What’s going on with LED Roadway Lighting?

Sometimes, chasing a story that runs into a brick wall can be revealing.

Two weeks ago, I decided to do an update on LED Roadway Lighting, the Nova Scotian company completing the changeover of the Halifax Regional Municipality’s 37,000 street lights into fixtures that consume sixty per cent less energy and are supposed to deliver $5 million a year in operating and maintenance savings over 19 years. The cost to the City is $37.5 million. This is not a story about people who complain the new lighting is too bright (a fix appears to be in the works for that) but a story about how citizens can be kept in the dark when a significant amount of their public money is helping to fuel a private company.

LED Roadway Lighting was founded 10 years ago by Chuck Cartmill, a down-to-earth Amherst entrepreneur whose C-Vision electronics manufacturing firm was already a proven business success. Cartmill’s move into the design and manufacture of energy-efficient lighting for cities, highways, and airports was embraced in 2009 by the provincial NDP government, which made a direct $6 million investment in the company. This gave the government (and hence, the people) an equity stake in LED Roadway Lighting and Nova Scotia Business Inc. a seat on its Board of Directors.

By 2013, LED was exporting product to 30 countries and had created 200 jobs in Nova Scotia, employing 150 at its manufacture and assembly plant in Amherst and 50 at its head office in Halifax. Chuck Cartmill was the president, majority shareholder, and winner of a slew of awards for entrepreneurship. His son Ken Cartmill was Vice-President of Business Development.

Today, according to NSBI, the provincial government’s stake in LED Roadway has grown to $22 million: $11 million in equity (converted to common shares in 2014 so LED could borrow money from banks more easily) as well as a $10 million loan guarantee, and a $1 million loan.

Given taxpayers’ exposure in the company, news last June that LED was permanently laying off people at its Amherst plant sent a worrying signal.

The elimination of 45 jobs was part of what LED Roadway CEO Peter Conlon described to CBC News as part of a three-year “restructuring” process.

Conlon said that in order to compete successfully in international markets such as the U.K., the Caribbean, and Asia, LED must become part of a global supply chain, and reduce import charges by doing assembly in countries where it makes sales. He added that Amherst would remain viable as a manufacturer for Canadian and U.S. customers, as well as the centre for product development and logistics.

The layoffs in June appeared to take former Business Minister Mark Furey by surprise. He blurted that he knew of some discussion of a possible change of ownership, but was unaware of the decision to downsize the company.

“These are unfortunate circumstances,” said Furey. “We do have to respect the business entity. But at the same time, we have a financial interest and obligation to taxpayers.”

LED Roadway CEO Peter Conlon publicly denied the company was about to change hands. But he did acknowledge LED was “open for additional investment” from potential partners.

That was in June. Efforts by this reporter to follow-up with the company and NSBI about whether LED (a) continues to seek outside investors, or (b) is setting up assembly facilities outside Canada have met with resounding silence. So have questions about whether more layoffs are likely now that, according to HRM spokesperson Brendan Elliott , the Halifax streetlighting conversion is 95 per cent complete.

The polite but firm email response from LED president Chuck Cartmill was, “Your questions relate to our confidential business strategies which could be compromised if made public and thereby available to our competitors. Therefore, I am sorry but I cannot comment.”

Cartmill did indicate he was getting “back into the business” after having left the day-to-day operations to others while he started and operated Solar Global Solutions, an LED solar company in Halifax that is part of the Cartmill Group of companies. Other questions he declined to address were  whether LED turned a profit last year or whether CEO Peter Conlon is still at the helm. Efforts to reach Conlon himself were not successful and some of the information regarding the management team and Board of Directors on the company website is out-of-date.

The chair of the LED Roadway Board, Hector Jacques (co-founder and former CEO of Jacques Whitford Engineering) has also been uncharacteristically tight-lipped. After one week of back-and-forth with the communications branch of NSBI, the provincial agency reluctantly granted my request for information about the current number of people employed by LED in Nova Scotia. The number of employees is 120, down from 200 a few years ago; 88 people work at the plant in Amherst and 32 at head office in the Bayers Lake Industrial Park.

“LED is a privately held company – not publicly traded and accordingly NSBI must follow industry practice, and cannot reveal information that is not in the public domain. A venture capital investment via NSBI in a Nova Scotia company does not give NSBI the right, in its sole discretion, to collect and to disseminate the investee company’s employment headcount,” emailed Marly Somers.  “That being said, because of the challenge you have described, we have facilitated on your behalf the answer to your employee question. LED has supplied to us for you their employee numbers.”

Thank you, NSBI, and LED for providing taxpayers with at least one FACT about how our investment is doing. The “challenge” which Somers understood was having a reporter write a story which might question why a company that receives significant amounts of public money to help it grow was unwilling to disclose how many Nova Scotians it employs. I also asked how many people it employs outside the province (at one point the number was close to 70) but again, neither LED nor NSBI were willing to share.

Profit figures are not disclosed because LED is privately-owned. NSBI says the company IS up-to-date in meeting the terms of its financial obligations. But now that the Amherst location is manufacturing exclusively for the U.S. and Canadian markets, it seems reasonable to ask if — or how — its workforce might soon be affected by the completion of the 18-month, multi-million-dollar conversion job in Halifax .

That contract was not without its problems and is also under an official Cone of Silence. Early last March, HRM was notified by GJ Cahill Inc, the general contractor it hired in 2015 to oversee the $37.5 million changeover to LED streetlights, that Cahill would be changing suppliers to “successfully deliver on the contract” on time and on budget.

Cahill’s marketing manager, Lisa Bragg, refused to explain why in the space of just one month, the company dropped LED Roadway, hired Holophane Canada (a subsidiary of an American firm which has supplied lighting to HRM since the 1930s), then suddenly switched back to LED.

“No comment”, said Bragg, “call HRM”.

HRM was equally unforthcoming when asked to explain the reason for the rapid sequence of change in suppliers.

“Out of respect for all contractors the municipality hires to do work, no matter the magnitude, we would never discuss details surrounding a specific business’s reasons or choices for how they execute the work they have been hired to do”, said Brendan Elliott, communications director for HRM. “Our focus is strictly on ensuring a contractor meets the expectations set out in the original terms and conditions. It is perfectly within the contractor’s right to change suppliers midstream, as long as they turn to an operator that appears on a pre-determined list of approved suppliers”.

Indeed, Holophane was one of four pre-qualified suppliers along with two other large American firms and LED Roadway. Holophane’s local manager Mike Baker won’t talk publicly about the reasons for the change: neither will LED. A confidential staff report dated June 16 to HRM Council recommended an additional amount of money be allocated to the project. Elliott says the city’s transportation director described the amount as “small,” but Elliott also says that amount will remain a secret until the terms of the contract are complete.

We shouldn’t have to wait much longer for that, but I’m more interested in why LED was temporarily removed from the HRM job, because that might indicate whether the local company remains competitive or has fallen behind in an increasingly global marketplace. I’m also curious about whether there was political pressure on Cahill, the Newfoundland contractor, to reinstate a Nova Scotia company (buoyed by a considerable amount of public money) whose prospects appear to have dimmed somewhat from the bright prospects of its early days.