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Tuesday, November 11, 2008

Volume - 54 Restriction of Trade Issues

As you are well aware (from my Blogs), Independence2, LLC is a private labeled full-line architectural door hardware company supplying Contract Hardware Distribution, and therefore the commercial construction market with Door Hardware products.

Recently, we have encountered another example of an attempt on 'Restriction of Trade,' if not outright disregard for the Sherman Act and other legislature protecting businesses from such acts of trade violations, and in this case with involvement of State monies. Within the State of Ohio, Mahoning Valley, County of Trumbull is a School District known as the Girard City Schools, who are in the process of building a new high school.

After spending almost sixteen years in a manufacturing environment, hollow metal doors, and six of those years as President of the company, competing against the giants of the Industry, Ingersoll-Rand, Assa Abloy, and the like, I'm fully aware of their respective powers, control and availability of cash to fund various aspects of their business, and certainly the tens of millions of dollars spend in their 'Specification Writing' sections. I'm also fully aware that a great many architects use that service for Division 8, even with public monies, such as in school construction.

Knowing all of the above, I nevertheless was introduced to a person connected with the Girard High School project; funds provided by the State of Ohio, as well as the citizenry of Girard, Ohio. I was encouraged to call the Architect involved, to attempt to have our 'i.2 series' of architectural products included in the specification, from a financial savings position for the School System. This was an innocent enough request knowing through experience, full well, how this story would unfold; as it certainly did.

The architect listen to my telephone call, and as expected, explained that they are using an Ingersoll-Rand Spec writer to write the specification. I explained that was obviously their choice (as restrictive as it might be), but my concern was to get our i.2 series of architectural products involved with the specification. Immediately, he started quoting Ohio Law (Grade A for covering your ass) and that the Spec writer only has to use three competitors within the Division 8 section. He then gave me the IR spec writers name and phone number for me to go (into the Fox's Den) directly to him, so that he could determine if I would receive the 'right of passage' and the 'blessing from above.'

After leaving a voice mail message as to the purpose of the call, my call was returned. A request for a catalog was made to which I sent our Electronic Catalog. A week of so later, I received my rejection (surprise, surprise). I not only received a rejection, but one from the 'skill set' of a fifth grader, terse and degrading (not worth publishing, but certainly available).

A rejection I can handle, especially from someone who desires to (obviously) keep prices high, bids controlled, the selection process limited, and why not - It's State money and the voters already passed the levy (never wonder why levies take six attempts to pass). My problem is that this 'moron' decided to list out his objections that simply were not acceptable to me, or to my company; therefore, my response to this illiterates 'lob of a grenade' and therefore a 'call in for F16 cover' (and if you, as a reader, don't get that, it's only because we haven't met). Thus, my response to the Architect, as well as to the Superintendent of the Girard City Schools, the Treasurer of same, and of course, our 'Fifth Grader,'among others for simply entertainment value:


"Dear Ed,

First, let me start by saying, that I am writing you in response to Mr. Pekoc’s e-mail of October 15th, as well as, in order to seek your direct permission for the inclusion of our high quality, lower cost Architectural Door Hardware products in the bid process for the Girard High School Project, as the Architect, you individually, have the final say so in our products, inclusion or exclusion to bid process.

Second, in regards to the reply from your Ingersoll Rand Spec Writer, Tom Pekoc, his response was as expected, with reference his refusal to specify Independence2, LLC and our i.2™ Series Architectural Door Hardware products in this bid process. It is not logical to expect that an IR paid Spec Writer would allow a high quality, yet lower priced product to invade his business opportunities, when it is to his benefit to specify only high price products within the Girard High School project.

Moreover, although I can respect Tom’s job as a Spec Writer, he is paid very handsomely to do his job by I.R. thus not only eliminating lower priced competitors with equal quality products and restricting opportunities he comes in contact with to promote, indirectly by his specification, only contract hardware distributors who have the ability to resell IR - ASSA Abloy - or Stanley’s top-tier products as Schlage, Sargent or Best, thereby limiting the quantity of contract hardware distribution into the bid process. Nevertheless, I’m not writing you to fight the Sherman Anti-Trust Act or restrictions of trade issues. What I do wish to do is to ensure that you are aware of a few common industry practices and to point out that ultimately you make the final decision as to which products are included or excluded from this bid process and that by allowing Independence2, LLC’s products into this bid process you are in no way jeopardizing the quality of products or services to your clients as Independence2, LLC’s products carry the same exact industry certifications and our products meet the same standardization of quality as those of I.R., ASSA, Stanley or other brands such as Hager or Dorma.

With reference to Mr. Pekoc, Ingersoll Rand Security Technologies, specific objections, and his point by point email which was sent to the both of us, let me point out some FACTUAL information:

REQUIREMENT TO INCLUDE 3 PRODUCTS:
Although Mr. Pekoc, per OSRC requirements, does specify three (3) separate hardware manufacturers, there purposely exists only a limited amount of distribution (contract hardware distributors) that are permitted to carry and resell Schlage or Sargent products, and only a few more who are allowed to carry selected lower tier products at the same time, such as Falcon or Yale, by two of the three manufacturers listed, thus it keeps pricing levels both high and limited. IR and ASSA have spent tens of millions of dollars over several decades in order to accomplish this type of restriction in on both the levels of Specification writing, as well, as the limited distribution that restricts bidding by certain product lines; not even to mention the extra ‘discount’ points which are available only to a few select distributors, that results in “steering” and award favoritism even within their own Distributor base.

EXPERIENCE IN MARKET:
Independence2, LLC is a new company, incorporated in 2004. As far as, the “being a guinea pig”, Independence2, LLC’s products have been installed within Elementary and Secondary Public and Private Schools in Ohio, West Virginia, Pennsylvania and Florida and our list of clients include Universities and Colleges. Outside of the Educational arena, our products have been installed in multiple major Bank branches, Biomedical Research Facilities, and 5 Star Resorts, and the largest Energy Supplier in the State of Louisiana. So pardon my vehemence, but Mr. Pekco can stuff his “guinea pig” mentality, and all the associated rhetoric that comes with this restricted process.

TRYING TO TURN “IMPORT” INTO A NASTY WORD AND TO HIS OWN ADVANTAGE:
It should be noted that Independence2, LLC is an Ohio/United States based Company.
Whereas the following are NOT:
§ Ingersoll Rand (IR) is a Hamilton, Bermuda based Company
§ ASSA Abloy is a Netherlands Company based in Stockholm, Sweden
Both IR and Assa own and operate manufacturing facilities in China, I.R. owning a Lock Manufacturer, and ASSA having just purchased Shenfei, a Chinese Door Closer Manufacturer in Shanghai. This is in addition to owning manufacturing facilities in Mexico and other off-shore, out of Country locations. The 2 LARGEST IMPORTERS of Door Hardware to the U.S. in the World are: I.R. and ASSA Abloy. Whether a Company owns an off-shore manufacturing facilities, only a percentage ownership of other off-shore manufacturing Company or simply utilizes independent inspectors involved in the manufacturing process, these are and will always be just business decisions. I could spew out numbers all day about which show just how much of the U.S. Door Hardware Market is literally and actually made in the U.S. But let’s not confuse the issue with unintelligent and short sighted remarks about “Globalization” or “Importation”.

QUALITY OF PRODUCT:
With reference to the quality of our product’s material, Independence2, LLC’s products hold every Industry Certification as other brand manufacturers; which means that OUR PRODUCTS MEET OR EXCEEDS THE SAME QUALITY STANDARDS AS OTHER BRAND MANUFACTURERS. These standard Industry Certifications are UL, ANSI, and BHMA, simply to mention a few.

It seems to me, that whenever public monies are involved in a project (and although the majority of this project is paid by State Funding), the Voters of the District and thereby their tax money, should to be represented with a higher standard of fiduciary responsibility as to cost. Independence2, LLC through our Contract Hardware Distribution, who would not otherwise be able to bid due to the restrictive nature of this section, are fully prepared to bid this project for Division 8 fulfillment.

As far as, Mr. Pekoc’s suggestion that you refer his recommendations to Mr. Joe Jeswald, Superintendent, I will gladly include distribution copies to not only the Superintendent, but also Mr. Bello, the Treasurer, (whose fiduciary responsibility it is to act in the interest of protecting the Taxpayer’s monies within the Girard County Treasury System), as well as other interested individuals and companies.

Regards,
Ron

Ronald P. Baldine
Managing Partner & Founder
Inrdependence2, LLC
623 W. Liberty St.
P.O. Box 40
Hubbard, OH 44425

Obviously, no response; also, as expected. When School districts, State Legislators, and other government/state employees finally 'get it,' it maybe too late. But, I will tell you this - the Voters Get It!

Wednesday, November 05, 2008

Volume 53 - Heaven or Hell

It's finally over, and America has spoken; given an obscure unproven State Senator, of four years ago, the Top Job. In the Land of the Free - Home of the Brave, we have elected the most Liberal Senator and mixed this choice with Control of Both Houses to the likes of Pelosi and Reid. We will find out over the next four years, if not sooner, how 'free' and 'brave' we really are.



While walking down the street one day a US senator is tragically hit by a truck and dies. His soul arrives in heaven and is met by St. Peter at the entrance. "Welcome to heaven," says St. Peter.



"Before you settle in, it seems there is a problem. We seldom see a high official around these parts, you see, so we're not sure what to do with you." "No problem, just let me in," says the man.



"Well, I'd like to, but I have orders from higher up. What we'll do is have you spend one day in hell and one in heaven. Then you can choose where to spend eternity,"says St. Peter. ''Really, I've made up my mind. I want to be in heaven,' says the senator. "I'm sorry, but we have our rules."



And with that, St. Peter escorts him to the elevator and he goes down, down, down to hell. The doors open and he finds himself in the middle of a green golf course. In the distance is a clubhouse and standing in front of it are all his friends and other politicians who had worked with him. Everyone is very happy and in evening dress. They run to greet him, shake his hand, and reminisce about the good times they had while getting rich at the expense of the people. They play a friendly game of golf and then dine on lobster, caviar and champagne.



Also present is the devil, who really is a very friendly & nice guy who has a good time dancing and telling jokes. They are having such a good time that before he realizes it, it is time to go. Everyone gives him a hearty farewell and waves while the elevator rises. The elevator goes up, up, up and the door reopens on heaven where St. Peter is waiting for him.' "Now it's time to visit heaven."



So, 24 hours pass with the senator joining a group of contented souls moving from cloud to cloud, playing the harp and singing. They have a good time and, before he realizes it, the 24 hours have gone by and St. Peter returns. "Well, then, you've spent a day in hell and another in heaven. Now choose your eternity." The senator reflects for a minute, then he answers: "Well, I would never have said it before, I mean heaven has been delightful, but I think I would be better off in hell." So St. Peter escorts him to the elevator and he goes down, down, down to hell.



Now the doors of the elevator open and he's in the middle of a barren land covered with waste and garbage. He sees all his friends, dressed in rags, picking up the trash and putting it in black bags as more trash falls from above. The devil comes over to him and puts his arm around his shoulder. "I don't understand," stammers the senator. "Yesterday I was here and there was a golf course and clubhouse, and we ate lobster and caviar, drank champagne, and danced and had a great time. Now there's just a wasteland full of garbage and my friends look miserable.What happened?" The devil looks at him, smiles and says, "Yesterday we were campaigning.. ..Today you voted."