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Stimulus Funds Yet to Open Many Windows

By Kari Lydersen
Washington Post Staff Writer
Sunday, October 18, 2009

CHICAGO -- Workers who lost their jobs when Chicago's Republic Windows and Doors factory shut down last December captured national attention by occupying the plant and refusing to leave until they were granted severance and accrued vacation pay. The incident is featured in Michael Moore's "Capitalism: A Love Story" as one bright spot in an otherwise bleak economic landscape.

The story had a happy ending when California company Serious Materials bought the plant last winter and promised to rehire all 250 workers by summer, banking on weatherization incentives in the American Recovery and Reinvestment Act to create demand for highly energy-efficient windows.

Vice President Biden visited the factory in April, holding it up as a poster child for green jobs created by the $787 billion stimulus act. Serious Materials board member Paul Holland introduced President Obama at a March 23 White House address on clean energy and new technology.

But months after Serious Materials chief executive Kevin Surace planned to be churning out windows, the factory still has very few customers and has hired back fewer than 20 workers. In fact, Surace said the company is spending $100,000 a week just to keep the factory open.

Things have not gone well, partly due to the alleged misdeeds of former Republic Windows chief executive Richard Gillman, who was arrested Sept. 10 on charges including money laundering, theft and fraud. Surace said Gillman destroyed relationships with potential buyers and suppliers, removed equipment and left computer systems in shambles.

But the main reason for the delay, Surace said, is that stimulus funds and tax credits for weatherization have not generated the skyrocketing demand he had envisioned for his company's windows. The windows, according to an industry rating system and government officials, are much more energy efficient than most others on the market.

"Part of the Chicago plan was by now we'd be hot and heavy into weatherization of thousands of homes in the Chicago area," he said. "It turns out everything has ended up six months slower than everyone wanted. Everyone is frustrated at every level. Is it anyone's fault? No, it's just the process. Shame on all of us for thinking it could be done in a few months."

Waiting for a Call

In the meantime, the former Republic Windows workers are awaiting the call from Serious Materials and watching their unemployment benefits run out. "There aren't other jobs for them in this economy," said Armando Robles, president of the United Electrical, Radio and Machine Workers of America Local 1110, which represented Republic Windows workers and also signed a contract with Serious Materials.

Surace expects business to be thriving by mid-2010. He said the company recently attracted $60 million from investors drawn by the promise of demand stoked by stimulus dollars.

Jared Bernstein, Biden's chief economic policy adviser, described the generation of private investment as a key goal of the stimulus package. "From my perspective, what's important is the extent to which the Recovery Act is working to very generally plant some seed capital in the green economy, and specifically to stimulate activity both in terms of investment and production at some of these window companies," he said.

However, green jobs in the window sector are still a wild card. Windows have only in recent months become a standard part of government-subsidized weatherization plans, thanks to advances in window technology and changes to the audit formula used to calculate energy savings. Most windows have an energy efficiency rating of R-2 to R-3; Serious Materials makes windows rates as high as R-11.

The stimulus law greatly expanded the existing Weatherization Assistance Program, with funding of $5 billion on top of the program's $450 million budget for the 2009 fiscal year. In the previous fiscal year, the budget was only $227 million. The program subsidizes home weatherization for people making up to 200 percent of the federal poverty level, with an average of $6,500 allowed for each home.

Homeowners apply for funds through local nonprofit or government agencies. These agencies perform an energy audit on each home and use computer models to decide which weatherization measures, including insulation, air sealing and new windows, would be most cost-effective. Then they hire a contractor to do the work and later obtain federal funds through their state government to cover the cost.

Dan Calamari, deputy director of the Community and Economic Development Association of Cook County, which oversees the program's funds in Chicago, said it will weatherize about 9,000 residential units this year -- compared with the more typical 3,500 units -- thanks to the stimulus funding.

The process has stalled in some states because the Davis-Bacon Act requires that workers be paid the industry prevailing wage, but the Labor Department had not established prevailing wages for weatherization across the country. The rates have since been determined nationwide; in Chicago, a window replacement worker must earn $22 per hour.

Even with the new technology, windows still make up a relatively small part of weatherization plans.

Calamari said that in Cook County, which includes Chicago, new windows account for less than one-tenth of weatherization investments in single-family homes. Windows offer greater energy savings in multifamily buildings, so they account for up to half the weatherization investment in large structures. Even so, such buildings represent only about one-sixth of Cook County's projects funded by the federal weatherization program. "In most locations where there are not a lot of large multifamily buildings, there will be some additional window purchases but not an explosion," Calamari said.

The stimulus act has been key to Serious Materials' March reopening of a window factory in Vandergrift, Pa., bought after it closed in October 2008. Surace said the plant was easier to restart than the Chicago factory because it had a smaller workforce and a loyal customer base. He said that nearly all of the Pennsylvania factory's recent business stems from orders spurred by a $1,500 tax credit that is part of the Recovery Act.

Meanwhile, government officials say the private market is expected to increasingly demand highly energy-efficient windows. The Empire State Building and Chicago's Willis (formerly Sears) Tower have efficiency retrofits in the works, including the replacement of many of the 16,000 windows and metal panels on the Willis Tower's exterior. Serious Materials is hoping for business from both projects.

Benefits to Come?

Bernstein said weatherization-related companies generally will benefit from public and private investment in coming months.

On Monday, Biden's office will release its "Recovery Through Retrofit" report, an interagency working group's plan for creating green jobs and increasing energy efficiency.

"Some will succeed, some will not; that's capitalism at work," Bernstein said. "But I can tell you this is a burgeoning industry and the Recovery Act is planting some of the really important seeds to help this industry get over the hump."

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