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U.K.'s Dialight Outflanks GE on Obama's Buy-American Stimulus
2010-12-17 05:00:01.6 GMT
By Jim Snyder
Dec. 17 (Bloomberg) -- A U.K. maker of energy-efficient
traffic lights took advantage of a buy-American requirement in
President Barack Obama's stimulus law to block General Electric
Co. from selling its competing bulbs.
Dialight Plc thwarted GE, whose market value is more than
700 times larger, by moving jobs producing light-emitting diode,
or LED, bulbs from Mexico to a plant in North Carolina. Then the
Huntingdon, England-based company got the Energy Department to
reverse a waiver from the stimulus law's mandate that funds be
spent on American-made products.
GE finds itself locked out of traffic-light purchases by
state and local governments using stimulus money because it
makes its bulbs in Mexico. In response, the company plans to
"invest in manufacturing of LED traffic signals that meet the
requirements" of the stimulus law, spokeswoman Kim Freeman said
yesterday in an e-mailed statement.
Obama agreed to the buy-American requirement sought by
lawmakers as a condition for passage of last year's $814 billion
American Recovery and Investment Act. U.S.-based multinational
companies led by GE and Caterpillar Inc. opposed the provision,
saying it would stifle competition and limit supplies. The
Energy Department's reversal on traffic lights proves its point,
GE says.
"While we support the government's U.S. job-creation
initiatives," rescinding the waiver "opens the door for less
competition and higher cost for municipalities and their
taxpayers," Freeman of Fairfield, Connecticut-based GE, said in
an e-mail.
GE, which has a market value of $189.3 billion to
Dialight's 165.9 million pounds ($259.3 million), sold more than
$2 million in bulbs to Philadelphia under the stimulus program,
said Michel Doss, GE's global product manager for traffic
signals.
First Waiver Reversed
The Energy Department has issued more than two dozen
waivers from the buy-American requirement, for products from
programmable thermostats to surge protectors. The traffic-lights
exemption was the first to be reversed, spokeswoman Jen Stutsman
said. Department officials say the move, effective for bids made
after Dec. 1, signals to manufacturers the benefits of moving
operations to the U.S.
"Our hope was it would help grow U.S. manufacturing for
clean-energy projects," Kathleen Hogan, the department's deputy
assistant secretary for energy efficiency, said in an interview.
Communities can spend federal funds on LED traffic lights
under two stimulus programs that also support initiatives to
expand recycling and promote renewable-energy use. Congress
directed $6.3 billion to the Energy Efficiency and Conservation
Block Grants and the State Energy Program, most of which has yet
to be spent, Hogan said. An estimated $200 million will go to
LED lights, she said.
Red, Yellow, Green
Dialight and competitors place the light-emitting diodes in
balls that shine in traffic-light colors of red, yellow and
green or that show turn arrows and walk signals. Communities or
distributors install the balls in the yellow casing familiar to
drivers.
Dialight previously made some components at its North
Carolina plant and shipped the parts to Mexico for assembly.
Since the stimulus bill was enacted, full production has been
shifted to the U.S. factory, increasing jobs to 130 from 50
workers, according to Roy Burton, the company's chief executive
officer.
"It's nice to bring jobs back to the U.S.," Burton said
in an interview.
'Nice Bonus'
The company had decided before the stimulus law to end the
work in Mexico because it cost too much to ship parts back and
forth, Burton said. Gaining an edge over competitors who can't
qualify under the buy-American requirement is a "nice bonus,"
he said.
Dialight makes about a third of the 1 million traffic-light
balls sold in the U.S. each year, Burton said.
A third LED traffic-light maker, Leotek Electronics Corp.,
has indicated it plans to relocate a production line to
California to compete with Dialight, Stutsman of the Energy
Department said in an e-mail.
In the two months before the department canceled the waiver
permitting purchases of LED traffic lights abroad, four U.S.
cities and the state of Montana chose Taiwan-based companies
over Dialight to supply about $1.2 million in bulbs, according
to Dialight. Four of those awards went to Leotek, a unit of
LiteOn Technology Corp. of Taipei. Dialight won three bids
totaling about $127,500 in the same period.
$28 Million in Sales
T.J. Struhs, Dialight's head of government affairs, said
sales of LED traffic lights totaled about $28 million last year,
about 23 percent of the company's total sales of 77.3 million
pounds ($120.9 million.) Dialight has more than doubled this
year in London trading. The company climbed 24 pence, or 4.8
percent, to 525 pence yesterday, reaching a 52-week high.
While LED bulbs are costlier than traditional incandescent
lighting, they can last 10 years instead of one year, and use 8
watts of electricity instead of as much as 150 watts, Struhs
said. LED bulbs are now used in 65 percent to 70 percent of the
more than 16 million U.S. traffic signals, according to the
company.
For Related News and Information:
Today's top power news: PTOP <GO>
Top energy stories: ETOP <GO>
Dialight's 1-year price graph: DIA LN <Equity> GP D <GO>
--Editors: Larry Liebert, Steve Geimann
To contact the reporter on this story:
Jim Snyder in Washington at +1-202-624-1972 or
jsnyder24@bloomberg.net
To contact the editor responsible for this story:
Larry Liebert at +1-202-624-1936 or
lliebert@bloomberg.net.
