Thursday, November 29, 2012

Some Unnatural Limits on Corporate Interests

Photo: Light on Life Images

Two years ago at Thanksgiving, I was a new member of First Lutheran Church of the Trinity, and I was anticipating that we would launch some kind of visioning process in the new year, where we would plan out the future and how we would grow. That hasn’t really happened yet, in a formal way, but some visions have been coming in and out of focus as we work on other things.

Soon after that new year started, our pastor, Reverend Gaulke attended an organizing training that changed him, and affects his ministry. He’s always preached from the pulpit that God’s presence is manifest in how we treat each other, that Jesus spent his time on earth ministering to the poor, the weak and the outcast, and coaching his disciples to do the same. The training was conducted by IIRON, which organizes for social justice; it introduced him to SOUL, a group of other south side pastors with a tradition of standing up for their flocks against more powerful interests.

Since then, Pastor Gaulke has been taking part in some of SOUL’s actions, but he’s been careful about committing our church. First Trinity is not affiliated with SOUL like some other congregations are. Pastor wants the church to remain a sanctuary for people regardless of their political views. And historically, First Trinity has had a Republican tradition, especially among the older Germans who remembered Hitler as a socialist.

In the week after President Obama won the election, IIRON and SOUL joined a nationwide movement in a campaign to press the President and Congress to make the rich and corporate interests pay to fix the fiscal trap Congress set up last year.

Thursday that week, 40 pastors rallied outside the federal building, asking Senator Durbin, and all our leaders, ‘Who do you serve?’ They carried a golden calf, representing the false idol of wealth and corporate interests. Pastor Gaulke got to shatter it.

The next day, IIRON and its allies like Lakeview Action Coalition and Northside Power rallied 400 around the Federal Building while a handful of protestors went up to Senator Durbin’s office, to ask him to sign a pledge to defend Medicaid and Social Security from opposing interests. Some of them got arrested for their trouble, including Joe Hopkins, a Methodist seminarian from First Trinity. The Senator never acknowledged they were there.

I was at the Friday rally, and I think they are in the right. Not because I don’t like rich Americans, or corporate interests. In fact, I think I probably stand with most Americans in that I really like rich people, I wish we had more of them. On a civic level, having them around makes our city a more vibrant, exciting place to be; on a human level, you want to see what people who are less strapped by what they can spend can manage to achieve. In fact, on a frivolous level, I like to see what people with money to spend to extremes will go out and spend it on.

I do wish some of them took a less narrow view of what their interests are, but to a point, the narrow view isn’t entirely their fault.

Photo: Light on Life Images

Self interest was once summoned up as a moral concept. Four hundred years ago, philosophers hoped to make it a rational counterweight to the passions of aristocrats that had embroiled Europe in perpetual wars.

The passions led to a reckless chase of riches, glory and dominion; the interests would guide a more moderate, rational kind of advance. Under their influence, the ruler would recognize his prosperity was entwined with that of his subjects. And initially, his interests weren’t limited to his material prosperity alone, they included the whole field of human concerns. A person would have interests in wealth, power and influence, but also in things like health, honor and conscience.

In time, the term came to focus on a person’s interest in wealth. And in the US, a narrow focus on financial interests has created a false divide between 2 kinds of business concerns. For-profit companies defined by their pursuit of money profits flourish on one side of it; on the other is a shadow system of non-profit companies defined by their charitable purpose, by the absence of interest in profit, and, as a result, by their state of financial dependence.

Their dependence is written into the tax code. Federal tax exempt non profits that are not foundations, charged with distributing their wealth, must prove they are publicly supported by showing that most of their revenue comes from the charity of others, and not from earnings. They can raise a surplus, but they can’t distribute it to owners. That limits their ability to raise capital. Their lack of capital, and restrictions on distribution of their assets, limits their access to loans. In effect, these restrictions guarantee their staff will exhaust themselves scrounging for donations to keep the lights on.

There is no reason they can’t incorporate as for profits instead, except the risk that their interests will be narrowed to the pursuit of profit above all other things.

It is the fiduciary duty of corporate directors to show loyalty and care to the corporation’s interests. The corporation itself may define its interests in the most generous of terms. Johnson & Johnson is known for the breadth of its corporate purpose statement. It names the interests of its customers -- the doctors, nurses and parents who rely on its products -- as its first priority, followed by its employees, and the communities where they live and work. It names its duty to its stockholders last, because “when we operate according to these principals, our stockholders will realize a fair return.”

That statement was penned in 1943. By the 1960s it must not have been uncommon for corporate executives to talk freely of the social responsibility of corporations, to consider how they might help fight inflation by controlling prices, or set environmental standards above and beyond those of regulators, or find ways to hire the “hardcore unemployed.”

Because in 1970, trickle down economist Milton Friedman published an essay blasting such barbarisms in the New York Times Magazine. It was called “The Social Responsibility of Business is to Increase its Profits.” He ridiculed those businessmen he heard condoning broader goals as the “unwitting puppets” of certain intellectual forces that were undermining the basis of our free society.

Business in general can’t be said to have responsibilities, Friedman argued, only people have them. He concedes corporations, as artificial persons, may be said to have artificial responsibilities. Businessmen who run corporations clearly have real responsibilities, but those are to the owners who hire them to serve as their agents. They’re still free to fulfill their personal sense of social responsibility on their own time, and spending their own money.

But to spend someone else’s money for the public good amounts to a tax, taxation is a function of government, and only socialists believe that resources should be allocated by political mechanisms, which force people to cooperate in ways that may not even work out according to plan, and not market ones, which work when people have the freedom to judge their own interests, and to choose the transactions that serve them best.

Through the 1970s, the defense of the rights of shareholders gained momentum. And the clearest way to measure benefits for shareholders is to increase the value of their holdings, and bring them higher returns. To accomplish this, executive compensation was linked to stock performance to tie interests of management more closely to that of owners.

The shareholder movement had been reinforced by action in the courts. An accumulation of case law interprets the fiduciary duty of managers to corporate interests more narrowly as a duty to maximize the monetary of interests of shareholders. Even in cases where a corporation’s purpose statement aspires to broader goals, the possibility of being sued, and uncertainty whether consideration of other stakeholders is legally defensible, can have a discouraging effect on managers’ willingness to weigh other kinds of corporate interest – like their relationship with a community, or a well trained workforce.

In a Big Idea essay in Harvard Business Review in early 2010, Roger Martin looks back at the era of Shareholder Capitalism, compared to the era of Managerial Capitalism that preceded it, and finds shareholders haven’t actually done much better under the new regime.

In fact, he found managers delivered significantly better returns before the shareholder revolution than they did after it. He acknowledges if you fiddle with dates you can find a balance where performance was about the same, “but there is no sign shareholders did better when their interests were put first and foremost.”

[“The Age of Customer Capitalism,” Roger Martin, Harvard Business Review, January-February 2010]

Martin argues that’s because there are natural limits to shareholder value, which reflects the price shares fetch on an exchange. Stock price reflects the market’s expectations of future earnings. The best manager can only inspire expectations to rise so far before they become unrealistic. After a point, they must halt, or begin to drop. If the manager is clever, they won’t drop until the next guy’s watch.

When Jack Welch took the helm at GE in 1981, he was a vocal champion of the movement who put maximization of shareholder value above all else. And he delivered fabulous results. GE’s value was $13 billion when Welch became CEO; by the time of his retirement in 2001 it was $484 billion.

Martin says much of that growth was fueled by the expansion of GE Capital, which had been relatively insignificant before. GE Capital accounted for half GE’s earnings by the time Welch retired. Then it took such massive write-offs in the financial collapse that GE’s value dropped as low as $75 billion before beginning to climb more slowly – today it’s $219 billion, about half its value at Welch’s retirement.

Back in 1982, the year after Jack Welch stepped up at GE, Johnson and Johnson underwent its own tribulations. That was the year the Tylenol killer laced product with cyanide in some Chicago area stores. James Burke, the company’s CEO, was so aggressive about recalling every bottle of Tylenol, nationwide, that the business press marveled that the CEO of a publicly traded company could afford to act on principle so rashly. Tylenol represented a huge fraction of the firm’s revenues, and in the short term, the company’s profits and market value tanked.

Martin argues Burke’s bold action reflected the company’s purpose statement, and that it helped build consumer confidence in the brand in the long term. In 2009, Johnson and Johnson’s market capitalization was more than twice GE’s, at $167 billion; today it’s $191 billion.

Friedman’s essay on the social responsibility of business argued that if managers lost their focus on the bottom line, investors and customers would rebel, they’d take their business to more successful rivals. Now, 40 years later, a growing movement of investors and consumers seem to be protesting that shareholder capitalists got their interests wrong.

In fact, socially responsible investment funds have been on the rise for 30 years. According to the US Social Investment Forum, a member association for investors, the socially responsible investment movement now represents $3,74 trillion, or 11% of US assets under management. That includes assets of individuals and institutions whose managers screen for corporate responsibility, or practice shareholder advocacy, or fund “community investing,” lending in communities under served by traditional financial services. And it represents a 486% increase from 1995, when the Forum started tracking; compared to a 376% increase in US assets overall.

Upwards of 68 million US consumers prefer to make their purchases based on a sense of social and environmental responsibility, according to one study, conducted by the National Marketing Institute in 2008.

Earlier this year, the Wall Street Journal polled its online readers to measure their interest in locally sourced food. Thirty percent of respondents said their interest in buying local was strong, regardless of cost or convenience. Only 7% said they had no interest in their food’s provenance; the rest reported mild to significant interest, depending on price and convenience. The results seem weightier, considering whose readership was polled.

Businesses with social goals have also proliferated. One recent paper tallied the membership lists of business associations with sustainable goals, such as the Social Venture Network, GreenAmerica and the Business Alliance for Local Living Economies, and counted 65,000 businesses with $40 billion in revenues. But the paper goes on to argue that that the law still tilts toward profit maximization, and that tilt still exerts a “chilling effect” on directors, and their counsel. The sustainable business movement has been pressing states to create alternative corporate forms.

[“The Need and Rationale for the Benefit Corporation,” principle authors: William Clark and Larry Vranka; January 2012]

Back in the 1980s, when corporate buyouts were being used for plunderous effect, many states passed “constituency statutes,” giving corporate directors explicit permission to consider interests other than obtaining the highest price for shareholders in evaluating an acquisition bid. Illinois allows directors to consider the effect of their actions on employees, suppliers and customers of the corporation, as well as the communities in which they are located. But the Clark-Vranka paper argues even those permissions are not completely reassuring. There is too little case law interpreting what weight directors may give other constituents, much less how they might apply in contexts aside from a takeover bid.

Since 2010, seven states have enabled businesses to incorporate as Benefit Corporations, or B-Corps, which are required by statute to create benefits for society as well as for shareholders. Illinois is not one of them, but we do have a statute enabling low profit limited liability companies, or L3Cs.

L3Cs are designed to facilitate investment in for-profit ventures with limited returns, partly by attracting investments from charitable foundations. The idea is that the foundation would take on most of the risk, and less of the return, in order to create more attractive opportunities for other investors.

Normally, foundations can be slammed with penalties for jeopardizing their capital with risky investments. But they are allowed to make what are known as Program Related Investments (PRIs), as disbursements in line with their charitable goals. L3C statutes are designed to create an entity that would automatically qualify for “program related” rather than “jeopardy” investments, though the Treasury has been coy about promising to recognize them as a class.

All these machinations may make you wonder if the principle of our capitalist system is really to ensure all participants the freedom to make decisions about their own best interests. If it is just to defend one interest, the chase for riches, above all others, then maybe we have made an idol of wealth.

Next Thursday, December 6th, IIRON will be returning to the Federal Building for a noon rally to attract Senator Durbin’s attention. They’ll be asking him to promise to preserve the safety net for the elderly, and health care for the poor. They’ll ask him to avoid the fiscal cliff by taxing the rich.

It would be a modest increase, the rich can afford it. In fact, it’s really a return to a tax rate they’ve paid before without ruining their status, or slowing a surge in the economy. Milton Friedman didn’t want business to pay for social goals. But he did make the case that the right way to pay for such things would be to convince our representatives in government to levy a tax.

Photo: Light on Life Images

Thursday, October 18, 2012

Local Sawyers Mill Reclaimed Urban Wood

Table by Icon Modern

Furniture design firm Icon Modern still has metal work done down in Bridgeport, hiring Metal Magic Interiors since UV Awazu moved out of town (Awazu was profiled on The Hardscrabbler in March 2012). Their wood comes from further afield, but not too much further.

“LEED defines local as within 500 miles,” Icon Modern owner Rocky Levy says. “With our stuff, it grew less than 50 miles from where we are using it.” In fact, the company advertises that “usually we can tell you the street or park where your pieces grew up.”

A cluster of local sawyers helps them do that. Horigan Urban Forest Products, Meyer Woodworking & Lumber, and GH Woodworking & Sawing are Levy’s biggest suppliers. Local sawyers Ellis Custom Woodworking & Sawing, and Carstens Millworks & Reclaimed Wood, also supply the growing niche.

Photo by Icon Modern

Icon Modern literally brands its table tops with a hot iron as “Reclaimed Urban Wood.” Reclaimed wood is often salvaged from existing structures – it has the patina of age, and the fortitude of old growth forest. Urban wood is harvested from the private yards, public parks and thoroughfares that are sometimes referred to as the “urban forest.”

Levy says clients like Whole Foods and Google are drawn to furniture that comes with a back story. At the same time, the emerald ash borer, which has swollen the volume of Illinois wood available for lumber since 2006, has sparked interest in local sawyers from another direction. The Illinois Department of Agriculture and the Emerald Ash Borer Wood Utilization Team want to build a supply chain to divert trees felled by the beetle from going to mulch.

Reclaimed Timbers from Icon Modern's Facebook Gallery

Gary Hamm first opened GH Woodworking as a cabinet shop in 1998. “I bought the saw mill to create materials for my own woodshop,” Hamm says. He started milling logs for other people with encouragement from the Illinois Department of Agriculture. That led to requests for repurposed barn-wood, and to connections with “folks in the deconstruction business.”

Today, Hamm estimates 75% of his business entails repurposed wood. He says a rash of new clients have come looking for it in the past year, bringing some relief from the cabinetry slump that followed the housing collapse.

Ron Meyer, owner of Meyers Woodworking & Lumber describes a similar experience. Meyer has been milling local logs for 25 years, but he stepped up his investment in the lumber business, acquiring his own drying kiln, 4 years ago. “When the economy took a dive, my custom cabinetry work got sparse. But this [his lumber milling business] seemed to take off at the same time,” Meyer says. “Right now, this is what is going strong.”

Still, Hamm describes recent interest in old wood as a revival of a longstanding tradition. “Sometimes you’ll be in a barn built 150 years ago, look up, and see holes and mortices that just don’t make sense.” He says that tells you they built that barn from a structure that was older still.

Irregular Boards from Icon Modern's Facebook Gallery

Milling reclaimed urban wood poses challenges. It is often riddled with objects that ruin saw blades, like iron nails and concrete plugs arborists used to fill tree cavities through the 1970s. Urban trees also tend to sprawl, yielding less clear cut lumber than cultivated trees.

More hazards wait in the kiln, where wood is dried to prevent it from warping later.
It can also warp or crack if it’s dried too quickly, if moisture content drops too far, or if the outer layer is allowed to dry out while moisture lingers inside -- the difference creates tension in the wood.

Bruce Horigan came to milling through tree management service, where he watched logs and chips go to landfills and mulch. “I wanted to create a higher use,” Horigan says. He and his wife Erika ran their own tree service business for 12 years to raise capital for the milling and drying operations; they opened Horigan Urban Forest Products in 2003, and maintain about 50,000 board feet of lumber in stock.

But tree services, like Kramer Tree Specialists in West Chicago, say they need more demand to set aside logs for lumber. “We’re taking trees down every day, and creating this steady stream of by-product that has to be moved,” Mulch Manager Tim Peters says. As it is, they take down trees that generate upwards of 100,000 cubic yards of mulch a year. Though Sales & Marketing Manager Paul Filary says they would just as soon send if off for lumber. “If the demand was there, there is no question we would consider doing that.”

The Chicago Furniture Design Association produced a Rising From Ashes exhibit to showcase fine furniture built from urban trees killed by the ash borer. Bridgeport furniture maker Hal Link built this chair, with a rising Phoenix for the show.

Phoenix Chair by Hal Link

Still, many furniture builders who use local wood are building one-off pieces, their demand for material is small. Icon Modern is unusual in that regard. Owner Rocky Levy was an office furniture manufacturer’s representative when he first read about urban wood. “I saw that there was no one using urban wood for furniture for the commercial market,” he says. “Urban wood is all different, it has to be hand selected. It’s difficult to make it work on a larger scale.”

Levy says Icon Modern incorporates 20,000 board feet into furnishings each year for corporate clients like Starbucks and Whole Foods. That’s a large volume for a supplier like Horigan, whose 50,000 board foot inventory includes lumber from many varieties of tree, in an assortment of size. But Horigan says he has no problem supplying volume if it’s planned ahead. He needs lead time to cure the wood, but after years in the lumber and tree management business, he says “sourcing logs has never been a problem.”

And Icon Modern's clients appreciate wood with beauty marks. Levy describes using an ancient oak tree that turned out to have a bullet lodged in it. Horigan’s sawmill sliced the soft metal in half, and Icon Modern left it in the finished table. “In the traditional lumber industry knots, discoloration, foreign objects in the wood are considered defects, they would never be used” he says. “We embrace those things as part of the story.”

Photo from Icon Modern's Facebook Gallery

GH Woodworking & Sawmill
Wauconda, IL

Meyers Woodworking & Lumber
Batavia, IL

Horigan Urban Forest Products
Skokie, IL

Ellis Custom Woodworking & Sawing
West Chicago, IL

Carstens Millworks & Reclaimed Wood
Warrenville, IL

Monday, October 8, 2012

Hal Link, Furniture Builder, and Bridgeport Arts and Crafts

Hal Link builds custom furniture and cabinetry from a high-ceilinged basement studio in the Bridgeport Art Center, overlooking the river at 35th Street. Most of Link’s furniture costs from $2-10,000, which is about what you might pay for a hand-made bike. Then, every couple years, he gets a major commission.

One year it was a wall size buffet in the arts and crafts style. When he asked to see the architectural drawings for the house it would fit in, it turned out the client hadn’t commissioned them yet, so he helped them design their house.

This year, he’s building a chair modeled on the English coronation throne – a 13th century masterpiece first commissioned by King Edward I. Hal’s built other thrones, including one with a phoenix rising from the back, which he made from urban wood felled by the Emerald Ash Borer for the “Rising from Ashes” furniture show sponsored by the Chicago Furniture Design Association (CFDA). This one will rest on the backs of hand-carved griffins, finished in gilt.

Hal built this chair 18 years ago and it’s comfortably weathered by a life outdoors. (It is also feathered with sawdust in this picture.) He uses it as a camp chair at the Pennsic War, hosted by the Society for Creative Reenactment every year in Pennsylvania. Centuries ago, Hal says, the seat would have been made of slung leather, which stretches over time, so he used wood instead. It is remarkably comfortable to sit in – what it lacks in upholstery it makes up with ergonomics.

Hal’s specialty in medieval furniture and his other specialty, in arts and crafts style, are complementary, in a historical sense. John Ruskin, father of the English Arts and Crafts movement, was a champion of the gothic aesthetic. He thought its rude vigor reflected the rugged character of the Northern landscape, and he thought its abundance of fanciful detail reflected the vitality of the craftsmen who carved it.

Greek buildings were all smooth surfaces for reflecting the “peacefulness” of Mediterranean light. Ruskin thought their rational lines and repetition reflected the enslavement of the Mediterranean craftsman, “for the perfection of his execution can only be reached by exercising him in doing one thing, and giving him nothing else to do.”

The Arts and Crafts movement he helped inspire had the same complaint about factory production, where each worker was reduced to repeating one task over and over again. It promoted objects that were fashioned by craftsmen rather than assembled by pieceworkers. But the movement had natural limits – only so many workers could find employment supplying their cult of craft, because craft-made objects cost too much for the workers themselves to afford.

If that ever changes, global supply chains may help it along. They allow us to meet our basic needs with a superabundance of very cheap goods, so that even people with modest incomes can save to invest in a few very good things, if they’re inclined to do it. And the blogosphere hums with people who are. The dress-like-a-gentleman-movement and the fewer-better-things crowd – they’re informed by a densely cross-linked world of discovery agents, searching out tradition and craft in objects from knives to watches to well made shoes.

Their influence hasn’t necessarily shown up in employment stats yet – the number of small manufacturing companies has not shown a steady increase as far I can tell. But it does show up in the streetscape, where buildings abandoned by big industry have been steadily reclaimed for small ones, even when the rest of the real estate market held its breath.

Before Hal had a workshop in the Bridgeport Arts Building, he was in the Spice Factory on Cermak, just north of the river. This was in the late 1990s. The building was buzzing with artists, but it was also always getting pasted with liens and notices that utilities would be shut off. The owner had a reputation for promoting live-work space. Tenants would move in, then get evicted when she got caught. Link never lived in his workshop, but a poorly plumbed shower for people who lived upstairs used to leak into his space, ruining expensive materials, until he finally shut the water off and walled it off himself.

By 2001 he was looking for new space. John Edel had just bought the building that would be Bubbly Dynamics in the Central Manufacturing District east of the river, and Rick Price was renovating the Iron Studios to the west. Hal looked at both of them, but neither was quite ready to rent. He took a space in the former Spiegel ware house at 1300 W. 35th Street. It had just changed owners a couple years before. A large portion of it was still used for document storage. A teddy bear factory occupied the entire 2nd floor -- the American Bear Company still warehouses their stuffed animals there today.

Hal moved into the basement, sharing 2,800 square feet with Richard Zagorski, a pattern maker who was almost ready to retire. Eleven years later, they still share the space, Richard enjoys taking on small jobs. He makes patterns for decorative metal grills, or custom parts for old machine tools.

In 2006, when developers were still making big plans, the Metroplitan Planning Council and the Urban Land Institute published a proposal for a “creative industries district” on Cermak Road. It would incorporate the Spice Building with 2 of its neighbors to renovate a combined 800,000 square feet of studio and office space for artists, craftsmen and architects. It would cost $103 million to build, including a proposed $36 million in TIF subsidies.

Since then, something like that, but more sprawling, has continued to evolve organically in Bridgeport.

The building at 1200 West 35th Street, with 500,000 square feet, has steadily transformed itself from the East Bank Storage building to the Bridgeport Art Center. Hal was just the 2nd artist there when he moved in, in 2001. Today, over 40 artists occupy the 3rd and 4th floors. This year, the building launched a new Fashion Design Center, with studios, a shared cutting table, and an 18,000 square foot event space for fashion shows and other events. It has stunning skyline views; Hal laid its parquet floor.

The Zhou Brothers have housed artists at their 87,000 square foot building on 35th Street since 2004 – it boasts about 50 resident artists today. Ed Marszewski opened Co-Prosperity Sphere, a 5,000 square foot showroom and project launch pad in 2006. This spring, they launched SMALL, the Small Manufacturing Alliance, to showcase Chicago made goods.

John Edel renovated Bubbly Dynamics gradually, over 8 years, accumulating tenants in as he built the space out. It has 24,000 square feet of space and he calls it the Chicago Sustainable Manufacturing Center now. John bought his second building, a 90,000 square foot plant in The Stockyards, in early 2010.

Every 3rd Friday of the month, the Artists of the East Bank coordinate an open studio night with the Zhou Brothers building down the street. Just last week-end, the Bridgeport Arts Center hosted a launch party for Chicago Artist’s Month, together with SMALL, and Ed’s other new venture, Mash Tun, a magazine and craft beer festival.

This year, Chicago Artists Month aims to showcase how Chicago artists can serve as “essential building blocks in the development of vibrant and livable neighborhoods.” Bridgeport’s arts spaces demonstrate how the reverse is also true - neighborhoods can make room where artisans like Hal Link can build their business in stable, affordable space, and in concert with a community of peers.

Friday, September 7, 2012

More Bridgeport Bike Work

Michael Catano of Humble Frameworks at Work
photo by Rob Lomblad

Chicago’s hand built bicycle industry has gained momentum this year, and Bridgeport builders are still at the front of it. The custom builders at Bubbly Bicycle Works, the frame builders co-operative founded by Owen Lloyd [and described on The Hardscrabbler in January 2011], have been joined by Legacy Frameworks, a small batch manufacturing company.

Manufacturing jobs have a good reputation in the US, people sometimes forget they haven’t always been ideal. The industrial revolution was hard on workers. The jobs were dirty, dangerous, and poorly paid. They were also unskilled and tedious, labor was reluctant to give up their sense of craftsmanship and meaningful work.

Labor unions helped change that, but so did owners like Henry Ford. Ford’s great innovation as an automobile manufacturer had less to do with the efficiency of his assembly lines [similar efficiencies had been achieved before, at the Stockyards for instance] than the bargain he struck with his labor force, who agreed to show up reliably for impoverished jobs, in exchange for a higher wage. And paying better wages helped create the market for Ford’s new cars.

Ownership’s commitment to that bargain has wavered in recent decades, so it’s satisfying to see some of the labor force making its way back to the old way of work, even if their numbers are still pretty modest.

Alignment Table at Bubbly Bicycle Works, photo by Rob Lomblad

Nationally, the hand built bicycle industry grew gradually for decades, then took off around 2005, the year the North American Handmade Bicycle Show (NAHBS) launched its first event. Don Walker, NAHBS founder, estimates there might be 50 craftsmen earning a living building custom bicycles in the US today, and another 150-200 who supplement their income that way. In fact, a few US builders have grown to factory scale production, employing dozens of skilled craftsmen to build bicycles by hand. Jay Townley, whose market research firm Gluskin Townley Group, LLC tracks the bike industry, estimates US hand-builders sell 30,000 bicycles a year.

Chicago’s hand-built bike industry is still modest for a city of its size. Portland, a city of 600,000 people, has at least 25 bike builders; Minneapolis, a city of 400,000, can count 12.

Chicago has 2 full-time custom builders, and several who build bicycles part time. Garry Alderman of Method Bicycles and Michael Catano of Humble Frameworks each build 20-35 bikes a year. Method operates from a West Loop building shared with an art gallery owned by Alderman’s wife; Humble operates from Bubbly Bicycle Works, Bridgeport’s framebuilder’s co-op, alongside custom builders See-More Cycles, Comrade, and Lloyd.

What they charge can vary widely, depending on what a patron wants. A complete bike from Method or Humble typically falls within the $3-$6,000 range, though it could cost as much as $10,000 with rarefied wheels and wireless components.

A cyclist can buy a high quality mass production bike for a fraction of that price, and it may be superior, by some measures, to a hand-built frame. That makes it even more impressive that a growing base of customers will pay more to have something a craftsman has built by hand.

Bicycle by Humble Frameworks

“The mass production bike industry has done a very good job of defining certain criteria that a bike should be, and then excelling at them,” Catano observes. “A bicycle that I make will never be as light, or stiff, as a single-piece carbon molded frame…. But if lightness and stiffness are not the two things you care about most, then this whole other world of things opens up.”

Lightness and stiffness are often prized in bikes built to race. Steel frames flex slightly, that can make them more comfortable to ride over jolting terrain, because they absorb shocks, but they also absorb some of the power of the cyclist’s pedal stroke.

Catano, who races cyclocross, has been refining his design on frames he’s built to ride himself. Many of the design features in his bikes, like shaping of the tubing, are calculated to build stiffness back into key points of the bike. Others are more purely aesthetic, like his painstaking bi-laminate construction technique.

Humble Frameworks: Raw Frame with Shaped Tubing

Bicycles may be welded or brazed – welding is quicker, the material of the tubes is melted together. Brazing uses a softer metal, usually silver or brass, as cement, and requires a careful hand. The tubes must be mitered to fit precisely, or the joint will be weak; the heat must be controlled evenly, or the cooling material will deflect the angle of the joint.

Humble Frameworks: Carved Lugs

Many vintage bicycles are joined with lugs, or sleeve-like fittings. The braze seeps into the fitting to hold the tubes together. Fillet brazing joins tubes directly to each other with a ribbon of brass, which is then filed smooth. Bi-laminate technique combines the simple lines of fillet brazing and sleeves with hand carved embellishments. It’s a technique mass production builders don’t use anymore.

Humble Frameworks: Bi-Laminate Joint

Catano describes browsing photostreams posted by fledgling builders on Flickr, showing design features they’ve borrowed at random from various sources, without really offering anything to “the larger conversation” of what a bike should be. That conversation is often conducted in subtle variations rather than grand gestures. If you consider the progress of a master like Richard Sachs, those variations might not be visible from 10 feet away.

“He’s essentially built the same bicycle over and over again, working toward this perfected idea of what a bicycle should be,” Catano says. “I think that’s what people respond to – something resonates with what a particular builder is doing, and they want to be part of that, they want a piece of that themselves.”

Humble Frameworks: Seat Cluster Detail

Hand built bikes are still a small part of the US bicycle market. There were 15.7 million bicycles sold in the US last year, according to the National Bicycle Dealers Association, and over 99% of them were imports. Though the market is undergoing glacial shifts. Jay Townley, of the Gluskin Townley market research firm, says imports were down by 4 million bikes last year, but sales held steady in dollar terms, thanks in part to the resurrection of millions of used bikes.

Townley says affluent male baby boomers have owned the high end bike market for more than a decade, and mass producers have been pushing their price points upwards over the last 5 years by developing high tech bikes for pro circuit teams, and then making those bikes available for sale. As the high end price point has moved from $3,000 to the $6,000 range, the price gap between mass produced and custom bikes has narrowed.
The baby boomer males are the lightness and stiffness crowd, the demographic that buys the same bikes the pros ride, but they are aging out of the market. They represent just 80% of it now, they were 88%, Townley says.

Gen Y wants different things. They’re into green design, car-lite culture; they are unemployed, but entrepreneurial. The outlines of their consumer profile are not exactly crisp. “The brands are confused,” Townley says “they don’t know what to do.”
Some of Chicago’s Gen Y shoppers doubtless make their way through Tati Cycles, a 200sf boutique bike shop in Wicker Park.

Tati’s proprietor, J, describes 2 types of customers who are drawn to custom bikes – one is the 23 year old who went to art school and will spend a lot of money to have a few very good things. The other is the 35 year old architect, who has money to spend, but doesn’t want anyone to know. “He wants really, really nice things, but things that don’t look expensive,” J says. “The average person will look at it, and won’t be able to tell.”

J attributes their modesty partly to Midwestern conservatism. Friends in the fashion industry tell him that conservatism is echoed in the local market for men’s suits. It also suggests nuance to his motive for buying custom, or hand made goods.

The classic explanation for why a consumer will buy something that displays his discernment more than his wealth, is that he is showing off his cultural capital to sophisticated peers. That motive may be real, but it seems to be joined by a real desire for a more personal, less alien relationship with objects themselves. Some consumers want to participate in the production process, if possible, or at least to know everything they can about how the object is made.

J describes a recent encounter with a customer who came to Tati shopping for a jersey. Tati, a tiny shop, maintains a selective collection, so J had just 1 jersey, in black, by Search and State. Search and State is a small company that makes a couple, technically excellent garments from carefully chosen fabrics, in the actual garment district in New York. J and his customer had a 70 minute conversation about the jersey, the customer decided it was exactly what he was looking for, and bought it.

As customer tastes take new dimensions, the categories of custom and mass produced are blurred. Tati Cycles offers cyclocross frames built by Humble Frameworks, at cost, J says, because he wants to help Catano’s business grow to a sustainable scale. But he also sells bikes made to spec by Maxwei, a mass production builder in Taiwan – they are custom, but not built by a single craftsman.

Legacy Bicycle Detail

Legacy Frameworks sells manufactured bikes, but they are all hand built by Levi Borreson. He builds the same style in 2 sizes, in small production runs to make them more affordable. Legacy bicycles are carefully engineered for bike commuting, they are slightly less expensive than European commuter bikes, and they only weigh a third as much.

Borreson has been marketing Legacy Frameworks through big organized rides, bike swaps, and pop-up retail events like the Guerilla Truck Show that coincides with NeoCon, partly to avoid retailer mark-ups.

Legacy Bicycle and Rear Triangle Detail

Heritage Bicycles, Chicago’s other small production builder, has taken the opposite tack. Heritage builds very stylish bicycles, and sells them at a Lincoln Park general store, where you can also shop for accessories, and hang out at the store’s coffee shop. In fact, Heritage has developed its own line of waxed canvas panniers.

“I don’t see Heritage Bicycles as being a bike company,” owner Michael Salvatore says. “I see it being a lifestyle brand, and the bicycle is an entry way into that.”

Customer Suzanne Fox describes how Salvatore customized her Heritage bicycle by building it out with racks and panniers – she would have bought the Heritage panniers but they were still under development, “I liked the idea of having an all-Heritage bike.”

Prior to opening Heritage, Salvatore was co-owner of Bowery Bicycles of New York, which sells bikes with a similar combination of local construction and retro-aesthetics. He recalls that when Bowery Bicycles first opened, they expected their customer base to be hipsters and boutique shoppers, but it turned out to be broader – extending to other small business owners and the buy-local crowd. Something similar is happening in Chicago. Heritage opened its doors in January, and Salvatore said he expected to sell at least 10 bikes this year. By mid-August, they had sold 80.

In some ways, Humble and Heritage make very different kinds of bicycles, but Humble Framework’s Catano is enthusiastic about the profile Heritage is bringing to hand built bikes in general. At one point he says “I think they’re the most important thing that is happening right now, in terms of Chicago bike culture.”

“When I started building bikes in Chicago,” Catano recalls “I was really excited that there was a huge population of cyclists, with no one building custom frames here. I thought ‘I’m going to make out like a bandit.’”

He quickly realized the fact it was a wide open market also meant there was little awareness of handmade bicycles as an item someone might want. Heritage makes hand built bicycles accessible, and visible, to a much broader public. Catano hopes that will help other local builders as well.

“Every time someone sees a hand-built bike on the road, and says ‘Oh, that’s cool, hand-built bikes are a thing that I like,’ it’s got to help.”

photo by Rob Lomblad

Monday, August 27, 2012

Notes from Neighborhood Watch

I haven’t lived in Bridgeport all that long but I am already proud of the place as if I’ve lived here all my life, and sometimes a little defensive about its media image as a hold out of the uglier parochial sentiments. Living in Bridgeport really is like living in a small town. There are a lot of good things about that, though there are some things that are not so great. Some of both came out after a sensational murder last fall.

I hear there have been sensational murders in Bridgeport before, guys shot down outside their houses or tortured to death behind closed doors, but they often seemed to be criminals reaping the wages of their chosen careers. This was a 73 year old woman, bludgeoned to death in her garage on a nice block east of Halsted St. And it followed close on 2 startling incidents of people robbed at gun point in broad daylight around Normal and Parnell.

It was more startling because of where it was. Years ago, I’m told, Parnell was a tough street and the rail yard on Normal was inhabited by hobos who carried big sticks to beat the rats with. But since then the yard on Normal has been paved for White Sox parking and Parnell has been rebuilt with big houses with soaring atriums, in ground pools and second kitchens in finished basements (whose inhabitants still spend summer evenings sitting the garage, an unfamiliar custom that seems quaintly old world).

Our regular CAPS beat meetings used to be held at Wentworth Gardens, the public housing complex on the other side of the viaduct. After the Parnell murder in October, there was a special CAPS meeting held at Nativity of Our Lord on Lowe.

Over 400 people filled the church basement. The 9th District CAPS officer, the District Commander, the Alderman and the Chicago Police Department’s second in command, all came to address their fears.

The crowd was restive and suspicious, they seemed ready to boil over. They want to know what police were doing to address the crime wave in their neighborhood. The police seemed to be telling them there wasn’t a crime wave. At least Commander Jarmusz started out running through statistics of actual crimes for each of Bridgeport’s beats, in almost every category the number was down from the previous year.

Eventually a woman from the crowd told him, “I don’t care about statistics, I know crime is up,” a sentiment the crowd heartily approved. They told the CPD’s second in command “You’re not from here,” and they left muttering that the police were “lying through their teeth.”

The uglier sentiments were amplified through the ether in the months afterwards, through Facebook groups and reports on EveryBlock. Neighbors provoked each other with veiled, or not so veiled, references to people of other ethnicities who don’t share our values. “It’s Black Friday on Halsted Street” I see a friend post from a bar on the afternoon after Thanksgiving. He describes black youths walking Bridgeport’s quiet retail strip “in gangs of 3 and 4.” There were reports of crimes, and rumors of crimes that would never make it to the police blotter -- black men trying to lure young girls into cars and other creepy things.

I helped spread a couple of those stories myself. They were reports of home invasions I’d read about on EveryBlock this spring. In the first, a woman left the apartment building door unlocked for just a minute while she ran to the neighbor’s next door. While she was gone 2 black men walked in the building and pried open the lock on her apartment with a screw driver. Her son woke form a nap to find them in the kitchen. Luckily, when they saw him, they made excuses and left. In the second incident, a man answered his front door and 2 black men were outside. One of them punched him in the face, they grabbed everything they could get quickly and ran back to a waiting car.

These were both reported within doors from where I live – a block so confident in its security that the neighbors in my building are ideologically opposed to locking the building entrances. In fact my landlord likes to leave them standing open to let the breeze in, another custom I thought was quaint when I first moved in. It drives me nuts since I started reading EveryBlock.

Dan from Bridgeport Citizen’s Group made a point of asking about these incidents at the next CAPS meeting. The sergeant sent someone to check the database, and it turned out neither incident had actually happened. At least there had been no home invasions reported to the police on those blocks in recent months. It’s hard to imagine someone would get punched in the face and robbed in his own home and not call the police. But if he wouldn't, that’s another public safety problem.

There are people who believe the police are lying through their teeth. I don’t believe that – I think the police want us to keep our doors locked and our eyes open for trouble. I don’t believe Bridgeport’s crime wave is all hysterics either. But I wish some of that attention could be re-directed toward crime that originates here.

There was just a new murder on Friday night. A 30 year old man was gunned down on 31st and Wallace in broad daylight. Shortly after rush hour, Lynn from Bridgeport Citizen’s Group went by the police station as Commander Jarmusz was turning in. He flagged her down to tell her what was going on. He said it was a Satan’s Disciple who was killed, they didn’t have a suspect in custody yet, but he wanted her to spread the word. He asked that people stay away from the scene while police worked their investigation.

The loud complaints at the Nativity CAPS meeting last fall were balanced out by other voices. “If we’ve learned anything,” the CAPS officer reassured the crowd “It’s that statistics don’t mean anything if you don’t feel safe.” He went on to encourage us to make ourselves more safe by stepping up to participate. Come to CAPS meetings, call in tips to the police, join the Bridgeport Citizens Group, which coordinates a neighborhood watch. People in the crowd reinforced that advice, they urged their neighbors to act on their concerns and get involved.

It was April before I made it to my next CAPS meeting. By then, the beats had been redrawn and the monthly CAPS meeting was moved to the 9th District Station on Halsted Street.

I worried about the elderly ladies who had traveled from Wentworth Gardens to make the meeting, who probably face crime threats as serious as anyone in Bridgeport, and who now found themselves in a room full of white people, many of whom seemed to think all the crime that didn’t come through the viaduct came from those “Section 8 people” in public housing. One woman at the meeting asked if we couldn’t start a petition to just build a gate around the Bridgeport Homes, the public housing complex just beside the police station on 31st Street.

When the Wentworth Gardens ladies got up to leave, our CAPS Officer made a point of acknowledging them from the podium, and they explained they had to go because they’d paid a driver to bring them over, and the driver’s hour was up. But one of the ladies took the opportunity to describe some of the activities they were organizing over at Wentworth Gardens. When she’d finished, the room gave her a round of polite applause. They came back for another month or two, but I don’t see them at CAPS meetings anymore.

Dan and Lynn, who founded the Bridgeport Citizens Group, live across the street from Bridgeport Homes. They say they see more trouble coming from buildings run by absentee landlords than from public housing.

Last Spring, Dan had just gone to court to testify against a Latin King whom he’d witnessed chasing someone with a drawn gun. The police were delighted he’d do it – they thought they’d have to settle on more minor charges associated with violation of his parole, because they thought witnesses would be afraid to testify in court.

The guy went away for 6 months. While he was away, Dan and Lynn were reaching out to his grandmothers, who live on either side of the street, and an aunt who denies he lives with them, but then seems to admit he might. Dan says he and Lynn disagree to a certain extent on how to handle a situation like that. He says he has no problem pressing landlords to evict families if the family harbors a gang member who runs around with guns, though Lynn has more qualms about it.

But their strategy with landlords who harbor dangerous tenants has been to call the landlord and ask him to take responsibility first. If that doesn’t work, the alderman can sometimes send in teams of inspectors looking for violations. That might encourage a negligent owner to evict, or sell. Though sometimes, when you push a problem tenant out of one house, they reappear in a house down the block.

This summer the Citizens Group has been active on Carpenter Street. People say Carpenter has had trouble for a long time. There is nothing about the way Carpenter Street looks that would explain why that is. It has the same mix of cottages and 3 flats with pretty roof-lines as other streets in the vicinity. Neighbors can point out buildings whose 3 apartments were once occupied by 3 generations of a family, until the older generation died and the younger ones moved away. Now absentee landlords play a role here, like they do on Lituanica.

At the moment, there is one particular cottage that has been a hub of activity. The tenant in that house has a long resume with the corrections system, and it’s not just him, it’s all his friends. If you’d drive a strange car down that street they’d come out to peer in your windows when you slowed for the speed bump.

Neighbors have been calling the owner of the building, who lives in the suburbs. She’s been defensive, eventually she told them the tenant was going to move out at the end of July, though the date came and went and he’s still there.

The Bridgeport Citizen’s Group have used smoke-outs to good effect in other parts of the neighborhood. A smoke-out is a cook-out where neighbors assert their presence immediately in from of a safety hot spot. The neighbors on Carpenter had some trepidation about trying that on their street – they feared it would just rattle the hornets. But they went ahead and hosted one at the end of June.

The event itself was a success – neighbors rallied from across the neighborhood, and Commander Jarmusz came out to show his support. But once we were gone, the gangbangers held their own event, starting around 1 in the morning. And when the neighbors called the police, it took a half dozen calls and 3 hours for them to arrive.

The July CAPS meeting was acrimonious. One Carpenter Street neighbor has been working for several years to get criminals off her street. More than once she has seen bad neighbors pushed out of one house, only to have problem tenants reappear down the street. Her husband has been assaulted, they have had bricks and hand tools thrown through their windows. Now she’s alienating the CAPS officer by implying he’s personally ineffective, and she is skeptical about ideas from the Citizen’s Group, because she’s tried a lot of it before.

The police sound just as frustrated – they are understaffed, and overstretched, and Bridgeport isn’t the most dangerous part of the 9th district. Dan says when they first launched the Bridgeport Citizens Group a couple years ago, the 9th district had 9 CAPS officers. Now there are 2, 1 of them is part time, and they have to balance their policing duties with tasks like making wellness calls to seniors during heat alerts.

For his part, Dan’s not convinced police alone are the whole answer – didn’t Carpenter Street still have gang bangers when the police were fully staffed?

In the weeks since the smoke-out and the CAPS meeting where the frustrations all came out, representatives of the Bridgeport Citizens Group sat down with police to try to work out how the chain of communication might be improved. Among other things, they learned 911 calls are prioritized by an independent dispatch center. The officers responding in the car don’t know what time you first called. If they show up 3 hours later and you’re mad at them, they just absorb your frustration. The police helped the Citizens Group work out a script for following up on calls that don’t get a timely response.

The Citizens Group has also been brainstorming next step strategies for Carpenter Street -- creative ideas to make it harder to flee through gangways and vacant lots, and to hold landlords accountable. Call the landlord with problem tenants, but also call other landlords with apartments for rent to ask what their screening practices are.

And they can always use more volunteers for the neighborhood watch. On the neighborhood watch in my beat, we don’t see a lot of suspicious activity in progress. We report a lot of graffiti so no one thinks he can mark a spot and own it. Just as important though, we’re tied in to the activities of our neighbors in other beats, and to the kind of communication that might actually make the neighborhood safer, as frustrating as that process may sometimes be.

Sunday, July 15, 2012

A Turn in the Local Waste Stream

Coming Soon to The Plant: A Brave New Day for Municipal Waste

Bridgeport might soon find itself in the near vicinity of not just 1 but 2 anaerobic digesters. They will transform tons of raw garbage into heat and power, with a by-product of potent soil enhancements, and they may change the local landscape for waste.

One of them, under development at The Plant, an adaptive reuse project in the Stockyards, would take in 32 tons of food waste per day, and fuel the generation of up to 500 KW of electricity per hour – mainly to power food processing, beverage brewing, and an aquaponic farm, all located on site. The Plant’s developer, John Edel, says he expects to break ground within a month, and complete construction within 8 months. Growing Power’s Iron Street Farm plans to develop a digester that would eventually consume 100 tons of food waste per day, though they are still working out the details, including where it will be located and how it will be financed.

Anaerobic digestion is a proven technology. European digesters consume a full spectrum of farm, industrial and municipal waste, often in some combination at co-digestion plants. Their use in the US is limited almost exclusively to waste water treatment plants, and to commercial farms where they are deployed mitigating the polluting power of oceans of manure. Building an urban digester, that will consume municipal solids, is still a tricky process. The contractors who build them vary widely in expertise, and the financing must be knit together from subsidies and tax credits, since biogas is still on the margins of our power grid.

But that’s not because the plants are not potentially lucrative. In fact, profits from the heat and power generated by burning biogas could be secondary to the profits to be had from consuming huge volumes of garbage.

In the US, anaerobic digestion is mainly a waste treatment process, much of the methane produced is simply flared. That’s especially true at waste water treatment plants – there are over 3,500 digesters in operation at such plants in the US, but just over 100 of them burn the gas to produce power. There are only 191 digesters at commercial livestock farms, but 186 of them use gas in combined heat and power plants. Illinois has 3 farm based digesters, with capacity to produce 2,243 MW of power. Wisconsin’s huge population of dairy cows lead the nation in farm-based generation, with 29 anaerobic digesters with 120,982 MW of electric generation capacity.

By contrast, municipal solid waste remains largely untapped. There are about 250 million tons of it generated every year, according to the EPA. Undigested food waste in particular has much more power potential than manure, which has already been depleted once. And municipal solids are a reverse commodity – there’s great value to be realized by taking it off people’s hands.

That’s been more true ever since the passage of the Resource Conservation Recovery Act in 1976. Prior to that, municipal waste was mostly disposed in open dumps, left to leak contaminants into ground water, and seep methane into the air. The Act didn’t eliminate the old city dump, but it did prohibit the opening of new ones. It established criteria for the location, design and operation of landfills, and linked federal assistance to resource recovery and sanitary practices.

Regulation made waste disposal a more capital intensive endeavor. Substandard local dumps gradually filled and closed over the years. They were replaced by large scale, state of the art, regional facilities – and a more elaborate supply chain of recycling centers and transfer stations, where waste is aggregated for long haul shipping.

A 20th Century Waste Transfer Station, also in the Stockyards

In 1988 there were 8,000 landfills in the US. By 2006, three were just 1,750. On average, they each handled four times the waste. Waste haulers underwent a parallel process of consolidation – today the biggest operate their own landfills to retain revenue from gate tipping fees.

In 1985, it cost $8, on average, to deposit a ton of waste at a landfill; by 2004, it cost $34, and the US waste disposal business was a $40 billion industry. Since then, consumption may have slowed with the recession, but tipping fees have continued to climb, to a national average of $49 per ton in 2011.

Organic waste buried in landfills already decays anaerobically – in the absence of oxygen, it produces methane gas, and less of the carbon dioxide exhaled in open air rot. Methane is more effective at creating atmospheric greenhouse conditions than carbon dioxide, so the new, reformed landfills use pumps to capture it. Some of it is simply flared, but it can also be pumped to co-generation plants.

Land and Lakes of Park Ridge is a typical new generation landfill operator. Founded as an excavation company in 1966, they are vertically integrated, operating a fleet of waste hauling trucks and transfer stations, recycling centers and landfills.

Land and Lakes reclaims methane from its landfills to generate power – it boasts that it sends enough to supply 52,000 households into the ComEd grid. It also boasts the first “bioreactor” landfill permitted in Illinois, at its River Bend Prairie landfill in Dolton. The biogreactor manipulates moisture levels to accelerate the decomposition process, and produce more methane faster.

Anaerobic digestion takes that process steps further. Digesters vary in configuration -- some farm based digesters are big, covered pits of slurry, brewing microbial reactions. Digesting solids is a more complex process. The digester at The Plant is engineered like a complete gastro-intestinal tract.

The solids, including food waste, brewers grains and possibly fats from rendering plants, will be fed through a mascerator to chew large pieces into smaller ones. The chewed solids will pass into the primary digester, a 100 foot horizontal tube, where bacteria will start a series of chemical reactions, as paddles gradually churn it through the tube over the course of a month.

Coming out the other end, digested solids will be separated from liquids with a screw press. The solids will pass out of the system into a covered pile, and eventually sold as rich organic fertilizer. The liquid will continue into the second digester, a 54 foot tank with a membrane roof. The membrane will expand as methane collects, some of it pumped in from the primary digester, and some of it exuded by the liquid digestate. The spent liquid can also be sold as soil amendment.

From there, the methane gas will be piped into the building where it will fuel a combined heat and power system. The Plant will consume both the heat and the power on site, the system is sized to meet the building’s needs. These are estimated to average 300KW per hour under normal conditions, but the system will be capable of generating up to 500KW. It will be used to power commercial food processing, breweries, and the grow lights for the aquaponic farm, all of which generate their own heat -- industrial buildings often have to be cooled off all year round. So the heat generated from The Plant’s combined heat and power system will be run through an absorption chiller to produce cooling power. They are adapting the existing, extremely well built ammonia cooling system the building came with to run cold water instead.

Every aspect of The Plant has a full-cycle logic like that. The building that was once a mass production meat processing plant is being converted to incubate small, sustainable food producers, and the indoor farm. The aquaponic growing system will recycle waste from fish to fertilize plant crops; the digester will fuel generators to make power from garbage. That will make it much more affordable to run grow lights for indoor farming. And it will all work within the regular cycle of carbon exchange that goes on all the time between biotic life and the atmosphere -- as opposed to releasing vast carbon reserves that have been sequestered underground for hundreds of millions of years by burning fossil fuels.

Building it will cost about $2 million. Most of it will be paid for with a Food Scrap Advancement grant (F-SCRAP) from the Illinois Department of Commerce, together with a Recovery Act grant (ARRA) and a loan from the Chicago Community Loan Fund. The Plant has contracted with Eisenmann Corporation to build the digester itself, and with Alcor Energy Solutions to build the combined heat and power system. Eisenmann is a family owned German engineering firm with North American headquarters in Crystal Lake. They have built at least 80 anaerobic digesters in Europe and hundreds of other kinds of facilities in the US. Alcor has also completed numerous combined heat and power systems, but its owner may be more accomplished as an engineer than as a project manager. Alcor is behind on its contract at The Plant, the delays have been costly, time will tell if they are the firm that actually finishes the combined heat and power system at The Plant.

But once it’s all up and running by spring 2013, early estimates show more than half potential revenues coming from tipping charges for accepting waste, and a smaller fraction earned by selling power to tenants. Edel anticipates the tipping fees will be quickly consumed by the cost of operations. The Plant will take on the role of waste hauler itself.

The estimates are also based on tipping charges less than half the national average rate. And there is a sub-trend in the municipal waste market that moves against the long term rise of disposal fees. New, creative users such as organic farmers, bio-fuel producers, and now anaerobic digesters, are creating value for the best organic waste products –a value not earned just by hauling it away. Brewer’s grains are one example.

Iron Street Farm: Possible Site of Greater Bridgeport's Next Anaerobic Digester

Josh Deth of Revolution Brewing says his recently expanded brewing operations generate about 8 tons of spent grains a week – all of which has been claimed as prime compost material by 2 urban farms, including Growing Power and City Farm. Deth says he pays the farms to haul the waste, because they are non profits with a mission he supports and he wants them to succeed, but he says Goose Island brewery is getting paid by farmers who want to use their waste, which can also be added to cow feed. In fact, bulk used cooking oil is already a commodity, its price tracks the price of corn. Aside from its potential use for making bio-fuel, farmers use it as an additive to soy feeds to make them more nutritious when corn costs too much.

Deth says Chicago’s other breweries still pay conventional waste haulers – probably for one of the reasons he pays Growing Power. Deth says as a business owner, he needs to be assured his waste will be hauled away consistently at regular times. But “it’s not garbage,” he says.

Still, the sources of organic waste are numerous, and plenty of producers pay to have it reliably shipped away. Edel says The Plant will offer the same service as the big waste haulers at the same price, “and you also get a gold start next to your name that says all of your waste is going to a sustainable business to make energy and food.”

The Plant is unlikely to face a shortage of fuel anytime soon. Food wastes aren’t the biggest component of municipal solid wastes generated every year, but after all the paper products are recycled, they comprise the biggest portion that goes to landfill. The EPA reports almost 34 million tons of food waste were generated in 2010, and only 3% of it was recycled. The rest could fuel a generation of urban digesters, and also help pay for them.

Friday, June 1, 2012

Bridgeport’s Slow-Pop Retail Scene

If artists really have powers to re-start neighborhood economies, Ed Marszewski and the band of co- conspirators who planned the Version 12 arts festival this year set out to deploy them, and spread the impact as far as it could go.

The Co-Prosperity Sphere was made into a department store for small batch goods of local manufacture, First Trinity Lutheran lent itself as a concert venue, Benton House hosted “Art Bowl,” the afternoon fair for “Bridgeport Day” and a Community Supper Club. Saturday nights, neighborhood food trucks gathered in the parking lot next to Maria’s so neighbors could mill around and socialize, an event that turned out to be so popular the neighbors lobbied to keep it going all summer long.

And on top of all that, a dozen storefronts on Morgan and Halsted Streets opened their doors as “pop-up shops.”

Pop-up retail is a term coined by in 2004 (according to Elaborating the concept over the years, the group evokes the influence of the entertainment economy, the experience economy and, a new personal favorite, the “surprise economy.”

A guerilla retailer installs a collection of merchandise in a vacant storefront in an edgy location, sells it til it’s gone, then disappears. The merchandise might be one-off items from emerging designers, or get-it-while-you-can-edition products from established brands.

Trendwatching says consumers like it because it’s “discovery driven” and “massclusive.” The motives of retailers are various. Small designers can showcase their own designs. Big brands, like Target, can move with agility their big stores don’t afford them. Now, real estate agents use it to make interim use of vacant properties. But Version Festival might be unique in trying to mobilize it as a community development tool.

Whether it works or not, the Bridgeport pop-ups were certainly a good sampler of what Bridgeport is like now.

A Sample of Bridgeport as It Is Now
Spring Pop was a collaborative of 5 artists who curated stuff from their own collections at 3143 South Morgan. They had photography, scented bath salts, second hand clothes (“but they’re all our own things, not from thrifts”), and some heartbreaking boutonniere-size arrangements emerging florist Elizabeth Buchanan made from calla lilies she grows on a lot on Racine.

Ray Emerick opened his studio at 3149 South Morgan for children’s movies on Saturday afternoons. One mother told him his first Saturday would have been even better attended, but a local gang had posted plans to host a street fight that day on Facebook, so other Morgan Street mothers were keeping their kids home.

MN Gallery has been open at 3524 South Halsted Halsted Street for 13 years now. Owner Jim Molnar says he and his wife are “still looking for the best way to deploy the gallery as a for profit business, with our energy level.” During the festival they hosted 2 afternoons of salons: artists presented their work and a small audience was encouraged to discuss it.

County Commissioner John Daley donated the storefront next to his office at 3526 South Halsted to the project. It was vacant for much of the festival, but after some weeks of suspense, it now displays 2 large paintings, one of them is a vaguely menacing take on a B-News Update blog-post about childhood ballgames. (The author does recall learning to ‘defend your turf.’) B-News Update is itself a great running commentary on Bridgeport – the editors keep up with new developments, and occasionally reminisce about the neighborhood of their youth.

Back at the Version 12 pop-up project, storefronts behind Blue City Cycles opened up as Enoch’s Donuts (with bacon and bourbon, and other inspired flavors), and Paratext, a community book store fully stocked almost entirely from donations.

Finally, the third storefront behind the bike shop hosted some cool Wicker Park retailers who each took a turn for a week-end, lending Bridgeport’s retail project a little bit of their cache. Quimby’s, the famous zine-purveyor, made a brief appearance. Opening week-end, the store was occupied by Dusty Groove, a record shop sympathetic to Ed’s experiment.

In fact, Rick Wojcik, who owns Dusty Groove, says Ed Marszewski’s been trying to recruit him to open a store in Bridgeport for some time. He likes the idea, it’s one of the first neighborhood’s he’d consider. Though he hesitates over resources – staff, inventory, money – and because he’s not sure he would gain new customers, or if his Bridgeport customers already shop at his Wicker Park store.

He estimates it’s easier for Reckless Records or Dr. Wax, stores with more mainstream collections, to open branches. But adds, “I’m a big believer in retail shaping the city.” After all, “Why does anybody love a neighborhood?” It’s usually where their favorite shops and restaurants are.

So now that the Version 2012 experiment is over, how might Bridgeport retail take shape?

Bridgeport Retail as It Might Be Someday
Colleen at the South Loop Chamber of Commerce is inclined to defend Bridgeport’s retail track record now. The Chamber conducts a survey of retail vacancies every August. She declines to share the results from last year’s survey, but argues Bridgeport doesn’t have more retail vacancies than other places, it’s just that stores we have move around. “Stores occupy a space, they fail, they re-open down the street.”

Wojcik says Bridgeport today reminds him of Wicker Park 13 years ago, when Dusty Grove was looking for space there. In fact, Dusty Groove is an encouraging example of the kind of business that might take root here. The store specializes in small labels, limited edition, hard to find records in genres other than rock. It must qualify as a participant in the experience and entertainment economies. Better yet, it is the kind of business that can prosper in a retail location that has not yet taken off.

Dusty Groove actually launched from Hyde Park in the late 1990s, selling records over the internet from a back alley office. When they were ready to open a retail outlet, Hyde Park was too constrictive. “The University controlled the neighborhood, it shut down a lot of commercial space, so rents were very high there.”

Wojcik says when they went to Wicker Park, looking for space, the Wicker Park landlords were hedging their bets. “They were sick of renting to bohemians.” They were ready for residential gentrification to attract retailers who’d pay great rents, so they didn’t want to sign long term leases, or if they did, they’d only do it with a steep multiplier for annual increases.

Dusty Groove ended up buying their building at 1120 North Ashland at a time when “only idiots” would open that far from North and Damen. They needed space for their giant inventory, and the shipping and order filling apparatus that is the guts of the store. Wojcik says about 100-200 orders come in every night and staff spend the mornings picking orders. He estimates that even today, 50% of the walk-in traffic are people who were on the web-site that day, or the day before, and have placed something on hold.

Meanwhile, since they arrived, Division Street’s filled in. “Ideally we’d be the store where the boyfriends would shop while their girlfriends are shopping in boutiques on Division,” he says, though he acknowledges it’s still a bit of a walk.

Looking back, Wojcik’s been surprised by how incremental the advance of retail gentrification has been. He says the Milwaukee storefronts were occupied, but they were occupied by older retail that didn’t reflect the neighborhood’s emerging demographic. Landlords were happy to rent to the old businesses as long as they stayed, because they were reliable. But when one would close, the storefront tended to stay vacant, as the landlord hoped for The GAP to come in.

“They were hoping for the rent, but they didn’t have the properties,” Wojcik says now. Milwaukee had a lot of 25 foot storefronts with long cavernous interiors, and they were all individually owned. “The Gap isn’t going to sign a lease with multiple owners.” He says the bohemian stores were willing to put up with lack of loading docks, and having to walk around the corner to access their dumpsters.

Today, quirky boutiques are working out pretty well in Wicker Park’s quaint storefronts. The neighbors might be grateful no one got around to tearing it all down.

In fact, Wojcik thinks residential overdevelopment actually slowed the retail renaissance on Division Street – even though the city required the new 3 story condos install commercial spaces on the ground, the retail condos were too expensive for most small businesses, and large retailers didn’t want to own property.

Eventually, things worked out -- retail offerings caught up with the new demographic. Wojcik says that’s partly because the demographic enjoyed reinforcements, the “Chicago Magazine crowd” came in to shop from Lincoln Park.

South Halsted Street Today
Bridgeport doesn’t necessarily have a lot of big spenders in such close proximity. Though it has other similarities with Wojcik’s description of Wicker Park: the old storefronts, the owners hesitating on the brink of a transition that hasn’t fully declared itself yet. In fact, there are plenty of retail stores open on Halsted Street now, they just don’t match the demographic asserting itself around Morgan Street. But new business that have opened sometimes report the landlords on Halsted haven’t seemed all that eager to rent.

Claire Knipper says when they were shopping for space to open Blue City Cycles in 2008, the landlord’s they approached were divided between those who wouldn’t return their calls and the ones who wanted startling rents. They looked at the former liquor store at 3409 South Halsted. The space was in bad condition, and she says the owner asked for $3,000 a month, triple net.

Loris Basso has had an even more mixed experience. He’s the proprietor of Monster Island Toys. He sells collectible figures from comic books, with a specialty in Godzilla and his cohort – Monster Island is their home in the movies, humanity tried to exile them there. Basso is the only dealer of the Japanese Bandai brand monsters in Illinois.

The retail store is just the icing on his thriving internet business. He is also one of those Halsted Street businesses that has moved from one storefront to the next -- trying to strike the best trade-off between the best rent and the best sales.

Basso says business would be better on the north side, there’s a more spendthrift collector base, they stop at the comic stores on their way home from work. They could stop by his store and buy the action figures in the same trip. But rents in Bridgeport are half, or less than half, what they are on the north side. Would sales be twice as much? As it is, he has customers from out of town who don’t mind making a trip to the shop when they come in to Chicago for other business. He gets a yearly visit from a shop owner in France, who stocks his store with merchandise he carries home in his luggage.

In 2007, Basso had his grand opening at 3407 S. Halsted. The property is owned by the same guys who own the former liquor store Knipper looked at. Tom and Jim Koulouris bought a cluster of storefronts from 3407 to 3419 S. Halsted in 2006.

Basso says he was paying $2,100 a month for 3,000 square feet, but there was also a leak in the ceiling – he had a pail to catch drips in the middle of the floor. He liked the Koulouris’, remembers them as good landlords. He says they went to lengths to repair the roof.

And business was good when Basso first opened. But when business wasn’t as good, and he asked the Koulouris’ to come down in rent, they weren’t willing to do it. Basso says their main business is a prosperous supermarket up north, and they didn’t have to rent the space.

So he moved to 3335 South Halsted – a smaller space for $1,500 a month. Six months after he moved out of the 3407 building, the roof collapsed with such force, it blew the windows out. (The building has since been demolished.)

Then he moved again down to the building that recently housed the Ramova Grill. The space was half the size, and half the rent. The owners, who also own the Ramova Grill, were preparing to retire, they had placed the building on the market, but Tony Dimos, one of the Ramova’s owners, says they were still looking to rent, they might have held on to the building if they’d filled the units with tenants, before they settled on a sale.

Even when they found a buyer, the closing kept getting pushed back. The appraisal was disappointing. Basso says he knows some of the details because an acquaintance was waiting to come in and offer the appraised value in cash if the sale didn’t go through. But then, Dimos says, it did. Happily so – after 50 years of service you hope the owners of the Ramova Grill got a pay out in the end. The new buyer wants to combine all the storefronts for a large Chinese restaurant.

Basso found the experience a little demoralizing. He felt Dimos misled him, because he promised him a lease. Basso took him at his word, fixed up the space and moved in, then Dimos didn’t go through with it. Then in the end, he tried to rush Basso out. He did get all this rent back, though he’s still not sure he’ll go to the effort to relocate the retail store.

Looking out across the street from Monster Island Toys on its last day open, there are 3 vacant storefronts across the street. They suggest a partial picture of Halsted’s fortunes. The Pants Store building was sold once last year, but is back on the market. Aaron Share of Koenig and Strey, who represents it, says it was bought by 2 investors, then one of them backed out, so the other needs to sell. Next to it stands a 3 story new construction condo building, with a first story storefront that’s never been occupied. Basso says the developer has decided to open an office in there himself. And next to that, there is another, older storefront, the windows are shrouded, there’s no visible announcement of any intent to rent, sell or do anything at all – maybe just waiting for the surprise economy to arrive.

Up the street, Jim Koulouris declines to give an asking rent for the former liquor store, he says it would need substantial renovations before he’d make it available. They have invested in the 2 storefronts at 3417 and 3419: one of them houses KAWA, a new sushi restaurant. Koulouris says they are asking for $2,500 a month for the 2,150 square foot space.

Things are looking up, he says. There are new businesses in the condominium building across the street, and they’ve been getting a lot more calls than they were getting 5 years ago. Maybe if things pick up a little more, it’ll be worth Basso’s while to open up a retail store again.