs, showed that many of these people believe, as the article summarized, that "next year it will be on the rise."

Only 53% of respondents said the market was still in decline, ENR said -- sounds bad, but three months earlier that figure was 68%.

Hope does spring eternal, don't it? The article noted that "infrastructure markets continue to be seen as the healthiest," naming power, hazwaste, and water-sewer-wastewater.    

A look a short distance down the road

By Joe Salimando  

This is the 4th and final set of ideas on The Big Shrink that will appear hear (at least for a while) on TEDMAG. If you missed the first three:

1. What If Ben Bernanke is Wrong?  

2. Fighting A Shrinking Battle 

3. The Big Shrink Is ON 

How I got here 

Before late 2002, I was concerned about my country's economic welfare. It was easy to see that Medicare (even without the Bush-endorsed expansion in drug coverage) and Social Security (a program that needs radical reform) were going to bankrupt the country. It was simple to look at our GDP, see the likely future growth, and calculate that these programs were gonna blow up.  

But I figured that would happen after I died. If I took care of my personal finances, my wife (who is younger and healthier) would be able to get through whatever happened in 2031-2040. Even a catastrophe.

Then, in late 2002, Ben Bernanke (then a newly anointed Fed board member) gave a speech about fighting deflation. It was the scariest single document I had ever read. First, these seemed to me to be thoughts one might keep to oneself. Second, this was a government official saying this. Third, you had to figure that, no matter who or what Bernanke was, he had Greenspan's approval to be able to say these things and have them posted to the Fed website.

By the way, the speech is still there , if you want to read it.

Reading that speech (and re-reading it a few times) was a turning point for me, personally. I came to realize that my government WOULD come apart . . . and not after I was in the grave, but sometime in my lifetime. SOON.

What was the practical result of this thinking? While many of my fellow citizens spent the years 2003-07 spending as if there was no tomorrow, my wife and I socked money away . . . as if there was no tomorrow. People bought huge SUVs and mini-vans -- we drive cheap cars. Folks purchased 3,500-sq.-ft. houses; we rent. This doesn't make us better; it just means we did act on what we saw.

-- and Bernanke's speech gets the credit. 

Choices

It seemed to me then -- and this seems even more certain now -- that the government of the United States was going to have two choices on down the road:

A. Default on some or all of our debt. This might include debt held by U.S. citizens, debt held by the Social Security fund, and/or debt held by foreigners.

How would this work? I can't imagine. But one way to postpone paying off what one owes is "payment in kind" (i.e., you get more debt, with a kicker, for the debt you already own). Another way would be to just say NO.

It's impossible to think about what would ensue after the U.S. government said it would not pay the interest on T-bonds, for example. Or repay the principal.

Think about it: Seems impossible/incredible, doesn't it? If you think so, too, then there's the other option. 

B. Devaluation of our currency. You can argue that this has been happening -- and it has, but in slow motion. After the Clinton years, the Dollar Index (a U.S. dollar valuation reading based on a basket of currencies) was at 120. Now, it's around 80-85. 

I'm not thinking this will be complete until the dollar index number is around 40. Or maybe 25.

To devalue your currency, just invite inflation in the front door. Allow your economy to go to Hell. Consider: The exchange rate in the early 1980s for Dollar-Yen was 350. That is to say, one U.S. dollar bought 350 yen. Now, it's below 100. These things happen . . . obviously. We haven't really had all that much inflation in the U.S. since 1988, but the Japanese have fought a 20-year (losing) battle with deflation -- so their currency keeps appreciating vs. ours. 

Inflation/devaluation would have a number of tremendous benefits for the U.S. government:

1 - repay Treasury bond principal and pay Treasury paper interest with much cheaper dollars. This would "beggar" all of the Treasury paper holders (U.S. citizens, foreign governments, and the Social Security system!). Screw you all, essentially, would be the bottom-line feeling conveyed. 

2 - U.S. goods would become much more competitive around the globe, leading to higher employment (in theory).

3 - of course, Social Security recipients would get monthly checks that barely would allow them to buy bread and milk, but someone has got to be the loser here. 

Looking at the two choices (I really don't think there are others) -- I figured we would pick B. 

BUT: Just in this past week, a mystery blogger contributed a post to Calculated Risk (which I read religiously) with the headline: "What Happens If Things Go Really Badly? $15 Trillion of Sovereign Debt in Default."

Maybe I was wrong?

Inflation plus Deflation

It now appears to me that something really bad IS going to happen. Throw all the bums out of Congress, put 535 new geniuses in there . . . go ahead, there's nothing they can do. Replace Obama with a woman from Alaska, replace him with a Martian, replace him with Saint Jude -- doesn't matter.

Taxes? You can't tax the population at 120% of its income level. Cut spending? Sure, but you've got to do something about Medicare and Social Security -- a dictator could do that, but not politicians who want to be re-elected. 

SO: We're screwed.

What seems likely to me -- the pot of sludge at the end of this rainbow, however we try to maneuver -- is a Shrink. Even if the government tries to inflate its way out of this, it won't work. We have two prime examples in front of us -- Weimar Germany and the present government of Zimbabwe.

In the very early 1920s, the U.S. dollar bought you about 4 German marks. Not too many years later, one dollar = 1 trillion marks. Recently, a friend mailed me one piece of Zimbabwean currency. I told him it was nice to have a billion-dollar note. "Look at it Joe," he told me -- it was a 10 TRILLION DOLLAR note.

And it's not fake!

Think about how it felt to live there (or read about it). What you really ended up with was a Shrink, not an expansion.

I remember reading how in Argentina in the early 2000s -- when the government put a freeze on how much citizens could withdraw each month from their bank accounts, so the government would (heroically) STOP inflation -- savvy people spent their paydays shopping. That is to say, they got the cash, and then immediately went out and bought THINGS before the cash lost value. I read about one family that bought chairs and tables. They didn't NEED chairs and tables, but they figured these things would always have a value . . . as opposed to the currency, which was worth less and less, day after day.

So their house became a furniture warehouse of sorts. 

My conclusion: Even if we try inflation, we're gonna get a Shrink. If we try not paying off our national debt, we're going to get a Shrink.

Hey: We've got a lot of people and companies NOT paying off their debt right now and the economy is shrinking

What a Shrink feels like

Here's what this situation will feel like for an electrical distributor: Reduced demand. Maybe your company isn't experiencing that yet; that might be because other companies with which you compete are disappearing (or shrinking).

Or maybe you credit that to the decline in nonresidential construction; it will come back, you tell yourself. I'm here to tell you -- it might come back, but not to where it was (not in most places in this country). Not in 2011. Not in 2012. Maybe not for a while. Can you make a plan to get through to 2019 with reduced demand?

Certainly, housing will bounce, won't it? Yes . . . it will be a dead-cat bounce. Some analyses of the situation say we have 5 to 8 years of prolonged housing-market misery ahead of us.

But won't the stimulus kick in, sooner or later? Hey -- it will be ALL GONE soon. And if there is a 2nd stimulus, it will be a lot smaller than the initial package.

Surely, Bernanke will do something -- won't he? Sure, the Fed can print more dollars and take a bigger role in the economy (hard to imagine, but still possible). But what we've seen since 2007 is that increased government efforts -- of all kinds -- have a diminishing return. The thought to keep in your head is "pushing on a string." 

Over 5 or 10 years, the size of your company -- in dollars, in people -- isn't going to grow, unless most of your competitors close down. The price of most things you sell won't elevate; I know, I know, that's already happened (except for the efforts of Saint Copper).

Can you make money while NOT growing? Yes. If you pay less for the material you sell. If you control how much you pay your people, including your salespeople. Consider: IBEW Local One , in St. Louis, recently did a "giveback' in negotiations with the local NECA chapter (8.23% across-the-board cut, the union's release says). Can electricians take pay cuts and electrical salespeople remain immune? 

Debt is going to be interesting, too. If you have a lot of it, you're in trouble (repaying debt during a Shrink usually proves impossible). If you want to take on more, you'll find it difficult (bankers already know what you're reading here).

But if you have little or none, your family and your company will be . . . golden. As demand -- for every single thing -- recedes, it won't be pretty . . . unless you have savings, or assets which can be converted into cash. Then, you'll find your $$$ buying more than you can remember.

Hasn't this already happened somewhere? Yes -- in housing. Yes -- in salaries paid to most U.S. workers (ignoring the health care costs). Pensions are being pulled back, even in union situations; even by local and state governments. Look around: There are lots of other places where The Big Shrink is in evidence.

NO, it's not everywhere. Not yet. But just wait: It will spread.

And the contention here is that this Shrink will continue, and expand, even if the government prints money at incredibly inflationary rates, as Bernanke indicated it would do in that late-2002 speech.

Note: Bernanke said that. Instead of shooting him in the head, sending him back to his desk at Princeton, or screaming at him . . . our country rewarded him by making him the Fed head. This is known as a symptom of a disease!

It doesn't have to be horrible 

What's the bottom line? According to one opinion-monger :

Current income levels can only support a 1980s level of spending. We've been borrowing the difference, meaning that once the lending window is closed (as it was recently), there has to be a quarter century regression

What if that's when The Big Shrink ends -- when we're back to the 1980s, in terms of our economy's size? What does that mean? There will be (or already is) a new premium placed on Management. It's not just for distributors, or for companies. People are going to have to better-manage their own personal lives, their financial situations, their spending, what they expect, what their kids expect, and much more.

EXAMPLES: Just because someone will loan you 125% of the value of your house doesn't mean you should take the deal! Just because a 3,500-sq.-ft. house would be nice doesn't mean you should sacrifice -- and live in only 2,300 sq. ft. And yeah, sure, that Hummer sure looks sharp; but maybe you can get by with a conventional, cheap station wagon (and worry later about "losing face" with the neighbors and your brother-in-law). 

Things will change. The U.S. may engage in more wars (I don't know) -- but we won't do it without all of us demanding that each of us sacrifice, something that stemmed from every military action by this country until the 2003 invasion of Iraq.

Did you know (or do you remember) that there was a SURTAX imposed by the Johnson Administration in the 1960s to pay for the Vietnam War? You got down to the bottom of the tax return, calculated your tax, and then PAID EXTRA on top of that, to finance the war effort.

Think about how that might be received today. 

People will start to save more money (which will have interesting reverberations throughout the economy -- as the savings rate increase, demand declines . . . sounds like a Shrink, doesn't it?).

With less to spend, "doing more with less" will become . . . common sense. Just as it was when I was a kid, and my parents (and their parents) couldn't shake the lessons of The Great Depression.

And, finally: As we all become more responsible, more interested in managing things to arrange our futures more intelligently and more carefully, we're going to force the same kind of thinking on our national government. It's not there yet, not even close.

But it will happen.

Even under two separate presidencies from different parties

By Joe Salimando 

Perhaps you've not read the previous two pieces in this series (7-9-10  and 7-12-10 ). If not, let me sum up the first half of The Big Shrink series:

a. It appears to be official government policy to prevent deflation.

b. Consequences of that policy, right now, include pinning prudent people to the wall and continuing the party for the profligate, the irresponsible, and those who pursue unethical, not-right, and illegal policies for their own benefit. We saw more of this in the recent "pass" given to Goldman Sachs (a "fine" equal to two weeks of profits . . . oh, the pain). 

c. There might or might not be future consequences of "stimulus" and Fed-led money-printing (as well as money printing efforts by governments around the world, "stimulated" by what's going on here). But as no one has a sure grasp on the future, and presidents only serve for 4 years at a time, these consequences are being . . . short-shrifted, disregarded, poo-poohed, ignored -- pick your favorite phrase. So it boils down to: The Future Be Damned.

Except: All of us kind of expect to live there, don't we?

At the end of part two, three questions were posed. Here are some stabs at answers.

Isn't deflation a big problem?

Yes. We have the 1930s to prove that. But Ben Bernanke, the Fed head, thinks he knows how to prevent it from happening again. AND HE MIGHT ACTUALLY HAVE ACHIEVED THAT!!! But no one knows what the cost of such prevention might turn out to be.

The cure worse than the disease? Maybe.

Think about Life, as you understand it. Example: I have an alarm system on my house. There is a cost: It's a monthly invoice. There are other costs, including the possibility of severe fines from my county in the case of false alarms. There is always a price for prevention, isn't there? Another example: Some folks take statins (like Lipitor) to prevent physical problems; other folks say statins cause physical problems. Most drugs DO have side effects (don't they?). 

Is there a surprise here? Only in that we don't know what the future cost of today's "solution" might be. Sometimes the price is high; sometimes it isn't.

What we can't actually know for sure is this:

- would we have had a massive deflationary event if we hadn't flooded the world with money and gone into stimulus mode?

- might we have a massive deflation event -- soon -- anyway, even with what we've done?

- could more stimulus and more money-printing prevent this awful boogeyman from coming back?

- what's the price of all of this flooding and printing, whether it succeeds or fails?

All we CAN know for sure is this: The U.S. went into the last Great Depression in fine financial shape. We had a heap of gold, and the world was (more or less) then on a gold standard. Bernanke's analysis of what he is doing and what might happen seems to ignore that fact (at least).

Oh, yes: What we also CAN know is that the U.S. had a big heap of debt going into this Great Recession. While some debt is being subtracted, much more is being added (by our government). If you need proof of this (do you, really?) -- spend some time studying what has happened and is still happening with the $5.7 trillion of debt taken on by Freddie Mac and Fannie Mae.

You'll freak out.

So the answer to Question 1 is: Yes, deflation can be a problem. Yes, it sure was last time. But -- the sitch we were in going into this deflationary episode in no way resembles the 1930s. And we can't know the consequences of the various ounces (or tons) of "prevention" we've taken to ward it away.

What is 'The Unseen Hand' doing?

This is kind of like debating God. Every time I am together with those raised as I was (Roman Catholic), I spend time wondering how there are only 1.2 billion Catholics on Planet Earth. What do those other 5.4 billion people believe? How can the Higher Power leave them out in the cold? Clearly, they have faith in something other than what I was taught -- right?

OK. So I might contend that "the Unseen Hand" is going to hit us in the head with this huge slug of debt (the huge bit we had before 2007, and the huge amount we've added since). Ben Bernanke and Barack Obama might say -- "yes, but" they had to fix the problem in front of them, and not worry about the future.

So -- to my mind -- what the "fix it now" fellows, when they tell us (between the lines) that they can't be bothered thinking about our collective future, are saying is: Let's Forget About The Unseen Hand

I regard this as more than worrisome. The reason I titled this series "The Big Shrink" is that -- in my life -- it has become clear that "the piper" is going to be paid, one way or another.

More on this later on; but please, in your own thinking on this, keep The Unseen Hand in mind. 

What does The Big Shrink mean to you?

It may not be clear what this Big Shrink series is doing on the website of a magazine serving electrical distributors. But -- to me -- it's pretty clear that the biggest threat facing the people who own and work in electrical supply houses (and their suppliers, and their customers) is continued misguided efforts to fight The Big Shrink.

In the end, my belief is: We're going to have the Shrink no matter what government does. There will be an end to money-printing, at some point . . . just as there has been in Zimbabwe. Do we first get to the point where U.S. money is worthless, as they did in Zimbabwe?

[By the way, I've been to Zimbabwe. I've seen giraffes fighting there (you'd be amazed -- they swing their necks at each other. I winced!}. It's a real place. There are real people there. I don't know if the piece of Zimbabwean currency I was sent recently -- from a friend -- is real or not. It had a big bunch of zeroes!

But I suspect the sign below, reportedly from a public restroom in that country, IS real]

In other words: The Big Shrink IS ON. It's happening; it's going to happen; our efforts at prevention will probably either ruin us or fail (some choice, eh?). That means people who have assets will find them appreciating in value (eventually). It means people who have savings will find their dollar buys more of everything (more wire nuts, more nice bottles of wine, more you-name-it) . . . eventually. 

And it means the price of many things will -- eventually -- fall.

What's the alternative? It's money-printing up the literal ying-yang, resulting in a dollar that is worthless, like the currency of Zimbabwe . . . or (shudder) Weimar Germany.

My strong belief is that this will happen no matter what. I'll outline the reasons for that in the next and final episode of The Big Shrink. I think this means a lot to you . . . and the decisions you make in the near future on Shrink-related issues might be more important for your future, and the future of your company and your family, than many of the choices you linger over on electrical suppliers, products, sales commissions, marketing tactics, and customer credit issues.

I know that isn't great. I wish it were otherwise. AND: I hope this analysis (what I am putting forward here) is WRONG.

. . . but what if I'm right?

Next: The Big Shrink Finale.

What appears to be at the top of the economic agenda in Washington, D.C. (and elsewhere) is NOT ALLOWING the economy to Shrink. Fight deflation and you prevent a revisit of the Great Depression; that's the thought. Deflation would probably mean even more unemployment, even more economic underperformance -- more ruined lives.

That can't be allowed, is the thinking.

What's wrong with that?

a. To fight deflation, you must take people who save and put them into DESPAIR. Their choices are horrible (there is no place to safely place your savings and obtain a decent, safe return on your money right now). "Saving is Stupid" is the subtext here. It's exactly the wrong message to send -- especially when, at the same time, it sometimes can seem as if people who acted irresponsibly (at all levels of our economy) are being . . . rewarded.

b. Assuming there WAS a lot of overspending, overborrowing, undersaving, and stupid government policies in the years running up to the 2003-2007 boom and the bust that followed, what we're doing now -- trying to restore the economy circa 2005 by borrowing even more and more -- might be a mistake.

We got there the wrong way the first time by running up personal and government debt, among other things. We're going to get there the wrong way the second time (this time purely by running up government debt and printing money, apparently).

Two wrongs do not make a right. In fact, we're compounding our errors here -- aren't we?

Maybe we can't get back there

What's scary is that, no matter how much more we borrow now, we might not be able to get out from under the rock we put ourselves under by . . . borrowing so much earlier. We might not get back to 2005, no matter what.

What this amounts to: We have had 16% to 17% real unemployment in this country during this Great Recession. The thinking behind zero interest rates, the stimulus, the money-printing, the bailouts, and every other damn thing is -- somehow we can reflate the economy to where it was. Lending will resume, businesses will grow, the unemployment number will fall, people will borrow, houses will be sold, more houses will be built -- etc., etc., etc.

What's wrong with all THAT? Maybe we can't. And even if we can get back to where we were -- no one knows what the ultimate cost of trying to get back there will be, or when we'll be presented with some kind of mega-stupendo invoice.

That's what Niall Ferguson is talking about in the video in Part One of this "Big Shrink" epic.

Faith of our (capitalist) fathers

There used to be abroad in the land a faith in the "unseen hand" of the market. This, apparently, has vanished. No one believes that now. Instead, we're supposed to have faith in politicians (really?), their administrators (Timothy-effing-Geithner?) and their appointees from academia (Ben Bernanke?).

If you've not been paying attention to all this up to now, please hear this: As a U.S. citizen and taxpayer, you have put your full faith and credit in these people.

Are you out of your mind? 

Further, it's reasonable for us to believe (I believe it) that "the unseen hand" is really still hard at work. It's just possible that, no what we do, we're going to get deflation.

. . . if you've read down to here, and read Part One, you should have at least three very good questions:

1. Isn't deflation bad? Shouldn't we back Obama-Bernanke-Geithner, et al, in whatever they want to do to fight it?

2. If the "unseen hand" really is -- well, unseen -- how can anyone know what the heck it is doing? Anyone (including the guy who wrote this) can claim that he knows what the "hand" is doing -- and be wrong or right . . . can't he?

3. Let's say all of what is here so far is correct. What does it all mean to an executive in the electrical industry?

Answers coming right up next time.

We're not talking about a tall psychiatrist

By Joe Salimando 

I spend some Internet time reading the thoughts of the hard-money crowd. Sometimes, this stuff can shake you up; other times, you can dismiss some of it as the ravings of The Fringe. For example: There's a lot of talk about a global conspiracy to keep the price of gold down. That would NOT be easy to do. Think about it.

On the other hand, some of this stuff is food for thought. For example, the hard-money folks have noticed that the economists who run thinks (Ben Bernanke) and comment on things and win prizes (think: Paul Krugman) don't discuss a four-letter word very much, if at all. The word is DEBT.

At this point, if you can subtract the Tea Party types and the gold bugs, there are two basic camps on the debt/money-printing issues out there:

1. WE NEED MORE STIMULUS. These folks think debt doesn't matter. One is economist Brad DeLong , who wrote (I am not making this up, click on the link):

That the U.S.--in spite of the Reagan deficits, in spite of the Bush 41 deficits, in spite of the Bush 43 deficits--still has room to borrow to deal with national emergencies likes wars and depressions is not regrettable. It is gratifying.

The hope is that this is all just Dingbat Kabuki: that the U.S. government will continue the ARRA rather than letting it die off and expire, and will find some way to compensate for the next round of state and local fiscal contraction . . .

 vs.

2. WE'VE ALREADY BORROWED TWO MUCH. See this post, which includes a video of Niall Ferguson , a respected historian. His take: When you find yourself in a hole, stop digging. His claim: We're about two years away from a borrowing crisis.

The argument boils down to: "We gotta keep stimulating the economy" vs. "We just can't do that anymore."

How the heck did we get here? I think I know.

What if Bennie is wrong?

First, Bernanke, the Fed Head, thinks he understands the causes of The Great Depression of the 1930s. It's possible he doesn't, that he studied the thing and came to the wrong conclusion. If you stare at the 1930s hard enough -- especially with the information we now have on hand from the 2007-10 period -- you might conclude that what the Fed did then, and is doing now, isn't capable of solving the problem.

Of course, that doesn't mean the Fed won't be able to make it worse.

Consider some of the decisions that have been made. We bailed out Fannie Mae and Freddie Mac; your tax dollars and mine stand behind 'em. Would it have been better to throw those billions at individuals and buy many millions of deeply underwater houses? You betcha.

What if you add more debt? What if we add more now, in response to the coming second leg down?

You CAN grow an economy out of debt. The way to do it is to have growth shoot up and stay at a sustainable HIGH rate for a number of years. Then -- voila! -- tax receipts to the U.S. government (and the local governments) increase, without a tax-rate hike. The money to pay off the debt seems to materialize out of nowhere.

PROBLEM: Unless the 2nd leg down is a doozy, we're not going to have fast growth. We could, of course -- if we go waaaaay down from here, we'll grow fast from the bottom at some point. But who needs that?

REMINDER: How did your nation emerge from The Great Depression? There was this World War thingy. We and our allies, and our enemies, flattened most of the industrial base of the world (including Japan). A lot of men who worked in those places were killed or maimed. The only place where you could find a bunch of operating factories in 1946 was . . . here.

And the result was, the halcyon days of 1946-1964, when the U.S. had industrial might, skilled human assets, and dominated the world.

Ben Bernanke can't flatten the world's industrial base (we've not yet given the Fed the power to make war). He can't drop $100 bills out of helicopters.

It's time to consider the possibility that he might be able to prevent a 2nd Great Depression, but he might not be able to create tremendous growth. This might not be his fault, totally . . . but if we keep running big budget deficits, we're going to need to grow as if it were again 1947 at some point.

To where this leads us

The back end of that thinking leads you to: How the heck are we going to get rid of the OLD debt we have lying around -- and the NEW debt these people are creating? This isn't just a political question; there are practical results on the level of the local electrical distributors -- things that haven't happen yet, results that you might not be able to avoid.

More next time.

Prowling through the data released 7/2/10 by the Bureau of Labor Statistics on the national employment sitch, you can understand President Truman's whine that what he really needed was -- a one-handed economist.

On the one hand, the nation had 125,000 fewer people employed in June than in May.

On the other hand, 225,000 of those losing jobs were doing temp work for the Census Bureau. Doing the math, it means some 100,000 people found real jobs!!!

On the other other hand, the civilian labor force lost 652,000 people in June (from May). That means many people died, hit the lottery, married rich, retired, left the country, etc., in June. Either that, or they told the government that they had done so poorly looking for work, they just stopped (looking).

As of June 2010, the labor force was sized at 153.74 million. One year earlier, it was 154.76 million. Is it likely that we had that level of pullback (retirement, etc.) by 1 million people over a year -- esp. in a year in which economic times are so harsh?

Another few hands heard from

On yet another hand, the Birth/Death model used by the BLS added a gross 147,000 jobs to the mix in June. That's 550,000 jobs added via this "guesstimate" in April-May-June. I call this BOGUS (I have other words, but they won't "print" here).

Another quarter heard from: The U-6 unemployment rate for June was (seasonally adjusted) 16.5%. This is what it was in June 2009. The U-6 is, as noted here previously, the widest measure of people who want jobs and can't find them (or want full-time work and can only find part-time work). You could call it "The Real Unemployment Rate."

Overall, if you look at the numbers for Q2, what we have here is One Dead Shark. The economy is NOT creating jobs. The "recovery" in employment numbers may be a function of the 550,000 jobs estimating IN by the BLS in April-May-June. And the U-6 rate is still just awful.

Bottom line: If we're coming out of The Great Recession, we are limping out. On the employment front, the "recovery" is missable . . . if you don't stare at it for a long time, you won't see it at all.

Other numbers of note

CONSTRUCTION -- had 4,406,000 production workers in the field in June. This is up from May, but down from 4,747,000 as of June 2009.

ELECTRICAL CONTRACTING -- 568,600 production workers in the field in May, down from 625,000 in May 2009. The niche industry numbers are released one month after the bigger numbers (like the national economy and all of construction). Note that the EC industry had 10,100 MORE workers in May than in April.

ELECTRICAL DISTRIBUTION -- this is NAICS 42361. The figure for May 2010 was 136,800. This is:

Highest total so far in 2010.

Up 1,100 from April.

Down from May 2009's 142,300.

At the present pace, electrical distributors might average fewer than 140,000 employees (all employees, not just production workers) in 2010. If that happens, it would be the first time it has occurred since 1994.

. . . through year's first 5 months

By Joe Salimando 

Perhaps lost amidst everyone's July 4 preparations, on 7/1 the Census Bureau emitted the May construction spending report. Through 5 months of 2010, construction put-in-place was reported at $314.2 billion, down 12.0% from the same period in 2009.

Two major themes are relevant here -- one from within that report, one from elsewhere.

Private nonresidential construction was down 25.9% in the first-month period. I check each month's report, and this is the first time in 2010, I think, that each of the nonres subcategories was negative -- including:

59.7% drop in Hotels/Motels

40.2% drop in Office

and declines of 30%-plus in Commercial, Manufacturing, and Amusement & Recreation.

Note that commercial (about 2/3rds of which is retail) had, during most of the 2000s, been the biggest NonRes subcategory. Now Power and Manufacturing are bigger. Power construction had been positive through April; now the year-to-year comparison is slightly negative.

The other major categories (along with nonres) in the report are Private residential (up 1.7%) and Public (down 5%). It's notable that these two categories have had the most federal help, of all sorts (including subsidies to local governments, subsidies to Freddie Mac and Fannie Mae, the housing tax credits, and much more) . . . and yet they still are drifting.

Other indicators

Three other indicators out in June were "mixed" -- yes, a media-type word, but it works here.

AIA's ABI  -- this is an index of what members of the American Institute of Architects told the association about nonresidential work they are being asked to do. It's called the Architecture Billings Index.

It's been negative (below the "50" line) for 28 straight months.

There was some excitement in May, when the April AIA ABI number rose all the way to 48.2. But the out-in-June report (the May data) saw the ABI plunge to 45.8.

Key points here: (a) the ABI has been "right" most of the way in this construction depression; (b) the surge in May might have been a head fake, or perhaps June's number was a downshift in an uptrend; (c) the ABI readings match what I've been hearing from contractors and distributors, on the whole.

McGraw-Hill Construction  -- this op emits numbers monthly on the $ value of new construction starts. This is more of a "future" indicator (like the ABI above) then the construction spending numbers from the government. It's more about contracts signed and holes newly dug in the ground.

Through May, the 2010 data, on the whole, are 2% below where the data where at the same time in 2009. And 2009 sucked. Nonresidential is down, residential up.

Now, when you click over to this report, the headline will saw May construction was up 3%. But that's compared with April. Page down to the bottom to see the unadjusted year-to-date table.

Reed Construction Data  -- ostensibly, RCD & MHC (above) track the same stuff. But Reed's numbers on starts for 2010 are much, much better. Nonresidential starts are positive. Total construction is up!

That link takes you to a short write-up, but look to the bottom -- a link to a free PDF that contains the full RCD report.

Note also: Your humble blogger noted the big gap between MHC and RCD numbers in an earlier post here. Jim Haughey, the RCD chief economist, was nice enough to e-mail a reply -- we posted it here .

Summary

"Mixed" really is the right word here. The AIA number seems to be charging forward, albeit still negative on nonresidential. MHC's figures aren't terrible, if you add 'em all up, so far for 2010. And RCD's numbers are great!

Somehow, the feeling I get when I look at this is that Housing is going to matter. Right now, it looks like it's turning down. Yes, yes, YES -- I know, I know -- most electrical distributors DO NOT live and die with the state of the local housing market.

But that's not the case for our national economy. And most local businesses, including distributors (and their contractor customers) do live and die with that.

Incongruous beliefs? Maybe not

By Joe Salimando 

My personal understanding of the current economy -- based on which I've invested money, so therefore this is not "punditry" -- is that we're going to end up with out-of-control inflation in this country (if not the entire planet). I don't know when. And I know I could easily be wrong, as I'm not a genius, not a mystic, not a magician . . . not even an economist.

However, when I see how the government has managed to take on oodles of private (and semi-private) debt, as in banks, GM, AIG, Fannie Mae and Freddie Mac, and much more . . . and how the debt is headed ever-higher -- I figure we are headed to one of two places:

1. Default on what it owes by the U.S. government. This might tend to have negative results for me. Maybe, even, for you.

OR

2. Devaluation (a sharp series of drops) in the value of the dollar, caused by massive money-printing.

In other words, no matter what happens, we end up in the same place. Am I right? I am hoping that it will take a few decades for this to happen, so that I won't actually find out.

However, in the immediate here-and-now, these beliefs leave me with a kind of . . . cognitive dissonance . I think we're headed toward the end of the world, at breakneck speed -- and yet it seems we have real fears of deflation RIGHT NOW.

Prices of all things are NOT going down. But you can buy a house much cheaper these days than heretofore (with very low mortgage rates -- if you can qualify for a loan). On the other hand, health care is more and more expensive. And, relatively speaking, so are things like iron, gold, silver, rubber . . . and copper.

Diagnosis of a condition

If you believe we're going to have a spate of deflation, you really should NOT focus on the fact that commodity prices are UP, and seem to be going higher -- can you? You can't believe two things that can't possibly both be true.

Or can you? Check this out. It's from the 6/15 Financial Times, quotes from Jesper Danneshoe, strategist at Societe Generale, writing in SG's quarterly review of commodities:

He said the commodities markets, in general, had "turned excessively gloomy about the global economy and the demand outlook for commodities."

. . . and in the next paragraph --

"We expect most commodity prices to trend higher at a moderate pace over the coming months and quarters."

So what markets are saying X, he's saying Y. At the very least, I'm not the only one with this condition. Note, especially, the word "quarters" in there. It's plural. That means his outlook for at least 6 months is a moderate higher price trend for stuff.

3,000-year bear market?

On the other hand, an opinion piece from Peter Tasker, analyst with Arcus Research, appeared in the 6/10 FT. Here's his doozy of a concluding paragraph; I've divided it up a bit to make it easier to read.

As societies become more sophisticated, knowledge generates ever-greater returns. By contract, societies in which commodities are highly valued are, by definition, primitive.

That is why the price of copper peaked out in ancient Egyptian times, when a few kilograms could buy you a slave girl. Its purchase power has been in decline ever since.

In essence, copper has been in a bear market for 3,000 years. Consider that before you diversify.

I have two quibbles with this brilliance:

1. Even in bear markets that extend fewer than 100 years, there are sustained, dramatic rallies. For people born in 1950-75, for example, the run up from copper at 65 cents/pound (2001) to the $4/lb. level (2008) was a pretty neat train to ride. Wasn't it?

2. I honestly don't know what happens if the U.S. government (and governments 'round the world) chooses to default on its debts. Or if the U.S. and all others keep printing money as if it will go out of style. Do we eventually revert to a barter economy, because no one can trust paper currency? It's a possibly.

Does that qualify for . . . "by definition, primitive" -- ??

And -- What comes next?

Maybe the next few years will not see a revolting end put to U.S. financial problems. Maybe my worries can, reasonably, be labeled as "absurd" (wouldn't be the first time).

What's important for most of us is what's in the immediate future. Here's the thinking of Doug Kass, a respected investment commentator, writing for TheStreet.com on 6/4 :

According to Bloomberg, the Journal of Commerce Industrial Price Commodity Smoothed Price Index, "which tracks the growth rate of steel, cattle, hides, tallow and burlap, plunged by 57%" last month. This index is usually a reasonably good tell on prospective growth as it includes a number of commodities that aren't exchange-traded and are therefore less apt to be controlled by speculators. As well, the index of 18 industrial materials "declined the most since October 2008."

Many pay special attention to the price of Dr. Copper -- the commodity is famously said to have a PhD in economics . . . I have no plans to skip Dr. Copper's classes. Rather, I am attentively listening to his lecture right now.

So at the very least we can say: There are smart people watching the price of copper right now. There are others, besides those who buy and sell wire & cable.

That should be more than enough reason for you to worry right along with me -- and to watch future price movements of copper as "directional," not just for your electrical business interests . . . but for the way you manage your personal affairs.

Think in gold terms & it's no bull market!

By Joe Salimando 

Copper made an all-time high -- as priced in grams of gold per tonne of copper (!!!) -- in the Spring 2008, according to the graph below (found on PricedInGold.com).

Where are we today? Look. It seems we're at a price little better than one-half the peak. That's quite a different angle on the price form what the nominal dollars-per-pound information gives you (the spring '08 peak was around $4/lb., now we're at $3/lb.).

Of course, you don't stock our warehouse with wire & cable by paying in gold (thank heaven!). But doesn't it shake you up just a bit that, today, you can buy 2,205 pounds of copper for fewer than six ounces of gold?

Correction - Or Next Time Down?

According to TEDMAG's weekly Commodity Watch (which you can put on your site, free, if you're an NAED member -- go here) -- copper closed April 9 at $3.58 per pound. Now it's 3 bucks. That's a 16% down move in a quarter.

Is that merely a correction (curb your enthusiasm) . . . or is copper headed back down?

Listen to this, from a 6/10 posting to AgMetalMiner.com: " . . . technical charts are showing a continued downward trend and some analysts are talking of $2.50/lb. in the coming weeks, a further 10% fall."

Just days earlier, a Bloomberg.com story drew a direct relationship between copper consumption and China's economy (yes, yet again). As it's someone other than ME saying this, let's see what's up:

“There could be further downward pressure on the copper price,” MF Global analyst Jeremy Cave wrote in a report. “Over 40 percent of copper is used in construction, so the relationship with Chinese property markets is clear.”

and

Property sales in Beijing, Shanghai and Shenzhen dropped as much as 70 percent in May as real-estate developers delayed offerings following government tightening measures, the state- affiliated Shanghai Securities News reported on June 1. 

Next time: More on our favorite red metal.

By Joe Salimando 

In the past month, a dozen Special Report blogs posted here on what I learned at the May 23-26 Wind Power show and conference, as well as some follow up. What's below isn't still more, but an index to the dozen pieces . . . plus one additional thing.

Intro piece from Dallas  -- some facts about the Big Wind shindig.

Politics & Wind  -- a look at the opening plenary, AWEA, and RES.

Dramatic decline in wind turbine installation  -- why? The federal subsidy is still in place.

Electrical distributors exhibiting at the Wind show  -- includes some really lousy pictures, taken by me.

Electrical contracting companies Doing Marketing! -- I was so shocked by this, I devoted 2 blogs to it:

An explanation  (all words).

A look at the booths  (pictures and a few words).

What is 'Small' wind all about?  Can distributors sell wind turbines? Tentative stabs at answers.

Visits with exhibitors  -- there were 1,428. I wrote about two, Eaton and T&B.

Michael Caliel, CEO of Integrated Electrical Services (a very large electrical contractor) talks with tED.

Part One  (some background, including links to ancient TEDMAG columns)

Part Two  ("a man wrestles with an octopus")

 

---

What others are saying after the Big Wind shindig  -- plenty of links for more info.

Final words (for now) = GO SOLAR!  -- where Joe ended up after spending 1 month on wind.

ALSO OF NOTE: Response from Schneider's Breeze.

Back in May, a Special Report was focused on an interview I did with Allen Breeze of Schneider Electric. Allen posted a reply to the blog, and that reply was posted below the item itself (i.e., it didn't become a new web item you might find here).

To read his posting, go here  and page down to the bottom of the web page.

Stare at anything long enough, maybe you'll find it horrific. Perhaps if I -- a long-time admirer of Kim Basinger's physical appearance -- looked long enough at her, I'd end up seeing nothing but warts.

In the past month, I've spent time thinking, learning, researching, and writing about Wind Energy -- beginning May 23-26, with my trip to Dallas for the Big Wind shindig, and winding up now, with this piece.

To sum up: After learning so much about wind, what makes sense to me is -- GO SOLAR!

Your Investment Commitment

Like it or not, the U.S. has an investment policy. In 2009, our Congress -- which acts on our behalf, or is supposed to -- committed $787 billion to a bunch of spending programs. Wind Energy is in there. There is a 30% credit-or-cash deal that ends soon for wind power installations (get construction started by 12/31/10 and you qualify for the 30% subsidy).

And there could be more. Wind proponents want the federal government to impose a national renewable energy standards (RES) on the 50 states. Many states already have their own versions of this -- while a 20% RES is the national goal for the proponents, Colorado only recently imposed a 30% requirement, for example.

Wind advocates, led by the AWEA (which has a lot of companies as members), want a national RES imposed -- giving Big Wind a big push. As an outsider without a dog in this fight, I feel strongly both ways about this. Yes, we need to get as far away from Coal as we can, as fast as we can. On the other hand, I distinctly remember politicians AND companies objecting to "Unfunded Federal Mandates."

Wouldn't a federally required RES be a Mandate? Wouldn't it be costly? And would it not be "unfunded," as our country is pretty darn close to broke (if you omit the printing-press thing) . . . ?

So here's a "green" federal mandate, being pushed NOT by a bunch of damn liberals but, in this case, by a bunch of darn capitalists.

As my dad used to say -- Go Figure!

Routine Lies

There are two HUMONGOUS huge mega-stupendo things wrong with wind energy.

FIRST: Of course, the wind does not always blow. To be concrete about it, the REAL electricity generated by a wind farm or individual wind turbine is probably going to be 30% to 40% of what it says it will produce. That means a group of wind turbines that, together, are rated at 50 mW will generate, on average, 15 mW to 20 mW. So what you get is not equal to the nameplate capacity.

Forgive my outrage on this. I'm not upset by the facts (facts is, as you well know, facts!). But with the reality being 40%-at-best, the idea of the wind people issuing press releases that say "We just built a 50 mW wind farm in Podunk" amounts to . . . a baldfaced lie.

Sure, the truth of the sitch (15 mW to 20 mW) is complicated. But if you've experienced life, you know -- you know this deep down in your gut -- that the truth is ALWAYS more complicated than a lie.

That's why people lie, isn't it?

I've seen a number of press releases on wind installations. They always talk about the 50 mW, not the 15 mW. Given the facts -- the real-world facts -- this is beyond "misleading" . . . isn't it?

Sky-High, Unending Spending

SECOND, Wind Energy needs a mega-stupendo investment, sustained for maybe two decades, for wind to become a significant factor (not THE big player, but just a factor) on the national electricity supply scene.

Now, we don't really need a huge increase the amount of electricity we generate. What we DO need is to replace the coal-fired power plants now in existence with . . . something. Here on TEDMAG, I recently suggested that we first drop bombs  on all of the coal plants -- to stimulate us to come up with a solution already.

[You think that's funny? I wasn't kidding.]

But let's say the nation pursued my suggestion. The next move is to replace all those coal-plants-in-ruins with something. Let's say, for argument's sake, some of that would be Wind.

What would we have to do?

A. Build the wind plants. Big, big investment. And remember, you don't get 100% of what you think you're getting. So if we decide we need to get 300,000 mW of power from wind turbines, we need to build . . . roughly 900,000 mW of nameplate wind-energy capacity. That's the math.

Doesn't it sound a bit more daunting at 900,000 mW?

B. We'd need to build massive amounts of energy storage into our national grid as well. Energy storage is required to keep the grid reliable (so when the wind stops blowing with 5 minutes' notice, we've got something to put on the line to replace it). Problems here are: (1) Energy storage technologies aren't all proven. (2) Some won't work. (3) Some will work. (4) We don't know which ones yet. (5) All of them will cost something; a bunch of the ones that don't well will be bad investments. (6) Even the good investments here are likely to be very costly!

C. There's more. Wind power needs The Smart Grid to work (and electric vehicles need The Smart Grid, too). So we're going to need The Smart Grid. The problems here only start with the fact that TSG will cost a bloody fortune. It's going to take 20 years or more to implement on a national basis. Right now, many of the people involved in TSG projects (real-world projects) can't come to an agreement about what they mean when they say "Smart Grid" (I am not kidding about this, and wrote about it here). Some of it might not work. We're already throwing billions at TSG, primarily to find out what will work!

D. There's yet MORE. If we elect to build large amounts of wind-generating capacity where the wind blows, we'll be putting it out in the middle of nowhere. Then we need to take the electricity and send it to -- well, to somewhere. This means we need to build stupendous new amounts of electrical transmission lines (the idea is to build Extra High Voltage lines, to efficiently transport the power over hundreds of miles). This is going to cost many many hundreds of billions, and it will take some time.

Add up A + B + C + D and you get some kind of unfathomable number. For the sake of argument, let's say it's $2 trillion (sure, that might be low, but what the heck). Let's agree that we can wait 20 years for this to happen (I don't think we can, but ignore that). That means we have to come up with $100 billion, year after year, for two decades.

Are the Chinese really willing to lend us that much more? Or: Can we have Ben Bernanke "print" that much money without making an impact on the value of our crappy currency?

The Ballot . . . Or The Bullet?

Additionally: The Wind People are (I heard the) upset that the utility companies have dithered about transmission-line siting. It takes 10 to 15 years to get a power line sited, if you can even get that done. The wind people want the national government to impose power-line siting mandates on everybody (and I do mean everybody). In other words, the national power-transportation need will be declared to over-ride any local concerns, anywhere.

Now, we might be able to have a reasonable discussion -- the two of us, you and I -- about power-line siting. I might be able, after talking you to death, to convince you that what your children or grandchildren really need is to have brand-new power lines (maybe even EHV lines) built over their elementary school property.

However, I haven't noticed that the U.S. of A. is really good at having national rational discussions. We haven't stopped arguing about Abortion yet, and Roe v. Wade happened when all of my hair was black. We're still making "War on Drugs," even though it's clear who won (the Drugs) and who has lost (the U.S.). And so forth.

You think the Tea Party people are excited now? Let's have the national goverment force people to accept power lines all over the place -- overriding local laws, local courts, local governments, property rights, and 200-plus-years of tradition. I really believe that this move (which the wind people want, because they need transmission to make their thing move forward) could result in nothing less than a New American Revolution!

Alternative Energy Solution

When I compared Wind with Solar, I come down on the side of the Sun. For one thing, a homeowner can't realistically build a wind turbine on his property -- especially in the townhouse community in which I live. If we're going to get wind power in Oakton, Va., we'll end up buying it from the utility.

But we can say "screw the utility" with solar PV. We can put solar on all the roofs. We can even (with building-integrated PV) put solar on non-roof parts of the house. The idea of "solar gardens" can help us, too -- we can build community-owned solar PV arrays on some empty spaces. We can sell that power to ourselves.

And if we're going to get into energy storage, we can install it here, store the energy from the sun that's generated during the day, and use it at night.

Think about the sharp divergence here. No need to build thousands of miles of power lines. No need to invest trillions and taken on even more debt. No noise. No stimulus for the Tea Party.

And yet, potentially, the same result.

Having expended the last several weeks of blogging here on what I saw/learned at the May 23-26 Big Wind Shindig in Dallas, I thought you might profit from other perspectives. I found some really good information (some of it show coverage, some of it other stuff).

Conference Highlights

"The growth has been vertical for this conference. Just nine years ago . . . a few hundred AWEA spawners met in a Holiday Inn." -- from energyblogs.com.

AWEA (the association behind the event) itself provided a bulleted list of show highlights. It included this: On the show's first day, wind power in Texas hit "an all-time production high." I found myself wondering how in heck they arrange that!

RenewableEnergyWorld.com's blogger offered a few items from his time in Dallas:

There was a place where you could have your photo taken against a wind-type-ish background. I avoided this; the blogger did not.

Additionally, he apparently engaged in Twittering about wind (I refuse to call it "tweeting" -- tweeting is what birds do).

Finally, he offered a "take" -- 2010 will be tough for wind.

 Just about everyone agrees with that. AmericanMachinist.com came up with Wind Markets' Growth Stalling in 2010.

Foreign Firms 'Dominate'

 From PoliticsDaily.com came something I thought about during the opening plenary's rah-rah show about the stimulus, the wind industry, and so forth: 

AWEA also claims credit for being "the voice of wind energy in the U.S." by representing "more than 2,500 member companies" and offering a possible solution to the government's dream agenda for energy and environmental policy: a clean, alternative power source spun out of America's air. But ironically, this political force is dominated by foreign companies, which make up two-thirds of the organization's event sponsors.

 So, if you do some math, we're spending stimulus dollars to send profits to overseas firms (and maybe a goodly number of the jobs created as well).

Diagnoses Abound

 "What the Wind Market is Hurting" was written by the guy who RenewableEnergyWorld.com sent to Dallas -- turns out he's the Podcast Producer. I didn't listen to the cast, but you can do that OR read at the link. Among the stuff he presented, here are words that might matter:

“Demand for wind is simply not at the level where a lot of these companies that are making these investments would like it to be,” says Matt Kaplan, a senior analyst with IHS Emerging Energy Research.

The first major factor in the slowdown is the drop in electricity consumption. With lower demand for electricity, utilities don't have to procure as much renewable electricity under their state targets. This has impacted a number of project owners who sell power on the competitive wholesale market.

Secondly, natural gas prices have fallen about 65% since 2008, from $11 per MMBtu to around $4 per MMBtu. Given that wind competes directly with natural gas, this makes the resource much less competitive. And with more shale gas reserves being tapped in the U.S., prices will stay low in the coming years.

Finally, the lack of a long-term national target for renewables in the U.S. is causing major component and turbine manufacturers to reconsider investments in the country. As a result, job growth in manufacturing will likely fall flat again this year.

That last paragraph is yet another slap at politicians. Can't we all just get along? Or vote 'em out?

Over at GreenTechMedia.com, they came up with this headline: The Year In Wind: Boom Followed By Gloom . The piece included this analysis:

But the economic downturn and drying up of investment capital from Wall Street is likely to stall that record-setting growth. As the year wound to a close, big wind power projects were scaled back. Still, that could help the industry catch up with itself, as new wind turbine equipment manufacturing facilities catch up.

At the same time, some of the key drawbacks to wind power – a lack of transmission capacity to bring it from where it's generated to where it's most needed, and the fact that the lion's share of wind power is generated at night when electricity demand is lowest – led to a renewed interest in energy storage systems and increased transmission capacity to better integrate the energy resource.

 I am more comfortable with the 2nd paragraph here. To make wind power work (as I've written here on tedmag.com), you need MORE transmission spending, NEW spending on energy storage (a basically untried technology), and GOBS OF MONEY for The Smart Grid (yet another untested idea). Heaven help us all!

 A 5/23 Seattle Times article talked about the challenges presented by wind. I would urge you to read the whole damn thing, but at least give these paragraphs (stuff about which you might already have read here on tedmag.com) a bit of attention, as this is close to the heart of it:

But the fickle, roller-coaster nature of generating electricity from the wind is also placing large new strains on efforts to manage the regional power grid.

"It is the great economic and engineering challenge of our time, at least in this industry, to try to figure out how to make all this stuff work," said Steve Wright, administrator of the Bonneville Power Administration (BPA). "It's a thrilling ride. But if something goes wrong, we're the folks that people are going to look at. So we take this very seriously."

The BPA manages a regional power grid that, minute-by-minute, must match the flow of electricity surging through the system with power consumption. When wind power unexpectedly surges or drops below forecasts, the BPA must idle back or crank up hydroelectric production from a network of Columbia River dams in order to avoid blackouts or other power disruptions.

 Documentation

 Here are several documents you might want to have around and reference (or actually read):

 Why a Strong RES Matters to the Wind Industry -- a 3-page PDF of an article from North American Windpower, it explains the stuff that freaked me out from this event's Monday opening plenary.

 Can the grid handle lots and lots of intermittent, unreliable electricity from Solar and Wind? The National Renewable Energy Lab says it can. Read this EnvironmentalLeader.com article (from which you can get to the NREL report).

 Then there's this look at the Small Wind biz, through the eyes of a guy from Urban Green Energy (via altenergymag.com). 

 Finally, AWEA came out with a report on Small Wind in 2009 (just days after the big shindig). The link goes to a release; you can download the report (for free) from that webpage.

Next time: Some final thoughts about the wind industry, the electrical industry, electrical distributors, and the investment policies of the United States of America.

Michael Caliel of IES, part two

By Joe Salimando 

If you've not read Part One of this two-part piece, you might want to start here.

One surprise for me, in listening to CEO Michael Caliel of Integrated Electrical Services, was this: After years and years of strategy changes (I wrote about a few of them) and attempts to get the local operations in line, and some shedding of some of the contractors it bought, IES still was a heavily decentralized company when Caliel got there. He found, he said, that efforts such as buying trucks, paying bills, and collections were all run by local contracting operations.

Of course, he knew that ECs were not experts in these and other things. "To take costs down, we had to [centralize] these operations," he said. According to everything I've seen and heard, that's been a prime concern of IES since he took over.

What I also learned (long before meeting him) was that, under Caliel, the company was centralizing and standardizing some of the company's electrical construction efforts. For example, bidding; there's more control from HQ these days over which projects the local contractors would pursue, and which would be ignored.

Caliel also came in the door (or just about) with the goal of creating a single company-wide approach to estimating and project management. I will admit right here: I was skeptical about whether these ideas would succeed.

Why do this? "We had a lot of variability" in the way different parts of IES went about the work of electrical contracting, Caliel answered, when he got there. What he wanted, and has pursued, is "one approach to project management, one approach to estimating."

Taking Away The Punch Bowl

Essentially, if you look at it over time, IES had become a company that offered a local electrical contractor some sort of Nirvana. He (or she, or they) could sell his company and get cash. Then he could stay on as an employee and -- pretty much -- run his company just the way he did before. There was little or no direct control exerted by the folks at the Houston HQ.

Who wouldn't want such a deal? A bigger bank account (some security for one's family) . . . and the opportunity to keep doing the same thing you were doing before, only with a bigger financial backer!?!?!?!

Now, Caliel has placed the local operators (some of them former contractors) in a straightjacket of sorts. You won't have control over the local operation; lots of typical things a contractor does (including buying trucks and buying materials) are being done for you or dictated to you. You still are responsible for knowing the local market and developing relationships, but the way you select jobs to go after, and the way you estimate them when you bid on them or price out a negotiated job, is standardized. And if you get a project, the way you manage it is specified.

In other words, Caliel has minimized (or eliminated?) the chance that a local contractor who is part of the IES collective will "go off the reservation." This must have been something like wrestling with an octopus.

Another note: Caliel was certain to mention that the IES safety record is "second to none." This is no small thing. Productivity is higher at construction companies that have internalized a "safety culture." Further, big potential customers -- those looking for a big contractor, maybe -- repeatedly say safety is a major concern of theirs in hiring construction contractors (see the CURT website for details).

Past, Present, Future

What I specifically remember about "the old days" at IES was that CEO Jim Wise said (in the late 1990s) that the company would, when it was done acquiring, grow to have $3 billion in annual sales. That's one awfully big electrical contractor.

I was openly skeptical about that; I had my reasons. The fact that it didn't happen is NOT a great feather in my cap. I regard it as something like handicapping a horse race and throwing out a 99-to-1 shot . . . so what?

What is interesting to remember is that Wise's pronouncement caused a stir (panic, even) among electrical manufacturers and distributors. I specifically recall attending a meeting at which some really smart people were in a tizzy about the kind of leverage Wise's company -- and, by extension, the other roll-up contractors -- would have in materials purchasing at such a size.

Won't happen, I said. I explained why . . . pretty much predicting exactly what happened to IES in the early 2000s. This was brilliant (just ask me, I'll tell ya)!!! However, I have a clear memory of being dismissed out-of-hand when I said it.

Ha!

Caliel made no such claims in Dallas. He clearly communicated what I had already suspected: This is a man who has voluntarily entered into a wrestling match with an octopus! And he thinks he's winning!!! If he's had some bad luck, it's the fact that the bottom fell out of the residential and commercial construction markets at just the time when he seems to have gotten to the point where all of the creature's eight arms were saluting in unison!

But make no mistake about it: The IES CEO is determined to eliminate the "luck" factor from the company's operations. Can it be done? I'm not sure the Tontine fellows will give him the time to get it done (I don't know anything about them). The only facts that are certain are 52-week range of IESC stock ($10 to $4.20) . . . and the fact that it closed recently closer to the bottom, at $4.65.

Here's another startling fact: From that $1.5-billion-annual-run-rate of early in the 2000s, IES's annual revenues in the year ending 9/30/07 (this is after the company's bankruptcy filing) were $890 million. In the most recent quarter (ended 3/31/10), revenues were down to just $107 million.

If you multiply that by 4, folks, you don't get close to $890M, do you?

That's a really big shrink. In part, it's about the economy. In part, it's about one very determined man doing his darnedest to get the octopus to dance to a very specific kind of music.

Next up: More -- from other sources -- about the Wind show.

Wrestling with an octopus; part one of two

By Joe Salimando 

Back in ancient history (1999-2000), I spent a lot of work time thinking, talking, researching, asking questions, and writing about The Roll-Up Contractors. There were a few of them. They were funded by Wall Street. And, for a time, they loomed as potentially dominant forces in the electrical contracting business.

They were, many thought, threatening to shake up how electrical manufacturers and electrical distributors did business.

Today, there are 2 1/2 of them left, really. I'll describe them here; while industry veterans probably DO know most of this, there are people who come here to TEDMAG who might not know everything that's ever happened.

Quanta Services (stock symbol PWR) was created by combining four powerline contracting companies. PWR's acquisition strategy always seemed more limited and selective to me, but -- in truth -- it is still out there, buying. Most recently (10/09), it expended $96M and 10.5M shares of its stock to buy Price Gregory Services, which is in the natural gas business. PWR stock is right now priced at $22.50, so if you want to put a value-right-now on that acquisition, it's around $333M.

EMCOR Group (stock symbol EME) is the "half" in the equation. It was the original roll-up, buying electrical and mechanical contracting companies hand-over-fist -- more than 100 of them, if memory serves -- roughly 20 years ago. Then the company went bankrupt, in 1994, after making an incredibly strange acquisition; it bought a big computer retailer. It emerged from bankruptcy with a new boss (Frank T. MacInnis) and, since that time, has been in pretty good shape. It constitutes a "half" because EMCOR avoided the roll-up excitement of 1998-2001, for the most part.

Integrated Electrical Services (stock symbol IESC) is another survivor. The company went through a prepackaged bankruptcy, shedding debt. It's now 58%-owned by Tontine Capital Partners. The company has also undergone a major reorganization in the way it operates.

A Bit More Background

I wrote a lot of words about these companies at one time (for TEDMAG.com and elsewhere). Some of the stuff can still be found online, via The WayBack Machine (www.archive.org ) -- a site you ought to know about even if you don't care one whit about contractors!

Here are two pieces you might want to peruse, if you have the time:

My Visit to North Korea  (posted 4/30/99) -- about a trip I took to meet Jim Wise, the then-CEO of IES. At the time, the company's "annual run rate" (internal sales plus those of acquisitions) was about $1.5 billion.

The Roll-Ups Take Their Shot  (posted 10/25/99) -- includes stuff on the national accounts efforts and supplier relations of IES and the other two then-active EC roll-ups, Building one Services and Group MAC. This one includes a piece at the bottom about national accounts from an IES conference call.

At The Helm of A Shrinking Company

Michael Caliel is the current CEO of IES. His company (an electrical contractor, remember) had a nice-sized booth at the Big Wind show. It featured a race car and, according to various releases, a race-car driver was set to make a public appearance for the company in that booth. I missed it.

However, someone got in touch with me and asked if I'd like to interview Caliel. Considering that I am the proprietor of The EleBlog , and that Caliel is the boss at the biggest pure-play EC in which anyone can invest (via a stock purchase) . . . the answer was a big YES.

I'm not sure what I expected; I don't get to meet a lot of CEOs of contractors with stock in public hands! Right up front, I liked the guy. He seemed honest and 100% engaged.

Note that we did not speak about wind. I was more interested in his management strategy; that's what I planned to ask about. As it turned out, he seemed happy to talk about what he has tried to implement at IES with what seems -- from the outside, at a distance -- like single-minded dedication.

Now, Caliel knew (he's smart, and he had to know) when he took the job as CEO, that he was coming to a company that has, for its entire history, had BIG problems. Acquiring dozens of ECs isn't all that hard. Putting them under a single banner, however, is just the beginning of the story.

Over more than one decade of operations, IES has not seemed able to get these local operations under control. The result has been lumpy earnings (that's what you might expect from a construction company -- even one with stockholders). But the really bad part has been SURPRISES. All of the surprises that IES has experienced and told people about were BAD.

Caliel's efforts, in response to that history, have been all about making IES one company. "The company was organized geographically" when he took over, he told me. "We had to take all of this [operational responsibility] back, out of the local operations. But first, we had to get all of the local guys to buy into the strategy."

Next up: More from my visit with Michael Caliel of IES.

There were 1,428. So sue me -- I missed a few

By Joe Salimando 

In the world of B2B magazines (like tED), a swirl of communications wells up in the weeks before a big trade show. PR folks representing exhibitors contact magazine editors -- are you sending someone to the show? Could you have him/her/it stop in our booth?

I've lived through this for years, and I'm not complaining. People who think they have someone new to show and a story to tell might just be RIGHT! So, for 34 years now, I've shown up (this has not be difficult, really). For Wind Power 2010, I made appointments as requested by Editor Misty Byers.

At the very least, this got me to move around the show, even when my feet were barking. In the process, I saw a lot that I hadn't planned to see. For example, I went by a booth for a hotel chain. What the heck are you doing here?, I asked the booth occupants. Answer: The wind industry builds all over the place. Key people are typically sent to a site, for a build-out -- for weeks and months at a time. These people have got to sleep somewhere!

Why Are You Here?

An unusual thing almost always happens when a B2B reporter (i.e., me) shows up at a booth for an appointment. Quite often, the PR person is not present -- the company didn't want to pay the freight to ship yet another body to the show. In some cases, the PR department hasn't spoken with the marketing/sales people who will staff the booth.

The result, quite frequently, is a conversation that goes like this:

JOE: Hi, I'm Joe Salimando from tED magazine. The magazine reaches electrical distributors every month. [Ignatz] of your PR dept. asked us to come by and listen to your story.

FERD of the exhibiting company: "Thanks for coming. What do you want to know?"

Essentially, it translates to "why are you in my face, with an open notebook, bothering me?" Typically, it comes from my designated contact, who is a sales guy. He'd rather spend his time talking to attendees, watching the female attendees, or on the phone with the people to whom he's spozed to be selling stuff who are not here.

You'll be proud to know that, in every case, I resist a smart-aleck-type response (what do I want from you? heck no -- whaddya want from me?). And I'm happy to report that there were just a few incidents of this in Dallas in May.

Eaton Corp.

Eaton's approach to the wind industry -- which I absorbed by looking at the company booth -- seemed to be pretty much of a case of "throw it all up against the wall and let's see what sticks." Of course, Eaton has a bunch of stuff to talk about.

Example: The company has electrical products with a "green" tint that were displayed and talked about (switchgear that's free of SF-6, for example). Promoted, also, was the fact that some of the equipment has been re-engineering and downsized -- something that might be important to people building wind turbines).

I looked around. Some products said Cutler-Hammer prominently, some didn't.

I was also told that the company could offer turnkey substation solutions to customers (in the wind biz, obviously -- if you build a wind farm with many turbines, you're going to build an on-site substation, too). Eaton can help via the "extensive service organization" that's nationwide.

This made me wonder. An extensive service org puts Eaton in competition with the electrical contractors on the show floor, doesn't it? And, if the company is handling something in a turnkey manner, it's probably going to place orders (for non-Eaton electrical materials, like a bunch of wire & cable) with . . . electrical distributors, too. Are the distributors going to fill the orders at prices Eaton dictates? Are the electrical contractors going to bid on the job at a lower price than that at which they might have bid if Eaton were not the turnkey solution-provider?

Smartest piece of the Eaton booth -- and I'm serious here, not smirking -- was the small space set aside with four comfortable chairs. It was a good place for private meetings (it was walled off, sort-of). It was a good place for people who were in the midst of walking a very big trade show to sit down, take a break, and listen to the Eaton spiel.

I didn't sit long. In the 1980s, I had a publisher by the name of Jerry Schwartz, in the waste industry. It's a long story, but it boils down to: Jerry wanted to spend every minute of the trade show walking around and talking to his customers. His bottom line for a trade show was: The worst thing you can do, as a magazine person at a trade show, is to sit down.

Thomas & Betts

From the look of the company booth, T&B has embraced the wind business. From the look of the people the company sent to staff the booth, there's excitement within the company about the wind biz. From what I heard from the people, there's not only lots of activity in wind, but there's more planned. Among the things I heard, in no particular order, from the T&B people who spoke with me:

1. No SF6 gas in this product. Apparently, a "green" approach is valued by wind-industry buyers. If that's not the case, at least the manufacturers THINK that's the case!

2. Customers T&B pursues on the wind end include OEMs and engineering groups (like Black & Veatch).

3. T&B isn't a johnny-come-lately to this biz. 2010 marked the company's 3rd annual appearance at the Big Wind show. I'm not sure how big the booth was (my error in not asking) -- but it was huge.

4. Some distributors at the show , I was told, were bringing customers to the T&B booth -- to have key customers look at products that they carry. The T&B person who told me about this seemed very happy!

5. "We'll have several new products [for this niche market] by the next Wind show." So T&B thinks it now better understands the special needs of wind developers and the contractors + OEMs who work for them.

Brian Shaw, director of sales for the Utility Products Group at T&B, told me the company's big three distributors to reach the market were HD Supply, Irby, and WESCO (I saw booths from Irby and WESCO on the show floor). He also told me that the acquisition of Joslyn Hi-Voltage was key for serving the wind niche -- "we have a bigger footprint now -- we've become more important to our end-users" as a result.

I also learned that Elastimold "catapulted us into this market" and that now T&B is "taking it to the next level" with the Elastimold line.

I also spoke with Don Juszcyzk, market development manager for power generation. I learned the company is teaching a course in crimping for products in the wind market -- high-voltage, low-voltage, and more. Electricians will take the course in a day. They can then be certified. If a certified electrician does the work, the products will be backed by a T&B warranty.

Next up: A talk with Michael Caliel, CEO of Integrated Electrical Services.

Can distributors "sell" turbines?
By Joe Salimando

Over the years I've seen opportunity come and go for both electrical contractors and electrical distributors when new markets emerge.  Some, arguably, could have been taken over by your supply channel; on the other hand, some that looked promising as new opportunities turned out to be wrong for your channel.  I don't know what you'll end up doing with wind power, but that's your job to find out.  Mine is to present you with information-- and hopefully its information that can help you make good decisions.  In doing my best to educate you from events you likely don't go to, I recently went to WindPower 2010 to gather info on the viability of "wind" as a product category for today's distributor -- and tomorrow's.

What I Think I Now Know

Here are a few things I think I know now, that you might either already know, want to argue with, or appreciate the tips about:

 1. "Small" wind is a category into which the AWEA puts wind turbines that generate 100 kW or less.

 2. There were not a lot of exhibitors who targeted that specific niche. There were 1,428 companies and orgs with booths.

 3. AWEA's two sessions that hit the subject hard were under the heading of "Small & Community Wind." This is not a grouping that makes a lot of sense, if you analyze it (I could be wrong on that). I don't think AWEA's grouping is malicious. It just throws both of these difficult-to-analyze and not-very-big elements into a catch-all "MISC" category. i attended both of these sessions. 

 4. Listening to all of what went on, including other sessions, I may have a hint (I know nothing, but I may have a likely guess here) at why "small" wind isn't BIG. The reasons might include:

 a. It's just as hard to deal with siting and other local issues for a big wind turbine as for a small one. There's not enough money coming out of one of the under-100-kW things to make it intelligent to pursue such an effort. The same effort for a "community" wind installation (of maybe 2 mW) might get you a wind farm that's considerably larger.

 b. Building small wind turbines in someone's backyard (or on a farm) is going to involve neighbors. I sat through a speaker (a researcher from England) who spoke about why some people just can't handle having a wind turbine nearby. Apparently, some of us (that would be "human beings") are more sensitive to the noise generated -- pretty much on a full-time basis -- by a wind turbine. Some of us don't notice it.

 c. The cost of a small wind installation was given as 12 to 25 cents per kWh. It's hard to make money that way, unless you are in, say, Alaska (where I heard a person at a 3/10 event in Baltimore say his electricity rate was 53 cents/kWh).

But There's More . . . 

A few weeks after the event, the AWEA issued a release (and a global market study) on Small Wind. The U.S. market for these under-100-kW things expanded 15% last year. The U.S. accounted for half of such units sold on Planet Earth, with 9,800 of them put into the market.

Further, the release claims that there are "an estimated 100,000 small wind turbines" now in place in the U.S. There's more; click through to the release via the link above; you can click through to download the report at the bottom of the thing.

"All politics is local," someone once said. Some (perhaps many) small wind projects are locally driven as well. I sat through a presentation from a guy on leave from the Harvard Business School, who helped push a wind project on the Fox Islands in Maine. This was NOT a small wind project, but a community thing. He talked about the local political situation, tax credits, and a lot else. The fact that stuck in my notebook: When the local residents took a vote on whether or not to approve the thing, it went 284 to 5 in favor!

Think about that: Almost everyone who voted said YES. How often have you seen that in a democracy, since the Greeks invented it?

A Role For You?

Based on a lot of listening, here's the role I figure electrical distributors might play in small wind projects: DEVELOPERS. In theory, you are a local (and locally known) businessperson. In theory, you know the key players in your village, town, or city. In theory, you have access to financing.

That doesn't answer the WHY question -- why would you want to do such a thing? Clearly, any new venture involves a learning curve; so if you do develop a local, 50-kW wind turbine, you're not going to make a bundle on it. Also, this is a departure from what you know how to do so well (relationships with customers and suppliers, move material around, etc.).

On the other hand, Green is big right now. As you know, it was already hot; the oil spill is prolonging the momentum behind it. So if you build a small wind turbine on your property, in theory you would gain experience in wind technology and construction, paint yourself a deeper shade of green, and maybe even save a little money on your power bill.

I can't always think like a distributor; I'm a writer/editor by training and trade. Maybe this makes no sense. Perhaps just handling the products that go into large wind farms is the distributor niche (there's got to be some reason there were so many distributors with booths on the floor this show).

Next up: Supplier conversations I had at the Big Wind event.

Photos taken at Wind Energy Expo in Dallas

By Joe Salimando 

Last time, your humble reporter noted how weird it was to see so many booths from electrical contractors at the Wind Energy Expo, May 23-26 in Dallas. Below, photos of some of the booths, with minor comments. NOTE: There were actually at least three more large booths from significant contractors (and another of a NECA-IBEW booth). The photographic abilities of said reporter being limited, the ones taken of the others were not of adequate quality to post.

Aldridge Electric of Illinois is an electrical contractor that has built its own wind tower. TED's GreenRoom actually has posted links to three brief reports on the difficulties the contractor has had with local people over the thing, including this most recent item.

Unfortunately, I don't know much about Cummings. However, this booth really had its act together -- high and to the left (you can barely see it), the company's URL was prominently featured; just below that, again at the left, Cummings had a video screen. Smart! Did some idiot say contractors don't do marketing?

The booth of Henkels & McCoy seemed set up for meetings (see the space in foreground). The company is one of the few contractors that advertises; I've seen at least one ad from it in at least one renewable-energy publication.

I had a chance to talk to the older gentleman in the Muth booth shortly after taking this pic. He said the company's business was good, holding its own. I've noticed (maybe you have, too?) that the powerline contractors are doing better, generally, in this "Great Recession" than the commercial ECs.That may explain, in part, how so many of them had the $$$ to travel to Dallas, pay for a trade show booth, and "do" some marketing at the Big Wind Event.

MYR Group had four different names of its companies listed in the exhibit program, all with the same booth number. Somehow, I wandered by this booth during this busy show with almost no one around. A fluke.

I've always been fond of O'Connell, a contracting firm HQ'd in upstate NY (perhaps because I went to college in upstate NY?). I hung around this booth for a while, looking to talk with the fellow at right. However, these two were involved in an intense conversation (and, as I've noted, I never interrupt). Eventually, I flaked off.

Quanta Services is the home to a number of union and non-union powerline contracting companies -- and a lot else. A former roll-up (of sorts), the company has survived . . . and thrived. If you're interested, look on a stock site under symbol PWR. I would put money into this company, except that I prohibit myself from investing in companies about which I might end up writing.

Perhaps you've heard of Rosendin Electric? Based in northern California, it's the 4th-largest electrical contractor in the U.S. (according to Engineering News-Record's annual rankings). It is also, according to what I have heard, VERY big in the wind biz.

I had never heard of World Wind, but -- somehow -- something in this booth caught my eye. Perhaps it was the words on the sign, something about "electrical installation and service provider." Or perhaps it was something else.

Next time: A look at "small + community wind."

Will windy wonders never cease?

By Joe Salimando

I've listened to electrical contractors, asking them questions, followed their individual and collective exploits, worked twice as a full-time NECA national staff employee, and even (for a while) published the magazine that's now #1 in their niche. I do some work, now, as a freelancer, for different pieces of the NECA-IBEW universe. I've been to most of the NECA shows since 1979, with the only significant gap being in 1984-1989.

Therefore, the following statement (a generalization) is based on something, and not snatched from the thin air: Most electrical contractors are not very good at running their businesses, and even fewer are oriented toward doing Marketing.

This is not meant as an insult.

How Contractors Are NOT Like Distributors

Fact is, unlike distribution, the electrical contracting biz sees a constant turnover (of companies and executives). Specifically, the 2007 Economic Census showed roughly 10,000 more EC companies (compared with 2002). Go back all the way to 1992, and you find 54,000 companies with 480,000 employees -- compared with, 15 years later, 72,000 with 800,000-plus.

So things DO change, dramatically, on this end of the electrical industry.

Also unlike electrical distributing, there is a clear route to becoming a contractor: FIRST, become an electrician. I've been around ECs since 1979 and -- other than the execs of roll-up companies, who were playing their own special kind of Wall Street-oriented game -- I've met almost no one in the EC biz who was like Chuck Steiner of Branch Electric.

Steiner, you may remember, said he got into the electrical distribution industry as the result of looking around for a business to enter in which he might be able to make a profit.

Unlike the electrical distribution game, ECs go into and out of business fairly frequently. This applies to the biggest ones, too. From the roll-up days (1998 to 2001), you might -- or might not -- remember the names Building One Services (BOSS) and Ground Maintenance America Corp. (Group MAC). These were major acquirers in the EC and HVAC business. Each having essentially shot its wad (of cash), they merged -- into Encompass -- which, in the early 2000s, was credited with roughly $4 billion in annual sales.

Now, $4 billion is a lot of annual sales, and 2000-2001 isn't that long ago. But not a vestige remains of Encompass, BOSS, or Group MAC. Zippo. Can you think of even one electrical distributor, sized at $1 billion or thereabouts, that's completely vanished?

Booths At The Wind Show

Distributors, of course, DO marketing. Contractors, generally speaking, don't (unless you consider the act of estimating a set of plans and submitting a competitive bid with a few alternates to be "marketing"). That's what really shocked me awake on Day One of the Wind Expo. There were electrical contractor booths all over the place!!!

Of course, these were contractors who do powerline work, mostly. They, obviously, were companies who will be comfortable doing wind tower installation work (the electrical piece). But even these companies, to my knowledge (and I could be right on this one) mostly do NOT do very much marketing.

Yes, they must sell their services -- typically, to electrical utilities. But the customers at the Big Wind event were not just utilities. And the other booths (1,428 of them, if the count I heard was correct) with which the contractors were competing for attention WERE (many of them) marketing-oriented businesses.

Now, in some cases, the marketing by contractors at the wind show consisted of giving away gee-gaws and notepads. In other cases, the booths consisted of photos of linemen at work. Integrated Electrical Services (the largest pure-play electrical contracting company in which one can buy common stock) had a race car in its booth, with a personal appearance scheduled by its driver. Even more impressively, to me, was the presence at the show of Michael Caliel, the president/CEO, in person (more on a conversation with him in a later blog).

Beyond just the number of booths, some of the marketing efforts were interesting. One company had a glassed-in meeting room as part of its large booth -- with a table and chairs; a place for its execs to meet with customers. Pike Electric had a very big booth, with all kinds of giveways, and a significant number of people staffing the tabletops.

Next time: Photos of the contractor booths at the Big Wind show!

I came, I saw, I took (lousy) pictures

By Joe Salimando 

You'd like to think that I carefully planned my visit to the Wind Energy Expo in Dallas, May 23-26 -- but I didn't. As a result, when I got there and looked through the stupendous (230+ pages) show guide, I was startled to find so many electrical distributors.

After the first few hours of the thing, I realized the show was so big that I could not make myself walk the whole thing. To avoid sugar-coating the sitch: I am lazy, overweight, old, and stupid. Therefore, I would assign myself to taking photos of the electrical distributor booths. THAT would get me to walk around the show.

And it did.

Border States Electric had a significant booth. If you look at a map of where the wind really blows in the U.S., and look at another map of BSE's locations -- you can see a reasonable amount of overlap.

Above is the booth of City Build Utility Supply. I had never heard of 'em, which just proves that I am ignorant. I believe they are local (Texans). The two fellows in the 10x10 were busy the entire time I was nearby with what I assumed was a customer -- I work for distributors, and I know enough not to interrupt them when they are talking with customers!

Elliott Electric Supply is big in Texas. Everything is bigger in Texas, of course -- but the state is the U.S. leader in wind! This booth was located among the 15000s and 16000s -- downstairs, in a piece of the Dallas Convention Center that had low ceilings. I took this picture on the way out (my feet were barking!) -- so I didn't stick around to talk to the EES booth person(s).

Perhaps it wasn't really a surprise that Graybar had a booth. Note that the vertical display at the right is of Corning products.

Rexel's HQ is in Dallas. I expected to see a Rexel booth at this event -- and I did. It carried the Gexpro banner, tho.

Grainger had a booth, and the red-with-a-bit-of-yellow attracted the eye. Like Elliott's booth, this was one is in the basement. [Yes, yes, yes, I know -- Grainger ain't no electrical distributor. Well, I had to put this picture somewhere!]

I took the largest slice of my time at this booth. The reason: This gentleman was staffing the Hagemeyer booth alone, and he was on the phone while I was in the area. I waited until he was NOT on the phone; I didn't want to take a picture that said: Hagemeyer had just one guy in the booth, and he was on the phone! I spoke to him and he told me: "The phone call brought in a big sale." Look closely, you can see the guy is smiling. By the way, this brings me back to something I wrote back in 2001: It's a mistake to staff your trade show booth with salesmen!!!

The folks at the Stuart C. Irby booth (like Hagemeyer, a unit of Sonepar) were interested in why I was taking pix -- little did they know that, as a photographer, I am a great writer! When I told them I was with tED magazine, they said they loved the magazine. Flattery will get you just about anywhere!

Given that WESCO is big in big projects, I expected to find the company with a booth -- and was surprised when, on Monday morning, I didn't find the co. among the exhibitors in the big book. But when I went to the booth number of "Modern" -- I found this booth, a conjoined arrangement of Modern, Hamby Young,and KVA.

Why Are Distributors Exhibiting At  A Wind Show?

It's pretty simple: There is an awful big heap of electrical stuff needed (beyond the turbine, and not including the nacelle -- nice word, eh? -- and the blades) to turn what blows into something a power company can sell. There are a lot of connectors. There's a lot of other hardware. And think about it: Were you building a 100-foot-tall thingy made of metal, wouldn't you worry (just a bit) about lightning protection?

As I wrote in the first piece (this is #4) of this series of blogs on the Wind Expo . . . this humongous event was an ELECTRICAL show. I don't think I've previously seen so many electrtical distributors with booths in one place, even going back to the salad days of the old, defunct Electric Show (in New York), or the bigger/better days of Electric West, and all the way back to The NECA Show in the early 1980s.

Next up: A look at electrical contractors on the floor of the Wind show.

The reason behind the current decline

By Joe Salimando 

Now, let's get this straight: The U.S. government will pay 30% of the cost of a wind installation that is STARTED (not completed, just with ground broken and some forward motion) by 12/31/10. That's the law. There's no limit on the $ that the Treasury Dept. will pay out to wind project owners.

Doesn't that sound like a recipe for a boom? Your cost is 10, but you've only got to pay 7 out of pocket.

And, in 2009, there was, indeed, an explosion in wind power installations. Wind power accounted for 39% of all electrical power nameplate generation capacity installed last year -- we're talking 10 gigawatts (gW) of wind. Even if you remain deeply in lust for coal, you have to admit . . . 10 gW is one heck of a lot of potential power generation.

Absent any other information, wouldn't you assume that the Big Wind Growth would continue on into 2010? That's what I assumed. But, as a former boss once told me (at about 155 decibels) . . . the word assume is comprised of three words, and . . .

Sure, the economy is indifferent to horrible. But that was the case in 2008 and 2009, wasn't it? And somehow we financed, started, and completed 10 gW in that economy, didn't we? So wouldn't we do the same thing in 2010?

Nope. Assumptions CAN be wrong. My old boss (I can still see the veins popping out of his neck as he yelled at me) . . . was right!

Showing Up And Learning

While I managed to find something to do and miss the appearance of G.W. Bush, a former Texas governor, at the 2nd Wind Energy Expo plenary, on 5/25 I did rouse myself and show up for "State of the Wind Energy Industry," a breakout session. Three speakers tackled the present status and future prospects for wind.

I sat there in awe. I was TRIPLE-shocked at what I heard.

1. The session was NOT a fluffball, or a rah-rah sis-boom-bah event (no cheerleaders, no pom-poms). It consisted of hard information. This info was especially hard for all of the wind industry people in the audience, as it was -- I kid you not -- ALL BAD.

2. That was shocking enough. But the idea that AWEA had a key manager on the panel, and sponsored the panel, and allowed the panel to take place at its huge shindig -- for all to see -- was doubly surprising. After all, this is the kind of information on one's industry that the typical association tries to bury under 7 or 8 rugs.

So if the previous blog seemed critical of AWEA, here's some praise.

3. The third, really amazing shock -- to me -- was the sheer scale of the decline. So 2009 had 10 gW of wind power installed. What was the Q1/10 figure? 569 megawatts (mW). Talk about falling off of a cliff . . . !

Session Info -- 100% Bleak

Speakers in the session were Kathy Belyeu, who gathers info for AWEA; Ryan Wiser, a scientist with the DoE's Lawrence Berkley National Lab; and Tyler Tringas, with Bloomberg New Energy Finance. I've heard the term "one was worse than the other" previously -- and here, I experience it. 

I looked around the room as these people spoke. Most everyone else probably had a job in or related to the wind biz. While no one rose to leave in a huff, there was some nervous shifting in the seats. I wondered how many people listened to these three people and left wondering if they would have jobs in 2011 or 2012.

Belyeu talked about AWEA's annual report, which I think you can buy on its site. The U.S. now, after 2009, has 35.1 gW of wind generation installed (doesn't that put the 10 gW in 2009 in perspective?). The rest of the world has 41.8 gW installed. As of now, the total wind power generation (nameplate) installed equals 1.8% of the potential electrical power generation in the U.S.

[NOTE that does NOT mean that wind accounts for almost 2% of electric power generation in the U.S. Remember -- the wind does not always blow. So what's installed generates power maybe 40% to 45% of the time. Maybe.]

She presented a march of facts, basically ripping the key numbers from the annual report, splashing them on the screen, and providing explanation/perspective. I actually thought I heard a pin drop when she got to the 539 mW number for Q1/10.

My notes on Wiser's presentation are accompanied by an on-the-spot summary, in big hand-written letters (mine) -- circled: "Pooping In The Pool." That's what Wiser did

At one point, he went into the WHY of he downshift in wind power installations. Forget the 30% subsidy from the taxpayer (I find that hard to forget, but let's put it behind us for a moment). THE PROBLEM: The price of natural gas fell off of a cliff first. As a result, wholesale prices in the electric power biz fell. That lead utilities and other power buyers to offer declining per-mWh $$$ deals to wind farm builders.

What's more, Wiser said, "wind turbine prices have doubled since 2002." In other words, the law of supply-and-demand still works. There was a big increase in demand for wind turbines and -- voila! -- the price went to the sky.

Wiser had more to say, and perhaps I'll detail it in a later blog, but to sum up: ALL of it was discouraging. The bottom line: Big Wind isn't going to be so big in the near future -- unless natural gas prices rise (and the wholesale electric power market moves on up).

For the hard facts: Many wind power plants built in 2009 had contracts negotiated earlier (like, 2008) with the going rate for wholesale electric power in the $60 and higher range ($60 per mWh = 6 cents per kWh). NOW IT IS DIFFERENT. Prices are more like $30 to $50 per mWh.

Let me ADD here (Wiser didn't say this): It seems unlikely, to me, that natural gas prices are going to increase substantially. Now, that opinion is worth precisely what you paid for it. And if one of us had a really serious conviction on the direction of natural gas prices, there are futures markets in which one can make a bet. Note that I am most definitely NOT going out to play natural gas futures.

However, here's the deal: Shale gas properties are being developed all over the world. Where just a few years ago (at DoE-sponsored conferences) I kept hearing that the U.S was going to develop a big market for liquefied natural gas, the word now is -- we don't need no stinking LNG. The reason: Shale gas. Reserves keep turning up; I have read that the U.S. reserves of natural gas are now thought to be at 100 years' consumption (previously it was 30).

With gas plentiful, the LNG supplies are (I have read) going begging. Prices of natural gas keep falling. More shale gas supplies are being discovered. Supposedly, Exxon's big acquisition of XTO [disclaimer: I own stock in XTO] is about shale gas. There's plenty of info on this out there; look for it, and you'll become convinced that natural gas prices aren't going up anytime soon.

If that's the case, it apparently means wholesale electricity prices aren't going up, and therefore wind farm developers aren't going to be offered deals at $75 per mWh.

"We've hit the reset button" in wind -- that was Tringas's assessment. "The market is trying to digest this new information . . . how attractive is wind?"

According to Tringas, Bloomberg research (the company owned by NYC's mayor purchased New Energy Finance in 12/09) has determined that we're in "a period of systemic oversupply" in the wind energy business. There is even "overcapacity" in China, he said.

In the U.S., he added, "there's potential for a pretty strong correction this year."

Big Light In Sky Appears In East

After digesting what I learned in this session, the Sun dawned (for me). I now understand why AWEA was so strongly pushing for Congress to act on mandating RES for the country (see previous blog).

Wind power installation has already fallen, even with a 30% federal subsidy. All you need do to earn that subsidy is install permanent roads on your wind farm (that's what I heard in another session). That ain't much.

But at 539 mW per quarter, 2010 isn't looking so good. I think (based on what I heard) the amount installed will go back up in 2011 and 2012 -- as there will be a mad rush to get projects started before New Year's Eve this year. Those projects will be completed next year and in '12.

However, the pow-pow-pow beating of the session I attended does linger. I heard about AWEA's figures, a frank (and devastating) assessment from a DoE researcher, and the hard truth from a private-industry guy. It was unanimous. Essentially, the wind biz had its heyday in 2009. After that, it looks like -- without federal RES legislation -- a very calm, still period.

Next time: A look at some of the electrical construction exhibitors I saw on the show floor of the Wind Energy Expo.

AWEA embraces RES - what that means

By Joe Salimando 

When the CEO of the American Wind Energy Association (AWEA -- the acronym is pronounced "ah-we-ah") came out, in the opening plenary on Mon. 5/24, and said that getting Congress to pass legislation mandating a national RES (renewable electricity standard) was the most important thing in the whole wild world, I sat in my seat and quietly had a fit.

I came to Dallas, to WindPowerExpo 2010 , to hear about the wind business, not to listen to political claptrap. Hey, I live near Washington, D.C., all I have to do to hear that kind of stuff is walk out the front door! Obviously, I was not paying attention to the event's general-session agenda or AWEA's priorities. The first day's big opening session was chock full of politicians. The 2nd day's lead speaker was a guy name Bush, who got a Harvard MBA and then went on to overcome his heavy drinking and heavy use of illegal drugs.

Why is politics so deeply intertwined with wind, I wondered -- at least in AWEA's vision of things? Also, I thought about the name: I would drop the 2nd "A" from the association's name, and have it be Association for American Wind Energy, abbreviate it AWE, and make everyone say it out loud as "Awe!"

On the political thing: It turns out there is good reason for the wind people to make politics a priority. Good reason for them, bad (maybe) for the rest of us.

Forcing Wind Between Our Ears?

Before coming to Dallas, my "spectator's" view of the energy sitch was: Wind energy is the closest of all of the energy alternatives to being able to pay its own way. It was close, I thought, to making a case for itself on the basic merits (dollars and sense, to so speak).

Sure, there are problems with wind (I detailed them recently here  and here ). But coal has huge associated problems and costs that are ignored. So does nuclear power; we need to solve the waste storage problem before ramping up nukes (I think we should do both, by the way). And even natural gas has problems that are neither fully paid nor solved (they are just thrust on Society, without a 2nd thought).

BUT: I was wrong about wind's ability to make it on the merits.

That's the reason that Denise Bode, the CEO, was pushing so hard for action by Congress. Speakers at the first session included Sen. Byron Dorgan of North Dakota. Dorgan, a Democrat who is a lame duck, noted that legislation now running around D.C. has a 15% RES built into it, but he plans to put up an amendment boosting that to 20%. In other words: If it pleases Harry Reid, the Senator majority leader, one part of Congress just might get to vote on the national government's imposing a 20% renewable electricity standard on the entire country.

Now, I AM NOT A LAWYER. But I can make arguments both FOR and AGAINST an RES that mandates anything on any of the 50 states. And I will bet that there ARE lawyers out there who will come out of the woodwork if such legislation is voted on and signed into law . . . from a certain perspective, the idea seems to be to force wind down our throats, into our ears, and so forth.

You don't need the Tea Baggers to want to resist such a thing.

Associations & Economics

At some point, every association that rides a boom must face the fact that the wave will end. From a certain perspective, the worst thing that can happen to any association is Massive Growth! To get away from the wind biz, let's look at what happened while I was in the solid waste industry (1984-89) and thereafter.

During the years that I was employed at the National Solid Wastes Management Association, the industry went bananas. Recycling took off. Waste-to-energy vendors popped up all over the place. There was something (oldsters will remember) called "the garbage barge," in the headlines and on TV for weeks.

Facilities were built left and right to process waste, turn it into fuel, burn it, process mixed recyclables, you-name-it.

I experienced that. Near the beginning of my time as editor of Waste Age, there were just three people working on the magazine: A young managing editor, my first-ever hire (Tom Naber), and me. We had just one computer between us; it was on a cart (I am NOT making this up!) -- which we rolled from one office to another, so we could each work on the thing. That was 1985.

By the time I left, near the end of 1989, there were nine people on the magazine's staff (and we each had a computer). The association itself had expanded, from roughly 30 at the time I was hired, to over 100 (maybe 120, if my memory serves).

On the magazine end, the publication ballooned; we had a show issue that was 440 pages (yes, one single issue). We started up a quarterly (Waste Alternatives) and a 26-times-yearly newspaper (Recycling Times). There was a newsletter on infectious wastes, a newspaper on street sweeping, and a lot more. One staffer (a young guy with an economics background) was assigned just to update commodity prices every two weeks, for the recycling newspaper. THAT was opulence!

Shortly after I left, however, the bloom fell from the thing (I wish I could take credit, but it was not my personal presence!). First, the "landfill shortage" that we all thought was happening was, actually NOT taking place, it turned out. The bottom fell out of the commodities market in the 1990s. In short, the magazine never had another 440-page issue. The recycling newspaper went bust. The other publications were abandoned.

On the association end, even the humongous trade show declined. The association staff shrank. Revenues receded. It was an amazing thing to watch . . . lucky for me, I got to watch all of it from a distance. Eventually, the association sold off the magazine and the trade show.

I thought about all of this while watching and listening to WindPower's opening session. The wind industry in 2009 had its best year ever -- 10 gigawatts of generation installed. Probably, as in the waste industry in 1985-89, no one ever saw this kind of thing coming. Perhaps, as with Joe Salimando and his fellow workers in those years, it was a case of expanding opportunities, expanding products, expanding staff, expanding this, and expanding that.

Probably such a thing can't be sustained (it sure wasn't in the waste biz) . . . short of a government mandate.

What Do You Do?

So the question occurs: If you are AWEA, and your industry just exploded, and you look at the window and see a huge abyss into which you are about to fall . . . what on earth do you do?

One answer might be: RETRENCH. Nobody likes that (is the national savings rate back up near double digits?). Another answer is -- you look around and find a way to keep the business a-booming. In the case of wind energy in 2010, looking out to the near term, the only answer is to pursue a plan in which the national government approaches 50 states with a baseball bat and mandates an RES that dictates people install wind, whether it makes financial sense or not.

NOTE that this does not make the wind people, or AWEA, a bunch of bad guys/girls. It does, however, make them part of The American System. It pretty much mirrors what President Obama's people and Ben Bernanke are trying to do -- sustain the economy at the high level it reached in 2003-07. I don't think that's going to work, by the way, and I do think it's going to end badly for most of the 308 million people living in the U.S.

For the wind people, maybe it won't end badly. They are exercising a constitutional right to petition Congress -- and to get something done that will help them (and, if they are right, help the rest of us, too). Maybe they'll get the 20% RES signed into law. Maybe no lawyers will pop up to sue the crap out of the government for imposing this unfunded mandate.

And maybe I'll wake up tomorrow at 6-foot-9, instead of 5-foot-7.

However, it looks bad. It looks as if the wind business can't stand on its own. When the alternative to making it on your merits is to say that a government mandate is a MUST (that's what Bode said, I have it in my notes) . . . you look like yet another special interest, not a viable alternative.

More on why AWEA is pushing for this next time (not a political column!).

I went to learn. I did! So will you -

By Joe Salimando 

I went to Dallas for May 23-26 to attend WindPower 2010, a gigantic mega-stupendous trade show and big conference on the wind energy biz. I left this comfortable, homey basement for just one reason: I needed to learn more about what's going on with wind (and solar, and you-name-it). Turns out, I learn a lot more by walking around, attending seminars, and asking questions, then I do sitting down here with BloombergTV on the tube, and the TV on mute.

WindPower was a huge event. There were booths on two floors (seven halls) of the Dallas Convention Center. And stuff outside, too. Booths were numbered 101, 1001, and on up to 16000. I am not kidding. Someone told me there were 1,428 exhibitors. As it turns out, this is a growing show, and for good reason. Last year was the best in the history of the wind energy business in the U.S. This year's event reflected that.

ELECTRICAL ANGLE: As we know, if you want to convert what blows into energy, you have got to do a lot of electrical stuff. As a result, this event was a HUGE electrical show, the biggest I've ever seen (and I go back a few years). YES, there were green exhibitors. Yes, there were non-wind exhibitors (like the hotel people). There were turbine-blade-makers and folks who specialize in weather forecasting and much, much more.

But there also were a bunch of electrical distributors on the show floor, and a significant number of electrical contractors, too.

A Well-Run Event

As I walked around the show on Monday the 24th, I was stunned at how well-run it was. I noted all of the stuff that was done "the right way," as compared with so many shows that do things . . . differently. Yes, yes, I realize it's because these people are taking in plenty of money. But it was stunning to see all of this done "the right way" -- all at one time, all in one place.

What am I talking about?

There were numerous volunteers, wearing cowboy hats, as you walked into the DCC. They offered help in finding your destination and meeting your immediate needs (i.e., they could point you towards the checkroom if you wanted to stow your baggage). There was no need to wander around, mystified; no time wasted, no needless effort expended.

There were numerous water stations. The show was big, Dallas is hot, you needed them.

There was coffee and soda (with ice) in every one of the conference meeting rooms that were used.

The Show Directory, weighing in at over 200 pages, was well-laid-out and useful.

Outside the meeting rooms, there were huge heaps (i am not kidding) of notebooks and pens for attendees to take and use. The notebooks were made from recycled paper.

My hotel had a poster and information sheets on the bus schedule and more. I wasn't always guessing at where I needed to be, or how I would get there. The buses left on time; they were where they were expected, at the right times.

There were many Internet stations, with tons of computers for one to use. I was surprised, as in this day of everyone carrying around at least one tech appliance, I thought the stations wouldn't be needed. But they were. And they were used, heavily.

There were separate computer-and-printer stations at which attendees could print out the presentations (before or after a given workshop or session).

On the show floor, the booth number of each booth was blazoned into the floor. So unlike so many shows, where I have trouble figuring out precisely where I am in aisle #12000 . . . in this one, I never had to guess.

AWEA took a lot of the promotional booths it wanted to have at the event and put them in the hallways.

Lunch was served on the show floor each day, but -- because the lay-out of the booth area included wide aisles -- I never had the same experience as I did at BICSI shows (where I distinctly remember mobs of people, impassable show aisles, and lucky-for-me dodges of full plates of food being mishandled by other attendees).

Volunteers walked the floor of each of the session rooms. Additionally, there were professional A/V people in each room. So there were no technical glitches (as you see in almost every show) . . . no "how do you get this thing to work" yelps from a presenter . . . and every session started on time (the A/V guy signaled this to the moderator with music).

With so many attendees, the breakout sessions were held in big rooms. Having someone walk around with a microphone, or having people stand, in the Q&A period -- well, it might have worked, but it would have taken time (I have seen this take time at other events). Instead, you usually found a blank index card at or near your seat; the volunteers walked around -- frequently -- to pick up these cards and deliver them to the moderator.

What's more, as this is -- you would think -- a "green" show, there were a number of sustainable steps taken. These were enumerated in the show directory. Even the coffee cups, it turned out, were made from recycled material.

In short, it looked (to me, a veteran show-goer) that the AWEA people were past masters of trade shows, geniuses of the exhibit world. AWEA (said as "a-we-ah") is the American Wind Energy Association .

Shortly after concluding this, I found out that the person helping AWEA run the show -- the guy with expertise -- was Lawson Hockman. I first became aware of this person at NECA; he ran The NECA Show for some time. I believe he retired, and came out of retirement to work with AWEA. I spoke briefly with him at WindPower (obviously, he was just a bit busy!).

My conclusion: Wow, did he ever pick the right event for which to come out of retirement. And the AWEA people ended up with a growing industry and enough money to let Lawson do the thing up right . . . which almost everyone I spoke with who attended the show actually did notice!

I credit the relevance of the sessions, of course, not to Lawson but to the AWEA people. The session content was, in my experience (I could attend only one at a time) -- surprisingly good. There were some very, very informative sessions (I omit from this label the one that included the former president, GW Bush). I also spent a lot of time walking around the show floor.

So: I am no wind energy expert. But I think I now know more about Wind, and how it fits with electrical distribution (and how we in the electrical industry fit with it). You'll read more about what I saw in Dallas in the next few Special Reports.

Let's say that the enormous waste in energy use in the U.S. bothers you, as it does me. After hearing a lot of discussion at the EE Global conference, you come to the conclusion that "we need to DO something about this!" -- and right now.

If you missed the pieces here from EE Global:

Lots of Electrical at EE Global  (part 1 of plenary coverage)

Industry Leaders On Energy Efficiency  (part 2 of plenary coverage)

Conversation with Allen Breeze of Schneider Electric  

Interview with Zia Eftekhar of Philips Professional Lighting

For at least the rest of this column, assume that the world is incapable of becoming convinced that it ought to act as the result of possible consequences of global warming. How, then, do we get the U.S. to act on EE, and cut energy use?

Plan A

My first idea is to do away with the heavy regulation of the price of electricity. Yes, this was tried in the 1990s, in a kind of half-fast approach. It didn't work. We have 51 state regulators and a national body (the Federal Energy Regulatory Commission). I heard the chair of FERC speak at EE Global (he moderated a session; I went just to hear him). He said his org had two jobs, and one of them was to keep power prices down.

Think this through with me. If the price of something is kept down, consumption will . . . do what? GO UP -- right? And that's what we've gotten, via decades of heavy price regulation of electricity, isn't it? Increasing, careless, stupid increases in consumption!

So how do we get people to use LESS electricity? Ideally, raise the price. Won't that make the nefarious owners of evil electric utilities rich beyond their wildest dreams? Possibly. I suggest we not worry about who makes money off of higher prices, and just pursue them -- avidly -- so that people voluntarily use less electricity.

Right now, the average price in the U.S. is around 10 cents to 11 cents per kilowatt-hour. I think something along the lines of 60 to 75 cents would get people to turn off the lights, run their dishwashers late at night, replace all the damn T-12s out there, and so forth.

Plan B

Let's say the first plan doesn't work for some reason. There are too many lawyers in the U.S., and some of them will, no doubt, figure out a way to drag out the implementation of Plan A until I, personally, am 175 years old.

So forget killing state and federal price regulation. How about TAXING power consumption? After all, our national government is deeply in hock. We can tax electric utilities (anyone who sells power) -- heavily. Then the regulators (at every level) would have to grant stupendous rate increases, as increasing taxes would be part of the rate base.

This is a PATRIOTIC solution. To be against taxing utilities would be: (a) to be FOR utilities, and no one likes them; (b) to be FOR aggressive waste of energy, and no one wants to condone that (even if everyone does it; and (c) if you don't want to implement this heavy tax and pay off the national debt, what -- precisely -- is your idea of how to do that?

Practically, the tax would have to be gigantic. If we're going to drive the price that grandma pays for electric power to 78 cents per kWh, we're going to have to tax the crap out of the utilities. The only part of this plan that worries me is that the idiots in Congress will expand spending once they get this money, instead of paying down the debt.

Plan C

Assuming neither A nor B works, we are in a horrible situation. We might be (who knows?) causing faster global warming. We as a nation are in hock above our head. We are a group of spoiled people who waste energy on a minute-by-minute basis.

Obviously, thinking about this leads to despair. It so happens, Plan C involves using a desperate measure: BOMB THE COAL-FIRED POWER PLANTS.

Now, that sounds violent. It is not my intention to kill any single person, not even Dick Cheney. It is my intent here, however, to get our marvelous Air Force to locate every single coal-burning power plant in the U.S., and do to those things what we did to Fallujah.

What would happen after every single coal-burner was leveled? Amazing stuff:

a. Power prices would have to go to the sky. We get 48% of our electricity from coal. No plants = a lot less power = higher prices for what's left. This obviates the need to kill all the regulators or tax the crap out of utilities.

b. We can take the high road on global warming. We can tell the Indians and Chinese -- hey, we DID SOMETHING about it, we didn't just talk. We blew our coal-burners up! Now, how dare you go out and build new ones!!!

c. We can also make a never-to-expire offer to the Indians and Chinese: We would be happy to send our Air Force to blow up your coal-fired power plants, too!

d. Then, in the U.S., we can rebuild our power system.

We can build small local power plants that do not burn coal.

We can build the power plants near cities and industry, so the waste heat from the process can be used -- boosting energy efficiency from 30% to 37% (that's what we get now from a coal burner) on up to 70% to 80% (numbers typically cited for combined heat-and-power facilities).

We can use DC power distribution in some places, where it might work.

Additionally, the step of blowing up every single coal-burning power plant on a single afternoon would be a NON-REVOKABLE ACT. No one would be able to put this particular toothpaste back into the tube. Debating what happened (in Congress, on Fox News, or elsewhere) would, finally, be irrelevant. The urgent need would be to figure out how to put up more solar, more wind, more natural gas, and even more nuclear power plants.

The Only Practical Solution

Raising the price of electricity is the answer. While the work of the Alliance to Save Energy (sponsor of EE Global) is -- as I may have written -- admirable, and the words of speakers at the conference were important . . . the likelihood is that nothing will change.

Get rid of electricity price regulation, however, and something good WILL happen. Tax the utilities until everyone must pay 78 cents per kWh, and people WILL turn off the damn lights. But in the case of both Plan A and Plan B, there will be endless debate . . . discussion . . . condemnation . . . pay-offs for politicians . . . lobbying . . . and, as you well know, NOTHING will be done.

That's why the efficiency (!) of having the Air Force bomb all of the coal-burners makes sense. Once it has been done, there will be no further need for debate. The only questions will be: (a) How can I use less electricity, as it has become a scarce commodity; and (b) how can we quickly and intelligently rebuild the power system, so that we don't screw it up on into the future.

In other words: It has become apparent -- at least to me, and it would be to you if you looked at it closely -- that Americans will not do the right thing on energy efficiency . . . not unless they have no other choice.

Bombing the coal-fired power plants achieves the "no other choice" scenario. It's the only way to get there in a hurry.

Philips exec talks before Lightfair

By Joe Salimando 

Zia Eftekhar has been working in the lighting industry for 40 years. He became president of Lightolier in 1992; on 1/1/10, he was appointed CEO of Philips Professional Lighting. Shortly after his 12-minute presentation at the recent EE Global plenary (covered briefly here), he spent a short bit of time talking to tED.

He indulged me in a summary of my reaction to the plenary, which included four other energy industry executives and a senator from Alaska. Each of the execs, including Eftekhar, said: "The technology is here, we don't have to wait on energy efficiency." My reaction: Well, then -- why isn't EE happening?

His answer: It is happening, albeit maybe not fast enough. Financing has been a problem of late (for more than just lighting, of course). In fact, as a result, Philips has put a financing initiative in place.

He also praised federal legislation that (effectively) bans inefficient incandescent bulbs in 2012 and 2014 (after that, forget the A-lamp). "The legislation brought public awareness," he said, to the efficient alternatives to the incandescent -- long before the actual ban itself will kick in.

Note: I don't like the ban. I'm not the only one -- Howard Brandston, a famed lighting designer, offered his reasons for opposition at the 2009 Lightfair -- I wrote up his presentation here.

LEDs

I asked him (awkwardly) about LEDs. I don't have all of the many (constantly renewed) set of facts about LEDs at my fingertips. But I do know there are significant quality variances in the various offerings out there. For example: See the comments (on linear replacement lamps) from DoE's Jim Brodrick , posted recently to Craig DiLouie's blog.

Even tho Philips might have the "inside track" on quality thanks to its reputation, isn't the fact that people will pay lots of bucks to install crummy, underperforming LEDs going to hurt the product category (at least in the short term)?

Standards are the answer, Eftekhar said. "We think it's essential," he noted, claiming that his company was active in each and every LED-standards-creating effort. He talked about the DoE's CALiPER program (something with which you MUST be familiar if you're going to sell LEDs, I think.]

One problem, however, for Philips -- and others -- is that the work on resolving standards issues is taking place NOW, in "real time" . . . while the LED market is in motion. This means underperforming LEDs will be sold into the market, in significant numbers. The poor quality will lead to unhappy experiences. I think it's a solid bet (like a 2-to-5 shot) that end-users are going to remember these bombs.

What about the issues involved with LED binning, I asked. This is another soft underbelly of LEDs, an issue on which electrical distributors (and their customers) should grab as much education as possible. It's a question for you to delve into with your suppliers: What's the variance in light output possible from a given "bin" of LEDs?

[Why ask? The variance can be HUGE. See the section on LEDs in this report from a lighting presentation at the 3/10 NFM+T conference.]

Eftekhar said Philips was pursuing a solution to "minimize the differences" by going to larger-size semiconductor wafers. Yes, semiconductors; you did know, of course, that they are the heart of solid-state lighting?!?!!!

What's the big idea? If you make a bigger wafer, you can take a larger slice out of the pie (the "middle" of the wafer is bigger, obviously) -- which works, Eftekhar said, to avoid the binning light-output variance. Isn't that wasteful, I wondered aloud. I envisioned eating away at the center of a Sicilian pizza from Spumoni Garden in Brooklyn, and throwing away all of the edge pieces.

NO, was Eftekhar's answer. There are, it turns out, other products that can use the "edges" of the wafers -- products that are not LEDs -- "applications where [the variance] doesn't matter as much."

Educating On Efficiency

"We need to do more education at the end-user level," Eftekhar noted. By "we," he meant the lighting industry (and electrical folks). He returned to this theme, educating the end-users, the contractors, the distributors.

Subtext: The industry has done a rotten job so far [he didn't explicitly say that, but . . . ]

What's to be done? Eftekhar: "We are talking to that end -- to both industry and government." As an example of how uneducated "the market" is, he returned to something he said in his EE Global presentation -- that only 1% of lighting in commercial building has lighting control installed.

Bottom line: If the electrical industry would like to profit (and this would be a long-term thing) from a great increase in energy-smart lighting retrofits, we're going to have do a lot more talking to the customer about the whys and hows.

Makes sense to me. Will it happen?

Next up: Thoughts inspired by EE Global on energy and energy prices.

Allen Breeze's title is senior VP, Schneider Electric North American Operating Division Power Business. In addition to being a prime sponsor of EE Global, the event (in D.C.) at which we spoke, Schneider is heavily involved in the electrical industry's anti-counterfeiting initiative.

On the counterfeiting thing, SENAOD/Square D products are going to now come with microdots embedded. "You can see them with a microscope," or some other kind of image expander, Breeze told me. The company will share the location/size of some of the dots with its industry partners (i.e., you) -- but it will keep others proprietary. The purpose: You'll be able to look at a product and tell whether or not it is the genuine article (no dot, NG).

On ENERGY: Breeze told me that if we don't do something, energy demand will double (by maybe 2030, I think). Corporations have to save energy to lower costs, do the right thing by the environment, and demonstrate corporate responsibility to everyone else, he said.

To me, the most interesting thing here is the new energy management group within SENOAD. It's separate from TAC, the building automation/energy management company that Schneider bought and owns/operates.

"The idea is that we can go in to a health care facility, for example," and do an audit, find potential energy savings, and follow through and implement them, Breeze said. It's not clear to me whether this operation competes with distributors and their contractor customers. Breeze didn't duck that question when I asked it, but the way he answered it indicated to me that - maybe - this effort is still developing. Perhaps Schneider hasn't sorted all of that out, or perhaps there are different answers in different places.

Products With Promise

If course, any booth tour involves looking at products. Several surprises awaited me in the visit to Schneider's booth (perhaps because I've not being playing close attention; the list of my shortcomings continues to expand exponentially).

Here's one eye-opener: HYAC Controls (the Cassia thermostat) -- from Schneider Electric. These will be interfaced with occupancy sensors, my notes say. Breeze said they are initially being rolled out with two specific niche markets in mind -- hotels and residential.

One important element here, apparently, is The Smart Grid. Breeze and Mike Matthews of the company (I didn't get his title or bizcard, sorry) told me about an upcoming deal in northern California, the territory of utility Pacific Gas & Electric. The ute has created the right for itself of controlling your residential AC unit on 15 selected days in summer (peak power demand days, one assumes). Residents there are going to need a new HVAC controller to interface with PGE's TSG controls.

Another product prominently displayed was a Schneider/Square D EV charging station, for a house. I hadn't seen that before and, as you've read here a number of times, I've been following the EV biz pretty closely. Interestingly enough, where the HVAC thingy did not have the words "Square D" appearing anyone on the product, the EV charging station did.

What's up with that, Allen? His answer: It's part of a branding move by the company. We'll see more and more in company advertising of Schneider Electric, and (altho he didn't say it this way) . . . less and less of Square D. As an example, the new TV ads rolled out by the company talk about Schneider, don't use the words Square D, and roll out a new concept -- EcoStruxure  -- which is about TSG and EE.

Elbows Out?

In looking over what was in the booth, and listening to Breeze, I got the distinct impression that Schneider Electric is expanding the part of the electrical world that it considers to be part of its universe. The thermostat/HVAC controls and TSG interface puts the company in Honeywell's face; the Cassia product verbiage that I heard sounded like a product that would compete with offerings from Leviton.

Is it astonishing that Schneider is looking at new pieces of the world to conquer? NOT AT ALL. For one thing, as far as I know (which isn't all that far, but go with me here) -- the company has made a lot of acquisitions and, globally, encompassed a lot more of any given building's technology needs than it has necessarily shown (in the past) in the U.S.

But more importantly, I have been expecting to see more aggressive behavior -- and maybe even marketing changes and big new investment s-- by a lot of big electrical manufacturers, including Schneider and its competitors. WHY?

First -- what follows has nothing to do with anything Breeze said.

Consider the facts that we all should know by now:

1. The economy has contracted.

2. No one knows when (OR IF) it will resume growing.

3. Some (like me) think a resumption of the shrink is going to take place, and soon.

4. Even those who disagree with #3 aren't so sure the U.S. economy is going to grow back to where it was in 2003-07. And with the recent fall-off-a-cliff behavior in Europe, it looks like the Western world is staying put right here. Add in Japan's 20+ years of no-grow nothingness......and you get a big stagnant market.

5. Sure, there's growth in the BRIC-minus-R market (Brazil, India, China). But these big companies all have massive operations in the Western world, especially including the U.S. For all of the "Tea Party" end-of-the-world-ism, the U.S. still represents a damn big market for many, many companies.

With those facts, large companies -- even those that can grow via acquisition -- may come to the conclusion that they need to start throwing some elbows. Instead of growing with the Western economies, or maybe a little faster . . . they are going to have to start going after market-share gains at the expense of . . . well, at the expense of OTHER very big companies.

[By "throwing elbows" I mean what I used to have to do on a basketball court to get a rebound. I'm 5-foot-7 and I don't jump like Michael Jordan. To get a rebound, I created . . . space . . . where the ball was going to come down. This is not uncommon in all ranks of the game -- and it's pretty damn impressive when someone 6-foot-10 throws an elbow at another big guy.]

SO: If you are company X, you can't count on what happened in 1990-2007 (normal market growth) to create additional sales for your company (and sales commissions/bonuses for you and your family). Plus, by now (mid-2010), your company has probably cut all of the workers it can cut without lopping off valuable muscle.

That means it is time to play hardball. What I saw and heard at the Schneider Electric booth dovetails nicely with this expectation.

Next up: Zia Eftekhar of Philips.

The Special Report dated 5/13, Near-Term Construction Pulse-Takings , covered "construction starts" data from McGraw-Hill Construction and Reed Construction Data on Q1 2010.

It drew a response from Jim Haughey, chief economist for Reed -- which follows:

Joe:

I just came across your summary of the differences between the two starts reports.  We get a lot of questions from our customers about the difference in starts.  The pattern in recent years has been for the Dodge data to start the year low and be revised higher so that the full year difference is less than the difference earlier in the year.  

We agree with Dodge that problems are just beginning in financing public construction.  And you are right to be concerned about when electrical contractors will start to see more work. NR building starts will not turn up significantly until year-end or early 2011 and the electrical work will come even later.  

The 10% (through April) rise in starts year to date is a comparison to the weakest months of the recession in early 2009. We expect the year to date gain vs. last year to grow through June and then fall back to about 12% by December.

Jim Haughey Ph.D.

Chief Economist

Reed Construction Data

225 Wyman St., Waltham MA 02451

www.reedconstructiondata.com

Last time, you read here about speakers from Siemens, United Technologies, and the state of Alaska -- addressing attendees at the EE Global meeting in D.C. Notes on the Opening Plenary's other three speakers follow.

CHRIS CURTIS -- he's president & CEO of Schneider Electric's North American Operating Division. In introducing him, Kateri Callahan of the Alliance to Save Energy (event hosts) detailed all of the jobs he's held at Schneider, detailing his "meteoric" rise.

I don't like meteors. They wiped out the dinosaurs, and they could do the same to me. So I was disposed to dislike Curtis who, after all, apparently can't keep a job!!! But these feelings were misplaced. He made a good 12-minute presentation covering, among other things:

1. There are 1.6 billion people on this planet without access to electricity. I liked the fact that this was included in his speech (it was actually pretty high up). The fact that some of the rest of us have managed to use electricity VERY inefficiently should not obscure this very important fact. Don't poo-pooh 1.6B; it's nearly one out of every four human beings now living!

2. Curtis said he was optimistic about the prospects for EE. Like the Siemens and UT speakers, he reinforced the fact that "the technology is here" to do the job -- right now. It may seem repetitive in this write-up, but I don't think anyone in the electrical biz can say this often enough -- to each other, and to the customers.

3. A data point I'd not previously seen: "Payback time [on EE investments] has decreased 22% over the past 5 years." That means you get a faster payoff when you put money into an energy-smart retrofit. How did that happen? Higher energy costs, Curtis said, plus decreased technology costs. How on earth did Joe S. miss this important fact? Curtis did not say.

4. "We cannot act as if we have all the time in the world," Curtis said. The Senator from Alaska was long gone by the time he rose to speak; I'm not sure this was addressed to her.

DAVE SZCUZUPAK -- he's from Whirlpool. His presentation's smart-aleck title was, "Why you need a 'smart' dishwasher to drive an electric car." Neat approach! Problem: I listened very carefully and, if there was serious and substantial follow-up to the promise of that title . . . he didn't come through and deliver it.

Oh, there was a bit of pay-off late in his speech. He said one EV would use 20,000W to charge overnight and that we'd need to offset this was smart appliances. The idea: You will tell you refrigerator that you want it to defrost, but the fridge won't do it if -- communicating via TSG -- there's not enough electricity to get the job done (i.e., the defrosting process would put a strain on the grid) . . . or if you are now charging your EV.

Szczupak said we'd eventually each have a "suite" of smart appliances in our homes. It was not clear how this will carve out 20,000W for the EV in the garage. The case was not solid (or not made very well).

An interesting claim: Refrigerators sold in 2009 used only as much energy as a 60W light bulb. "We are reaching a plateau on appliance energy efficiency," he said. I re-checked my notes, I am pretty sure I have this correct.

It leads to an obvious question: If there is a fridge out there that uses only as much energy as a 60W lamp, what the heck is our problem with energy efficiency? Sounds like we've already got it licked.

ZIA EFTEKHAR -- he's CEO at Philips Professional Luminaires. A very nice man, he carved out some time later on to speak with me (more on that in a later Special Report) on this day, despite the fact that he was flying from D.C. and EE Global to Vegas and LightFair in the afternoon.

In his speech, the last of six in the EE Global opening plenary, he referenced several numbers that everyone in the electrical biz should know:

1. Only 1% of the lighting in commercial buildings uses lighting controls. Isn't that STUPID? (I am using a word Mr. E did not use).

2. There were 110 million T-12s sold into the market last year (I'm not sure if this is 2008 or 2009 data). This is, Eftekhar said, "old technology." It's really . . . uh, well . . . STUPID . . . that folks are buying so many of these wasteful things, isn't it?

3. "The whole issue," he said, is about "old buildings. He admired what New York City has done, which is to require buildings of 50,000 sq. ft. and more to undergo an energy-smart retrofit in the coming years. That means every single building of size that you see in Manhattan will undergo an audit and retrofit.

4. Like all the speakers that preceded him (except the lady senator), Eftekhar emphasized that "the good news is that [the technology] is here and applicable." We don't have to wait; we can make existing building a lot more energy-efficient -- NOW.

SUMMARY: Six speakers. Not counting Sen. Murkowski, the five corporate execs basically said the same thing -- we can do EE now, save money for customers, reduce the need to build new power plants, and much more.

My take: As I have written here before, let's FORGET global warming. There are zero investments right now that offer the sure-thing return of energy-efficient retrofits. As a recent headline (on the Sustainable Facility magazine website) recently put it -- addressing business executives: "Would you rather fire an employee or a kilowatt?"

Next: What I heard from Allen Breeze of Schneider Electric.

International event in D.C. draws . . . me

By Joe Salimando 

EE Global is an annual international energy-efficiency event aimed at high-level "policymakers," regulators, and such. I don't usually attend; '09's version was in Paris, the 2011 renewal will be in China. These are not venues to which tED magazine regularly dispatches correspondents!

However, the 2010 event was held in my hometown, Washington, D.C. -- a place with a buttload-and-a-half of policymakers, regulators, and pontificators. Looking at the agenda, I saw plenty of stuff I didn't necessarily need to hear . . . but also appearances by people from Schneider Electric, Siemens, and Philips.

So I got to the D.C. convention center. At the least, I could listen to what the electrical folks had to say! I went to the Opening Plenary, where I learned that the event -- a child of the Alliance to Save Energy -- had six "founding sponsors:"

• The Department of Energy
• Duke Energy
• Schneider Electric
• Siemens
• United Technologies
• Whirlpool

Notebook Emissions

Here's some of what I heard in the opening plenary:

LISA MURKOWSKI -- she's a Republican senator from Alaska (tell me, what is it about right-wing women from the frozen north, anyway?). I didn't like her before she ever stepped to the podium -- not because she's a Republican, but because she is a freaking legacy to the country . . . daddy was a senator, too. Before you ask: NO, I didn't like the idea of Kennedys all over the freaking place, either.

After she was done talking, I didn't understand what she was doing there. We can't afford national regulation that will combat climate change, she said. Why kick off your meeting with someone who is Very Negative on something that most EE advocates think will help the cause?

GEORGE DAVID -- he's former chair/CEO of United Technologies. His presentation was terrific, the best of the six plenary speakers. This made me wonder: (1) was he speaking FOR his former company, or not?; and (2), do people get around to speaking the truth only after they step down from powerful positions?

David's gist: We've got the tools NOW to save energy, we don't have to wait. There's no need to sit around hoping for technological fixes; it's here NOW. Sample: A study (with which he apparently was somehow involved) by the World Business Council on Sustainable Development  says we can cut energy use by existing buildings NOW by 45%, with what we have to work with.

Question: If we can -- why aren't we?

His answer: INERTIA.

My answer -- I was thinking along with the guy, he was making sense -- is different. STUPIDITY.

ANDREAS SHIERENBECK -- he's a big-time building automation exec at Siemens. He made a lot of sense, too, and he's not retired. Each plenary speaker was limited to 12 minutes, which maybe cramped her/his style (no one usually tells a CEO when to stop speaking, and you just try doing that to a senator!). There was no time set aside for questions.

At the very least, I wanted to ask this fellow a question on his statement -- "I'm convinced you can't build The Smart Grid without smart buildings." I wanted to hear more about that.

OK, OK, of course -- a guy who runs Siemens Building Technologies is going to push "smart buildings." That's the SBT idiom, isn't it? But I wanted to hear a lot more. Why can there be no TSG without smart buildings?

There were other tantalizing tidbits thrown out here. Siemens works on its own buildings (as you'd expect). There's a structure in Zug, apparently the global HQ for building technologies, where they claim to have cut energy use by 44% just by using the monitoring and control that was in place. The impression given: They didn't do a major retrofit -- they didn't replace the windows (etc). -- they just made intelligent use of what was in place. If true, that's a heck of a thing, isn't it?

Next time: The rest of the plenary's speakers -- from Schneider, Whirlpool, and Philips.

Not so good, unless you look further into the future

By Joe Salimando 

FMI Corp. is the leading management consulting firm in construction (or so it says, and lots of people regurgitate that). A nice thing is that, quarterly, it offers a Construction Outlook -- making the doc free on the web. Download the Q1 thing (16p PDF) here.

A quick summary:

• Total construction in 2010 will be down 5%, FMI said, after a 13% drop in 2009.
• Nonresidential will be down 16% this year, after a 9% fall last year.

FMI says "the residential sector is expected to begin to recover in 2010" -- which is awfully careful phrasing, isn't it? It's written as if FMI is joining the consensus in parroting this line, but it doesn't quite believe it.

What's In There

I've gone through FMI's reports before. I like two major things about them (in preference to the data output you can get FREE from other forecasters):

1. The FMI report's numbers seem to match up with the U.S. government's "construction put-in-place" reports (monthly). There seems to be less need to fudge or adjust. This is not the case with what McGraw-Hill and Reed Construction Data report (they focus on "starts" and the numbers never match the "spending" reports from the USG).

2. FMI projects way, way out there -- in the Q1 2010 report, you can find numbers for the year 2014. Most forecasters and economists would never, never, EVER even attempt this. That doesn't mean FMI is correct about its outlook through the end of time (beyond 12/21/12!) . . . it does, however, give us something to LOOK at!

For the balance of what's here, I compared the forecast for 2014 with what actually happened (as reported in the FMI data) in 2007.

Real vs. Estimated

Residential -- this includes single-family, multi-family AND improvements, another reason to like the FMI data. The 2007 total was $500 billion, the prediction is for $416B in 2014.

Since the numbers are NOT adjusted for inflation, that's a bigger decline than it seems to be. The BLS inflation calculator already says that $100 in 2007 = $104.96 in 2010. If you want to add some minor inflation to the total, and take a 2007 dollar down a bit more, the 2014 number might have to equal $560B to come out even with 2007. $416B is less than 75% of that!

Obviously, residential -- in FMI's view -- is going to take more than half a decade to catch up.

Nonresidential -- $468B in 2007, $473B forecast for 2014. This is not really a flat comparison, there is some loss to inflation. But it's better-looking than housing, right? If you use the same inflation factor for 2007-14 (i.e., 112%), the 2014 non-res number would have to be $524 to equate to the '07 figure. The FMI number for 2014 is 90% of that.

Nonbuilding structures -- $182B in '07, $306B in '14. This is REAL growth, and a lot of it. Much takes place in the POWER subsector (from $59.3B in 2007 to $143B in 2014, which is a double even taking inflation into account). Note that power was 32.6% of the 2007 number and, if FMI is correct, will be 46.7% of the 2014 number.

Sure, you're not involved in the utility construction business, so this -- apparently -- means nothing to you. Here's why I think it's important: To pay for all of that Power construction -- FMI sees a sustained increase -- utility bills are going to go UP and UP and UP. That's going to make it easier for electrical distributors and electrical contractors to obtain work in energy-smart retrofits.

TOTAL construction picture, as forecast by FMI -- $1.2 trillion in 2014 vs. $1.15T in 2007.

Is that bad? It depends on what you are looking at. The comparison with 2007 makes the 2014 number look a little flat, especially when adjusted for inflation. However, the FMI forecast figure for 2010 is all of $888B.

So better days may well be a-comin'! Hang in there.

What MHC & RCD are saying these days

By Joe Salimando 

Each month, McGraw-Hill Construction and Reed Construction Data -- which employ economists and offer project-spotting services connected with construction -- emit numbers on the $ value of construction starts. These numbers differ from the U.S. government's monthly "construction put-in-place" report; the USG's numbers are on what was completed in the month, the MHC + RCD figures are about projects which have just gotten underway.

Month-to-month fluctuations in the starts numbers can be wild. Joe's take; Best to look away from monthly noise, and try to focus on year-to-date totals. At this point, each company has three "real" months under its belt -- so let's look.

Another complication: MHC & RCD are allegedly looking at the same thing, but what they say they see does not match (not even close). I do not know what this should be.

One further item in the mix: RCD recently sued MHC. That's an interesting fact. The allegation is that MHC was accessing (and using?) RCD's reporting. If that were ever true, one would think that by now, after the filing of a lawsuit on the matter, it has stopped.

What got me to type up this brief report is that the numbers don't match for the Jan-Mar 2010 period. It's interesting.

MHC

See the report here. Don't ignore all of the verbiage. The guy who wrote it, Bob Murray (chief economist) is a smart fellow who has access to tons of information that you don't -- the raw Dodge data that MHC sells to contractors and others all over the U.S. He's got an inside view. What Murray thinks important enough to note just might be important enough to note!

I usually don't give much credence to the numbers in the write-up. I page down to the bottom, where there is a "Year To Data Unadjusted" table.

Remember, this isn't spending -- it's "the $ value of starts." So these Unadjusted numbers might provide a look at what's coming -- especially for electrical people, who get a lot of work (and $) out of the back-end of most projects.

According to the March table, nonresidential starts were down 13% in Q1 2010, as total construction was up 2% in the period (thanks to a huge pop in residential starts). Of course, housing is so beaten-down that obtaining a "pop" of any sort in the winter months shouldn't be a cause for celebration.

Reading Murray's words, you get the basic idea that local governments are likely to continue to suffer financially -- and, in response, cut back on construction. Murray also wrote (without using these actual words) that the residential increase is what the guys on Wall Street call "a dead cat bounce."

RCD

Reed's final write-up of its March data can be read here. Note: There's a link at the bottom of that item to download (FREE) a 6-page PDF, chock full of all kinds of data.

Economist Jim Haughey of RCD seems -- to my reading of things -- to be more of an optimist than anyone has a right to be. On the PDF, RCD shows an 11.5% gain in construction starts in the year's first quarter -- quite a contrast with the MHC numbers, ain't it?

Plus, RCD shows a decline in nonresidential -- but only a 1% decline. MHC's number for this segment was -13%. What do you make of that?

Also on that site, you can access a free copy of a white paper, Time to Prepare for the Construction Recovery . As I said, these people are optimists!

Conclusion

I'd like to believe that I'm smarter now (at age 56) than I was back when I was 27. But I'm not smart enough to come up with a single sentence that summarizes the data captured on 2010's first quarter by two respected organizations that are -- ostensibly -- looking at the same basic thing.

Here's the thing: If there is a recovery starting in construction, it's going to take a lot of time for it to reach us in the electrical sector. So just because I'm getting a "negative sentiment" reading from reality in electrical construction and electrical distribution is no reason to badmouth an optimist.

Is it?

A look at what the purchasing managers think they see

By Joe Salimando 

By nature, I am suspicious of touch-feely surveys. However, the Institute for Supply Management (formerly the Natl. Assn. of Purchasing Managers) gets a look of respect for its monthly survey report. I'm not here to take the ISM numbers down. HOWEVER, 2x/year, ISM asks its members for data on how things are going and how they might go in the next 6 months.

This is a comprehensive survey, which generates reams of data. Find it here,

GO and READ it. Yes, please please please come back here. Or read what follows before you go.

1. Manufacturer-members of ISM think revenue on their side of the coin will grow by 6.3% in 2010's 2nd half, with capital investment by their companies to bounce up by 2.0%.

2. Non-manufacturer members (service companies?) see revenue rising by only 0.3%, which is pretty close to flat. They report cap ex increasing 1.9% in the year's 2nd half.

FROM A SURE-THING PERSPECTIVE, we already all probably think we know that:

a. Manufacturing is doing better in the U.S. economy in 2010.

b. The bulk of the U.S. economy these days is the SERVICE sector, not manufacturing. We already might have thought we knew that service-sector growth sucked.

c. Construction hasn't been so hot in 2010, and it's not looking much better on the "drawing boards" of the architects.

To put it succinctly, the data from the ISM mid-year forecast backs up a, b, and c -- very nicely.

Inflation?

I've looked at the ISM 2x/yearly surveys for some time now, and the thing I like to study is the Prices piece. This is provided in 2 sections -- prices experienced (what the ISM members have seen) and prices forecast (what the same people think they're going to see in the near-term future).

Here's a key part of the first part, what's been seen (this piece by Manufacturing types):

In the December 2009 forecast, respondents predicted an increase of 0.2 percent in prices paid during the first four months of 2010; however, they now report prices have increased 2.7 percent for the period.

The 55 percent who say their prices are higher now than at the end of 2009 report an average increase of 7.3 percent, while the 15 percent who report lower prices report an average decrease of 8.8 percent. The remaining 30 percent indicate no change for the period.

In other words: There's been more of an increase in prices paid by the Manufacturing-side purchasing folks than they had forecast at the end of 2009. On the other hand (read the rest of the first section) -- there's been less inflation on the non-manufacturing side.

Read on the 2nd piece of the Prices segment, which is about PREDICTIONS of the assembled multitudes. 65% of the manufacturing respondents think they'll pay higher prices in 2010s 2nd half, with an average hike of 7.4% forecast by that group.

Yes, there are others who forecast no inflation (or less) on the manufacturing side. And the non-manufacturing purchasing managers see little or no inflation. But it's probably worth keeping an eye on where "prices paid" end up as the year wears on.

More to think about - on the road to 2020

By Joe Salimando 

This blog continues from the 5-4-10 part one, on Peak Copper.

Some comments from Laherriere worth thinking about:

" . . . the copper price today is cheaper than in 100, when reported in 1998 dollars per kg." For this, he used data form the U.S. Geological Survey, which is pretty close to an unimpeachable source.

" . . . the decline of the ore grades for the world, U.S., Australia, and Canada, all declining below 1% in 2008. It is difficult to estimate the point at which production ceases to be economic." Here he leaves us on our own; there MAY BE a point where copper production is uneconomic; maybe not.

He notes that U.S. copper production has fallen from 1998's 2.1 Mt to 1.2 mT in 2005, "despite a sharp increase in price!" Truly, this is counter-intuitive.

On page 25 (of my print-out, anyway), there's a fairly interesting graphic from Rio Tinto which puts production and consumption (right on top of each other) on a graph, along with the price of the stuff, from 1850 to 2010.

What's also interesting is that, after 28 pages and 40+ graphics, Laherriere ends without taking you to the peak (so to speak). He notes that it is coming, "the only question is when." Earlier, he noted this: "Gold production has peaked in 2000 and copper will likely peak in 2020."

 Just Like Gold?

I am an investor in gold bullion and the stocks of gold miners. Yet I have no idea if we have reached "peak gold." Ben Bernanke and Alan Greenspan are the reasons I bought a mess of gold (stored in vaults, by the way -- I don't want it in my basement!).

But as a result of owning this shiny stuff, I've done some research. I learned that gold production is truly only for the courageous, as it is present in the Earth's crust at 3 parts per billion. Even if you locate a rich vein, you're going to have to move a lot of dirt to mine a little bit of gold. In the time I've been following gold (since Bernanke's hideous 11/02 speech, as a matter of fact), the price of producing an ounce of gold has bounced up steadily. It's now generally given as about $800 per oz. . . . which (I hope) might be a floor for the price of the stuff in the future.

Why this trip down a side lane? If copper IS becoming scarce, what one would expect is for production to become more expensive. Further, if energy (a prime input in mining -- think about it, you've got to move a lot of dirt!) goes on to become more expensive, so will the mining of just about anything.

And yet, as Laherrierre noted, copper's price is lower now than it was in the year 1990. To me, when we look forward as an industry to 2020 and 2025, this means one of two things:

a. More and more copper will be recycled. This is the only way to keep the price down.

OR

b. We ain't seen nothing yet in terms of copper price volatility and, perhaps -- appreciation.

Don't read this if you're leaving the electrical biz

By Joe Salimando 

Perhaps there really WILL be a tomorrow. Lots of people these days (including some running our government and our central bank) seem to think that we can get to tomorrow's problems when they club us over the head with a 2x4. Well, you can make the case that today is the tomorrow for which we didn't plan so well yesterday . . . which is why we're in such a mess.

For those of us in the electrical industry, COPPER will tell a lot of the story about whether the sun shines tomorrow, or hides behind mountains of clouds. So: What happens if we are approaching something you can call "peak copper" (just as we are said to be, as a planet, at or very near "peak oil") . . . .?????

A post on one of my favorite web sites contends we are nearing a peak. Or might be.

TOD + Intelligent Debate

One thing that might disappoint you -- if you are, like me, a fan of the U.S. of A. -- is that our political system no longer seems to work. The Senate is where folks are supposed to debate weighty issues . . . actually TALK about them. Instead, we've devolved into some sort of weight, non-constitutional 60-40 world.

Just a few months ago, the Democrats had 60 votes in the Senate, giving them (in theory) a "filibuster-proof" majority in that chamber. Things changed, and now the Republicans have enough votes so that if they vote as a block . . . or lose a few of their own but attract a few of the Dems . . . the can grind things to a halt.

Now, I tend to watch some of this political nonsense carefully (which is why I feel confident in naming it as "nonsense"). First, the 60-40 thing cannot be found (I defy you to try) in our Constitution. Second, when the Democrats had 60 votes -- a sitch they had to know would not prevail forever -- they did nothing about enacting a law, a Senate rule, or a constitutional amendment doing away the 60-40 thing.

WHY? I presume the Dems thought they could some day end up with fewer than 50 votes, and they wanted to maintain the right to screw the Republicans in the same way the Repubs are now screwing the Dems.

Why bring this up in a discussion about Peak Copper? Well, I think we suffer when our debate or discussion devolves into stupidity and who-struck-John. That's why I really enjoy a website, TheOilDrum.com, where some important stuff is discussed.

Now, TOD is a site for "peak oil" believers -- at least, on its face. However, a lot more than "oil" is discussed. I've read really intelligent expositions (and comments on them) on electricity, natural gas, and even homesteading (a variant of survivalism) on the site.

This is relevant here because on the final day of March, a poster (name: Jean Laherriere) put up a lengthy thing -- it printed out at 28 pages on my end, with 40+ graphics -- titled Copper Peak.

A Few Comments

You need to click on that link and print the thing out -- and read it, and read the comments. After reading it several times, I honestly can't tell you whether we are at "peak copper." Unlike oil, copper can be recycled; most of the stuff we've ever dug out of the ground is still here.

NOTE: Many critics choose to misinterpret (willfully or in ignorance? I don't know) the actual meaning of "peak oil." It doesn't mean we're running out of oil. It DOES mean we're running out of cheap, easy-to-find, easy-to-harvest crude oil. It does mean that maintaining current production levels (86 to 89 million barrels a day) is going to be a problem in the rest of the 2010s. And, of course, it means the price of crude oil (and its products, including gasoline and diesel) are likely to be a lot higher in 2025 than they are now.

If there's an argument FOR electric vehicles, by the way way -- this is it.

HOW DOES THAT APPLY to "peak copper," if it is actually headed our way? It might mean prices for a pound of copper are a lot higher in 2020 or 2025 than they are today. Considering we've had a run up in the past nine years from 65 cents (2001) a pound to $3.50 or thereabouts in 2010, higher prices for the red metal would be . . . interesting . . . for the electrical industry, to say the least!

Next time: A bit more on peak copper.

Energy Storage is a quite-fresh topic. NEMA's Currents blog had an entry on the organization's new Energy Storage Council in January -- of 2009. Yet when I checked recently (including an e-mail to NEMA), I learned that the ESC does not yet have web pages up on the site.  Note that this is note a criticism of NEMA; Energy Storage is "happening" right now. Were you young and looking for a place to "get in on the ground floor" -- and you weren't interested in learning Mandarin -- this might be the place to put your foot in the door.

Numerous + Diverse Untried Solutions

What's most interesting about Energy Storage is the diversity of ideas -- most of which, it seems (upon examination) are . . . still mostly ideas! Few have been tried at any significant scale. Here's a list, from the 4/30/09 NEMA Currents blog, of "today's readily available technologies:"

 

•  flow cell batteries
• fly wheel generators
• batteries (lithium ion, lead acid, lead carbon, sodium sulphur, zinc bromine, vanadium redox, etc.)
• thermal systems
• concentrated solar panels
• and "even Plug-In Electrical Vehicles that show great potential as a distributed mass ESS."

 

Note that the PEV alternative is generally referenced as V2G ("vehicle to grid").

Another list comes from a paper on Energy Storage Interconnection  from the National Institute of Standards & Technology (a/k/a/ NIST). It says in one place, "examples of storage technologies being considered" include:

• Pumped Hydro
• Compressed Air Energy Storage (CAES)
• Flywheels
• Batteries, mobile and stationary
• Super-Capacitors (SuperCaps)
• Superconducting Magnetics
• Thermal Storage
• Fuel Cells (reversible)
• Hydrogen Storage"

 

 Note: That (despite what may appear to be irrelevance) is a list of technologies for STORING ELECTRONS!!!

Other Ideas + Sources Of Info

First, while Energy Storage is new to me, and maybe new to you (other than batteries) -- and maybe more important in 2010 and beyond thanks to solar + wind -- it's not "new" by any means. This week, the Electricity Storage Association is holding its 20th annual meeting!

While it is relatively "old" (from 12/08), a report on Bottling Electricity  -- from the Department of Energy's Electricity Advisory Committee -- sums up some of the thinking on the issues. The subtitle: Storage as a Strategic Tool for Managing Variability and Capacity Concerns in the Modern Grid.

And while my understanding of Energy Storage is that it's about the grid, that's not the whole enchilada. NEMA's magazine (electroindustry, 3/10, page 18) ran a piece headlined "High Performance Buildings Benefit from Energy Storage." The gist: 

"Energy-efficient buildings using renewable energy generation systems can manage their peak demand through the integration of on-site energy storage and demand-responsive controls within their systems."

Why This Is Important To You

No, I do not think electrical distributors will start warehousing "superconducting magnetics" storage systems; maybe you'll never even see a "vanadium redox" battery, whatever that is. And I don't believe electrical contractors will become the prime sales contacts for "pumped hydro."

[But note that some contractors are talking and thinking about storage. For the past two years, at the NECA Show, the Los Angeles NECA-IBEW marketing cooperative has sponsored a demonstration exhibit showing how alternative energy and batteries in the basement make sense for a home. Note that neither of the events in the past two years was located in Southern California!]

What's important here:

1. Solar and wind can't go on the grid in big numbers -- even as "a million solar roofs" -- without massive energy storage being tacked on to the grid as well. See Part One  of this column.

2. Construction of solar and wind power systems will generate sales for distributors and their contractor customers. That, right now, is GOOD news. Well, add the construction of storage systems to that. Any place the local utility has been or will be burdened with intermittent wind power and sunshine-only solar generation, there will be the need for storage . . . perhaps one heck of a lot of it.

3. Maybe NEMA is right, and maybe more and more new buildings will be designed to incorporate some amount of building-only storage. That sure would be interesting, as it seems to cut the utility out of the picture!

4. Don't overlook the need for "society" to calculate the cost of storage when totaling up the costs of adding renewables to the grid. Doing a return-on-investment for a solar system for an individual owner/operator is one thing; but if that installation puts a new reliability burden on the utility grid, someone somewhere has to pay to maintain the reliability. it's likely to be all of us rate-payers . . . right?

5.You are going to sell products that are used in solar and wind installations. In fact, you -- the distributor -- may even engage in the marketing of solar modules and small wind systems! As you add more of this to your mix, you will be helping to create the need for Energy Storage and The Smart Grid. That doesn't mean you should feel guilty . . . just make yourself fully aware of what it is you are accomplishing!

Why we need this new thing

By Joe Salimando 

Your humble blogger maintains some pretty important things are being overlooked in the national discussion about renewable energy (chiefly, solar + wind):

1. We have got to have HUGE new investments in Energy Storage, Extra-High Voltage lines, and The Smart Grid in order to make big contributions from Solar PV, CSP, and wind farms possible.

2. The cost of these things is not really known.

3. The cost of adding these things is not being computed IN to the cost of solar + wind.

All of that qualifies, at the very least, as "maybe bad news." Maybe it will be really bad. But there are some good things in this mix:

a. Electrical contractors are going to be involved in the construction of at least TSG and Energy Storage facilities. This promises to be good for at least some electrical distributors.

b. Line contractors are going to be very, very busy with powerline maintenance, new lines, and that EHV stuff. For decades. There will be a labor shortage in the powerline business (if there isn't one already); that labor shortage will greatly increase the value of those with "lineman" skills. Maybe that's not good for you, specifically, but it's nice for them boys and girls, isn't it?

c. Although no one can quantify the cost of any of this, it's apparent that we're going to have to pursue all of it. The net will be that the cost of electric power is going to have to go UP and UP and UP. That will make people clamor for the energy efficiency products that have been gathering dust on your shelves.

With all that out of the way, let's take a brief look at Energy Storage.

You Need Power From Somewhere

In the old days, before Deregulation (so think 20 years ago and further back), many electric utilities operated with a BIG comfort margin. Some were in the 25% to 40% range -- which means, the local power company had more power-generating capacity than it needed. If a coal-burning power plant went down unexpectedly, there was no problem.

But three things, happening without regard for each other, have changed that:

a. Deregulation happened. Many power companies (those outside of Texas, anyway) operate with a lot lower margins. They eliminated the 25%-and-higher margins in order to get lean-and-mean for the anticipated competition from deregulated entities (most of which did not come).

b. Renewable energy happened, and continued to happen.

c. Coal-fired power plants aren't being built. Part of that is "global warming," part of it is local resistance to more pollution, and some of it is the anticipation of some kind of carbon tax (which means financial types don't want to come across with cash to fund the debt needed to build a coal burner).

Now think about it. Solar PV doesn't work at night, or when it's raining, or when it is very cloudy. Wind power doesn't really flow when the wind doesn't blow. SO YOU NEED A BACK-UP PLAN.

Obviously, the back-up plan isn't going to include coal. In many places, natural gas isn't a feasible fuel (mostly because of where the pipelines are and are not).

So: When the Sun isn't shining, and the wind isn't blowing, and your local power supply sitch is such that you get 20% to 30% of your electrons from alternative energy . . . what are you going to do to ensure 100% power availability, power quality, and grid reliability?

Answer: Pump Electrons In, Take 'Em Out

If you had a ready storage facility that had bundles of electrons, it's no problem. You get notice that the wind is likely to stop blowing in the next 5 or 10 minutes. So you "flip the switch" and take electrons out of your storage facility -- to meet the grid's needs for the next minutes, until you get the wind back, or power up some kind of reserve facility you have sitting around for just such an occasion.

Of course, the local utility can do other things to meet the power need at that moment. For example, it can rely upon Demand Response -- cutting the power supplies to those who have volunteered to reduce their power demand when the utility deems it necessary. There are a lot of examples of this, including one written up here recently (about Eaton). But let's say you are in an area with heavy air conditioning use, and you can "cycle" 100% of the AC units. You can turn 'em off for 10 minutes every hour. So you turn "off" one-sixth of them for the hour's first 10 minutes, the next "sixth" for the next 10 minutes, and so forth.

Now, a caveat: You'll need The Smart Grid to accomplish much of this. It will make cycling the AC units off much easier; it will make other Demand Response moves better; it will make the on/off switch of Energy Storage units (especially if you have several of those, which is likely) . . . smarter.

How Much Storage Will Be Needed?

I'm not sure how much storage will be needed. Recently, the idea was floated in California that the state should require its utilities to have at least 5% storage on hand by 2020. The state uses about 27,000 megawatts on a daily basis (see this California ISO web page). What's 5% of that? Well, it's 1,350 mW.

Which energy storage strategies will be used? That remains to be seen. How will the storage be configured (two 700-mW units, or five 300-mW units, or what?). No one knows. Just how much will 1,350 mW cost? That is, as yet, unknowable. Will the state need more storage than 5%? Maybe. Will there be more storage built over time? Almost certainly. Will all of the storage systems built work? Maybe not (some of this will be trial and error, perhaps).

Will utilities be able to add the extra 5% cost for storage to the cost paid by every homeowner for a rooftop solar PV installation? Well, no, not to the solar installation cost.

But someone is going to have to repay the utilities for the capital cost of constructing the storage facilities, right? And someone is going to have to pay for the ongoing operating costs of the storage units, as well as TSG that's needed to operate them -- right?

And all of those costs are going to raise the per-kWh cost of electricity -- significantly, in all likelihood. Right?

Next time: A deeper look at storage.

We're talking big piles of $ here, not moral backing

By Joe Salimando 

Earlier columns tackled the challenges of solar PV, what's wrong with wind power, and more wind power problems. Those lead us here -- to start to think about all of the costs that GO WITH the effort of hanging major amounts of renewable/alternative energy on the grid.

On April 4, a lengthy feature article by Paul Krugman, the liberal economist who writes 700-word columns twice ea week for The New York Times, appeared in the publication's Sunday magazine. "Building A Green Economy" covered a lot of ground, but it included discussion of "negative externalities." If you can access the article, it's worth reading (even if you disagree with the NYT, liberals, or, specifically, Krugman). If you click thru, make sure you see the whole thing -- it's distributed across 10 web pages.

Now, in no way do I believe that the "externalities" of solar and wind, and other forms of alternative energy, match the horror wrought on our environment by the mining and burning of coal. And it is unlikely that we'll come to the conclusion that the chemical problems with some solar PV cells are as awful as the residue left around by nuclear power generation.

However, there are major additional costs ("externalities," if you will) that will be created by renewable energy additions to the grid. These will be created, and paid for by someone, in the very near future. It's a mistake to ignore them.

From Where The Costs Come

For our purposes, let's focus temporarily on three major HUGE eaters of capital investment. This stuff doesn't exist right now, and we're going to need to build it. On the "good" side of the equation, it will create work for electrical contractors and sales for electrical distributors -- for decades. On the "bad" side, there's the question of from where the money will come.

1. ENERGY STORAGE -- we're going to need to add this new component to the grid. I'll cover it in some detail in a future blog here, but the bottom line is: We don't have it. We need it. We're going to build a lot of it. And it's going to cost a bundle. Why? Because solar and wind are not reliable, local utilities have to be able to "switch on" a major power source (it's going to be storage -- or natural gas or coal or nuclear) when the sun goes behind a cloud or the wind dies. I wasn't aware of this until 2008, when I began going to energy conferences.

Is there a way to avoid this? No. If we're going to transition to getting 20% or more of our power from alternative sources, this is BAKED INTO THE CAKE.

2. LONG-DISTANCE EHV POWER TRANSMISSION LINES -- OK, most electrical contractors and distributors will not benefit much, except maybe indirectly, from this one. I wasn't aware of this one until 9/08, when the Bush administration's Energy Secretary unhesitatingly endorsed Extra High Voltage power transmission. The basics of this idea are: The Sun shines stronger and longer in desert areas (places where people don't live). The wind blows at sustained rates and with great gusto (so to speak) in abandoned places . . . people didn't choose to settle where a sustained 22-MPH wind was blowing!

So we'll have to build HUGE solar PV "power plants" and MEGA concentrating solar power plants and lots and lots and lots of wind turbines and wind farms out in the middle of nowhere. There's no purpose to doing this unless we can take the power from "nowhere" . . . and transport it to "somewhere."

EHV lines (345 kV, I think I heard) will do the trick. Power will be transported for 100s of miles. We'll reduce transmission losses.

However, someone is going to have to pay for this. And the cost is going to be in, at least, the tens of billions.

3. THE SMART GRID -- if you're going to have a grid with two-way power flow on many transmission lines, with the need for energy storage to be uploaded on a moment's notice, and with things like demand response taking place on a regular basis . . . you can't leave the power system's operation up to humans. You've got to tack on a communications-strong command-and-control "machine" onto the grid. That's where The Smart Grid (which I abbreviate as TSG) comes into play.

There are numerous problems with TSG. One is that you can't get one, single, solid definition of the thing (at the 9/09 GridWeek, one of the two conference chairs "outlawed" the discussion of an actual definition, probably because it would eat a lot of time -- and get nowhere). Another is that no one agency or group of people is "in charge" of making this happen. 

Further, no one knows what it will cost. Hundreds of billions? More than a trillion? Sure, you can find numbers like that. How long will it take to put in place? A dozen years? Two decades? No one can tell you.

The Bottom Line (???)

You cannot add the unknown costs of Energy Storage to the not-yet-penciled-out costs of building EHV lines to the trillion-dollar (?) tab for TSG and get a real-world number. All we can know for sure at this point is that the total cost is going to be calculated in about the year 2035, and that it's going to be MANY hundreds of billions . . . perhaps more than just 1 trillion!

Now, there is an awful lot on "the bottom line" here. Some of it --

1. If human-caused global warming is REAL, this might be worth it.

2. There is no way to look at the economics of alternative energy (solar, wind, etc.) and NOT add the costs of all of this to it. Would we need EHV lines if we built more coal-fired power plants? Would we need TSG if we were to just continue to do what we've been doing for the past 60 years? Have you ever previously heard about energy storage, except maybe as a fascinating fun fact?

3. From where is the money going to come? At the same time as we'll need to generate tens of billions of dollars in capital investment -- annually -- for these projects, we face rebuilding our national non-electrical infrastructure (schools and water systems and roads/bridges are in dire shape) as well as the run-up in costs of Medicare and Social Security.

Next up: A closer look at Energy Storage.

Before I read a word about Denmark or the U.K. (see part one), I was aware of significant problems with wind turbines. Here's what I think I know:

a. You can't put a tall wind turbine on (or near) a high-rise building, or inside a city, or anywhere people would like to enjoy being "outside." Not a viable idea. 

b. Vertical wind turbines (the kind you might put on a building's roof) reportedly don't generate enough power to pay their way. They look interesting. They make a building's owner/operator look "green." But there reportedly isn't (not yet, anyway) a great return-on-investment. I believe this will change, over time, thanks to R&D -- but even if/when it does, remember, the wind does not blow on a reliable or steady basis.

c. Wind has the same reliability problems as Solar. We'll need The Smart Grid to cope with the in-and-out behavior of wind power (a computerized grid can react to surges in power from wind turbines and to those moments when the wind just stops).

d. Along the same lines as #c above, in order to make major contributions to the grid from wind power viable -- we'll need big-time Energy Storage to help keep our power supply reliable.

e. If you trouble to add the cost of #c and #d, you've really saddled wind power -- in general -- with HUGE additional costs. The return-on-investment (to society, to the country, or to a given utility) of adding major amounts of wind power to the grid becomes horrendous. The ROI could be measured in decades.

[Note that I'm not saying "we shouldn't do this because the ROI is 22 years" . . . however, if we're going to do it, we should know what we're doing. Right?]

f. Wind is noisy. Noise complaints apparently are legit, at least for some people. In plain English: You and I could live in the same house, near an operating wind turbine. Where I would have no problem with the noise (hypothetically), it would -- literally -- drive you to drink. Why? Our scientists are studying this. It is not explicable right now. Then again, no one knows why any human being would be a fan of the New York Mets!

g. Some folks think wind turbines are unsightly. The battle against the off-shore wind generators near Cape Cod included, on the ANTI side, the Kennedy family. Hey, they own property on the Cape, and those wind things ruin the view (I'm not sure if they ruin the view from the shore, or if one goes sailing). A wind farm does tend to drastically alter the beauty of a vista; drive out to Palm Springs, CA, and tell me what you see.

h. Were you determined to maxi