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Carmanah Technologies was once the poster child for Canada's clean-technology industry - a fast-growing world leader in the solar sector. But the company over-extended itself, and in 2007 telecom industry executive Ted Lattimore was brought in to trim it back to a manageable enterprise.

Mr. Lattimore shrank the Victoria-based company, slashed costs and closed the manufacturing operations. Then the recession hit and forced even more cutbacks.

Now it's a lean enterprise that focuses on solar-powered aviation and marine signals, LED street lighting, and solar systems for industrial rooftops. The only dark cloud over the company is a messy legal battle with an Israeli power supply firm called Lightech Electronics that Carmanah tried to buy last year. The deal went sour when one of Carmanah's large shareholders stepped in to block it.

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Carmanah was once the darling of the Canadian clean technology sector, but it has shrunk sharply. What happened?

When I joined the company three-and-a-half years ago, it had gone from a $4 share value to $1.30. Sales had gone flat. It was losing money. Inventory was up. Staff levels were high. The fix was to shut down our manufacturing and lay people off, all those kind of things. There were 10 businesses, and we closed or sold six of them. So now we have four businesses. All the manufacturing is outsourced. Every aspect of the business is totally scalable. All the businesses are growing right now, and they've all got really good prospects for the future.

How has the lawsuit with the Israeli company affected Carmanah?

We have a cloud that is hard to see through. It definitely [causes] uncertainty. If you go back to September when we announced the agreement to purchase Lightech … our share price went up, which hardly ever happens [when an acquisition is announced] So this was a huge vote of confidence that this was the right thing to do. Then we ended up with a dissident shareholder, and the resulting lawsuit and the uncertainty, and the share price has just dropped like crazy.

What's your message to investors who have stuck with you hoping for better days?

We have a small business that has been around for almost 15 years now, and we are still here and we still have lots of cash. It hasn't been mismanaged, it's run into some problems and we'll get through it.

How has solar technology improved recently?

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Improvements have come in both parts of the industry - solar [cells]and LEDs [light-emitting diodes] The efficiency of solar cells, in the time I've been here [at Carmanah] has improved about 20 per cent. LEDs just keep getting better, more reliable, cheaper, and brighter.

What's the focus of your R&D?

We spend an awful lot of time on how to get the energy from the solar panel into the battery in the most efficient possible manner. Then how you get it out of the battery and into the light in the most efficient manner. That is where we spend our time.

Where are your products made, now that you don't have in-house manufacturing?

Most of our work is done at Flextronics in Houston, Texas. Houston is actually a very low-cost centre, and it is also convenient for shipping all around North America and into South America. Our expectation is that we'll have a second manufacturing location in Latin America. Ideally it would be in Brazil.

How do you feel about Ontario's local content rules for solar installations?

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We see no threat from the policy. We have an office [in Toronto] We use all the products that the FIT [feed-in tariff]program identifies as being appropriate.

Is the program a fair way to create a renewable manufacturing industry?

I give the Ontario government full points. [They]took the risk on this - the political risk in doing it for the first time - [so they]deserve the spoils. It is not a program that can be easily replicated across the country because of the manufacturing aspect of it, [but]Ontario has a manufacturing culture. The idea of working in manufacturing is ingrained in people here. That doesn't exist in British Columbia, not in the same way.

Do you need government support to make your company work?

No. The only solar policy that exists that affects our business in any way is the Ontario FIT program. Every other aspect of our business is done with no subsidies whatsoever.

How do you justify the high costs of solar to your customers?

With our solar-powered lighting business - street and parking lot lighting - the total cost of ownership itself can be an economic argument [when you compare it to]pulling power off the grid, month after month for years. We can justify it on that [alone] And we can particularly justify it [in locations]where the grid is not already available. Hence the focus on Latin America, where the infrastructure does not exist.

In signal lights, [it is similar] In the marine world, the reason you have a flashing light out there in the water is because nobody should go near it. Therefore you don't want to have to maintain it - to replace the battery or refuel it. You put our lights out there and they stay there for years, and you don't worry about them.

Do you see Carmanah as a green energy company?

There are many people who position it as a green energy company [and]I think that's fine. It makes it attractive for us when we are looking for employees, especially younger employees who see it as a big bonus.

Where are the big markets in developing countries for your products?

We sell globally, but we have done better by narrowing the focus to North and South America. By focusing on Latin America we are identifying more opportunities … because the [power grid]infrastructure does not exist. We are doing very well in Colombia and Venezuela. We believe there is a huge opportunity in Brazil but we haven't really cracked that market yet.

What about the huge markets of India and China?

They are both very price-conscious, and China particularly so. India would be a rational next step for us once we do better in Latin America. I don't want to see us tackle China until every aspect of our business is just goof-proof and we've got it down to a machine. Otherwise you can lose easily in China. They have highly skilled engineers and very low cost structures. They'll copy you and beat you at your own game.

Are LEDs going to take over from other forms of lighting - even in residential settings?

LEDs are being used now in many commercial applications, because architects and designers can work with them so well. If during the day you go to a coffee shop or a restaurant or a club or a fitness centre, and you constantly see different applications of LEDs, the next step is to put them in your house. Once people become comfortable with it … it will happen.

Do you have LEDs in your house?

I've got halogen all through the house and I like the look of it and the feel of the light, but it takes an amazing amount of energy to drive that. I sometimes look at it when I've got all the lights on and say 'Isn't this insane.'

I'd probably use one-tenth of the power if they were LEDs, [although]the capital costs would be a lot more to put them in. I hope that we move in that direction.



Title: Chief executive officer, Carmanah Technologies Corp.

Personal: Born in Midland, Ont., 58 years old

Education: BA in Economics, University of Western Ontario

Career highlights:

* Joined Bell Mobility as a branch manager in 1985.

* In 2000, appointed chief operating officer of Connex, a mobile telephone network in Romania, which in 2005 became Vodaphone Romania.

* Joined Carmanah as CEO in 2007.

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About the Author
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

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