US International Trade Commission requests input from Independence LED
The United States International Trade Commission advises the President and Congress on legislative matters. On 7.9.12, the Commission asked Independence LED to provide input from the perspective of a US Manufacturer and employer, specifically regarding multiple Bills before Congress. Independence LED provided the following file that was included in Trade Commission Report to Congress.
US International Trade Commission
500 E Street, SW
Washington, DC 20436
Subject: RE: Digital File for Trade Commission File on HID and LED Components
Thank you for contacting us on July 9th about the United States International Trade Commission’s Temporary Duty Suspension on certain HID and LED lamp components. We understand that the Commission is an independent agency in the U.S. Government, which among other things, provides advice to the President and Congress on all matters of international trade. In response to your request for input to Congressional legislation related to certain HID and LED lamp components, we also understand that the Commission prepares reports on legislation concerning duty suspensions for the Ways and Means and Senate Finance Committees. Since the Commission attempts to identify and contact domestic firms and associations that may have interest in the subject legislation, we have also included a brief background on our domestic manufacturing business to provide context for our response and key Appendix research files for your review.
Charlie Szoradi – Chairman and CEO
Background on Independence LED – U.S. Manufacturer of LED Tubes
The Commission has asked to advise you in regard to the following four points and the breakdown of legislation in Attachment #1: We have provided a response to each of the four points below:
U.S. LED Tube Manufacturer: We support 11 of the 13 duty suspensions. The two that we oppose are Bill H.R. 5478 and Bill H.R. 5484
Bill H.R. 5478: Light emitting diode (LED) Tubular LED (TLED) (provided for in subheading 9405.40.80). It calls for a FREE Duty through 12/31/2015 in lieu of the current 3.9% Duty on Tubular LED products. Out of the set of 13 Bills, this one accounts for the vast majority of impact on technology adoptions and domestic jobs, because the majority of commercial lighting is tubular with current fluorescent technology that typically uses twice the energy as LED equivalents. The Department of Energy has reported that there are over 3 Billion fluorescent tubes in U.S. Ceilings. This response warrants further explanation per the ADDITIONAL information on LED Tubes in this file.
Bill H.R. 5484 Light emitting diode (LED) drivers. This Bill calls for a FREE Duty through 12/31/2015 in lieu of the current 1.5% Duty on Tubular LED products. The vast majority of LED Drivers are currently made overseas and they serve as the companion technology to the LED Tubes. A FREE Duty on U.S. Drivers will significantly deter U.S. Manufacturing, reduce the number of potential U.S. Jobs, and reduce American Energy Security. The security issue comes up in this context: If an LED Driver were like the starter on a car and the LED Tube is the car, then it is a potential national security issue for the U.S. if ONLY foreign companies make the “starters” for the tube lights that dominate all of commercial illumination.
U.S. LED Tube Manufacturer: We make LED Tubes that would be impacted by Bill H.R. 5478: Light emitting diode (LED) Tubular LED (TLED). The vast majority of other manufacturers of LED Tubes are from China. There are only a few U.S. Companies that are making LED tubes in America and a few others that have expressed interest in shifting manufacturing from China to America, but this lift in the import duty will most likely serve to deter them from either keeping the manufacturing in America or bringing the jobs and technology to America. The margin in electronics is so narrow that 3.9% can become the difference between keeping an operation overseas and setting up U.S. manufacturing in this clean energy sector.
U.S. LED Tube Manufacturer: We import the LED Drivers referenced in Bill H.R. 5484. We are working on a U.S. made LED Driver to add to our manufacturing operations but we currently import the Drivers from China. H.R. 5484 does not reference that one of the key components of an LED Driver is the “Capacitors”. The vast majority of Capacitors are made in Asia with very few manufactured in America. This may be one of the reasons that the current Duty is only 1.5% vs. 3.9% on the other components. Our Company and in turn our Distributors and End Users (Property Owners and Managers) would only slightly benefit in the short term with the lift on the Duty, but in the long run it just creates one more reason to let the manufacturing continue in Asia.
U.S. LED Tube Manufacturer: We will not benefit from this set of bills other than a very slight short term advantage on the imported LED Drivers referenced in H.R. 5484. However, we will face a significant challenge that could add up to hundreds of millions of dollars in lost revenue and thousands of U.S. jobs lost if H.R. 5478 PASSES for Light emitting diode (LED) Tubular LED (TLED). The flood of Chinese LED Tubes is already difficult enough for us to compete with our U.S. products. The margins are very tight on our clean energy products so 3.9% advantage to the Chinese is a significant additional hurdle to overcome. The stakes are so high because with over 2 Billion U.S. fluorescent tubes that will eventually be replaced by LED tubes that use 50% less energy, the scale of the retrofits at $50 per tube is $100 Billion over the next 10 years. A 3.9% Duty is not just 3.9 Billion dollars lost. It could be the majority of the LED tube industry lost to China. With at least 5 jobs created for every $1 Million in U.S. Made LED Tube Retrofits, the jobs creation potential is as follows; if we keep the technology at home. $100 Billion per year for a decade breaks down to $10 Billion per year. This is 10,000 Million so with 5 jobs per Million there would be 50,000 new jobs each year. Given that we are struggling to create this many jobs each month across the entire U.S. in every business and government sector, the timing could not be worse to give a hand up to overseas manufacturers.
ADDITIONAL information on LED Tubes:
APPENDIX #1: Legislation
Additional Background on Independence LED and working at the Federal Level.
On June 28th, 2012, Independence LED Chairman and CEO, Charlie Szoradi, joined one of the company’s Distributors to travel to Washington, DC for a meeting with high ranking members of the Energy Conservation Team from one the Department of Defense (DOD) specialty divisions.
The meeting was to discuss strategic implementation of retrofits for T12 and T8 fluorescent tubes to American Made LED Tubes. Since the summer of 2011, The Independence LED Distributor has been conducting multiple lighting audits for a vast range of energy conservation efforts for the military. The Independence LED Eagle Tubes were selected and installed in a pilot program over Q3, 2011. The feedback from the July 28th meeting was that the Independence LED Eagle Tubes have out-performed a set of imported tubes with internal driver technology over the year long testing program.
This recent trip to Washington, DC is not the first time that Mr. Szoradi has engaged at the Federal level. In 2009, he served on the Green Economy Task Force, specifically for the Capital Hill Delegation through his role as Board Member of the Sustainable Business Network. His Task Force role included meeting with Senators and members of the House of Representatives, from both sides of the aisle, to identify the benefits of energy efficiency measures in the private sector, in advance of the vote on the multi-billion dollar American Recovery and Reinvestment Act (ARRA).
This summer, the next meetings range from the Navy Weapons Station in San Diego, California to the Army Corps of Engineers in Rogers, Arkansas. Given the July 14th, 2012 ban by the DOE on the inefficient “T12” fluorescent tubes and the significant volume of remaining T12s in the military properties, the leadership team at the June 28th meeting in Washington, DC was naturally interested in the advantages of Independence LED’s CASH for CLUNKERS Lighting program that the Company launched in response to the July 14th 2012 ban by the Department of Energy on inefficient T12 fluorescent tubes.
Green Building Council and Booz Allen Hamilton Report:
Source: US Green Building Council: http://www.usgbc.org/ShowFile.aspx?DocumentID=6435
Buildings generate approximately 40 percent of the United States’ carbon emissions.
Booz Allen calculated the savings that result from green buildings based on data from a meta-analysis of 10 reports on LEED-certified buildings. The study then calculated the estimated savings per square foot for four savings categories: energy, operations and maintenance (O&M), trash, and water. Based on these analyses, the study calculated the following average savings per square foot: Energy: $0.52 /sq. ft.
Once the absolute value of the expenditure impacts and the savings impacts were estimated in IMPLAN, the difference was calculated between the two to obtain the overall net economic impact of green construction. Over the nine-year time period from 2000 to 2008, green construction generated $173 billion dollars in GDP and supported over 2.4 million jobs that in turn provided $123 billion dollars in labor earnings. Over the five-year time period from 2009 to 2013, this study forecasts that green construction will generate an additional $554 billion dollars in GDP and will support over 7.9 million jobs that in turn will provide $396 billion in labor earnings. Exhibit 2-3 illustrates the total net economic impact effects of green construction in terms of GDP, jobs, and earnings. Exhibit 2-4, Exhibit 2-2, and Exhibit 2-6 illustrate the direct, indirect, and induced effects on GDP, jobs, and earnings.
Green Construction Economic Impact
From 2000–2008, the green construction market has:
From 2009–2013, this study forecasts that green construction will:
APPENDIX #4: Research Sources
Appendix # 4.1: Department of Energy – January 2012 Report
Page #35 of the DOE Report identifies:
2,385,399,000 fluorescent tubes in American ceilings:
48.1%: T8s totaling 1,148,222,000 Tubes
39.5%: T12s totaling 941,335,000 Tubes
12.4%: T5s or Miscellaneous totaling 295,842,000 Tubes
All 2.3 Billion of these tubes will eventually be replaced by LED Tubes that save 50% or more on electricity.
Appendix # 4.2: Presidential Memorandum – December 2011
President Obama has reached a key understanding. On December 2nd, 2011, the President wrote a Memorandum, “Upgrading the energy performance of buildings is one of the fastest and most effective ways to reduce energy costs, cut pollution, and create jobs in the construction and energy sectors. The Federal Government can do so by increasing the pace of the implementation of energy conservation measures, and improving the results from its energy efficiency investments.”
See the full White House Memorandum Dec 2011.
Please note that with over 3 Billion sq. ft. of Federal real estate, the U.S. Government should look to retrofit with U.S. Made LED Tubes vs. imported ones.
Appendix # 4.3: Size of the Federal Government Real Estate
The Federal Real Property Profile (FRPP) is the single comprehensive inventory system that contains data on all federal real property assets within and outside the United States, including improvements on federal land. The government's portfolio of building assets totals approximately 3.87 billion sq. ft of space. In all, the government has a total of 1.25 million building, land, and structure assets with a total replacement value of $1.53 trillion. www.gsa.gov/portal/content/104199. Of the total Federal properties more than half is the Department of Defense, “DoD occupies a reported 300,658 buildings throughout the world, valued at over $575 billion comprising over 2.2 billion sq. ft.” Source: Page #12: Military Report: http://www.acq.osd.mil/ie/download/bsr/BSR2010Baseline.pdf
More on Size of the Federal Government: With more than 1.8 million civilian employees, 500,000 buildings, and $500 billion in annual purchasing power, the Federal Government has a responsibility to lead by example when it comes to its environmental, energy, and economic performance. http://sustainability.performance.gov/
Appendix # 4.4: Government Energy Consumption and Waste
“Government agencies spend more than $10 billion a year on energy to provide public services and meet constituent needs — while grappling with tightening budgets. Yet nearly one-third of the energy used to run typical government buildings goes to waste.”
Appendix # 4.5: Why are LED Tubes for Lighting such a Big Deal?
According to the DOE, over half of our U.S. electricity consumption is for buildings. Plus, lighting accounts for 30% -35% of all commercial electricity use, per the Electric Power Research Institute. See the EPRI Report.
IndependenceLED.com Source: McKinsey Global Lighting Market Model; McKinsey Global Lighting Professionals Consumer Survey
Lighting Market Trend Projections
LED Market Growth Projections