By now we have all heard a sad tale of some Mid-western or New England town that, for decades and through many generations, thrived on the jobs and revenue of a local business but, during the last few decades, under the pressure of the global economy, lost that resource and was left with only an empty factory as a reminder of better times. Vashon has a similar story to tell but, fortunately, thanks to Foss Miller, one part of it has a positive ending.
K2 Sports is the more famous business of our two-part story: founded here in 1962 it is known for pioneering the fiberglass ski and, through efforts of several innovators and the well-known world champions and Olympic medalist skiers, Steve and Phil Mahre, Debbie Armstrong and Christin Cooper, K2 and Vashon island became world famous as the source of the fastest skis in the 1984 Winter Games. By that time the island was benefiting with some good jobs, a decent revenue stream and a factory just south of town.
Foss Miller joined K2 as a young graduate, hired in 1972, to engineer skis and, soon afterwards in 1975, he founded Sawbones, another plastics-based company that has grown to become America’s largest manufacturer of artificial bones. However, in the 1980s, these two companies started down different paths.
As we know today, all that’s left of K2 on Vashon is an empty factory—the jobs and revenue left the island long ago. Their story is a familiar one: starting with a need for seed money in 1976, a large part of K2 was sold to Sitca, a group of Northwest investors. In 1982 the subsidiary, Jansport, was sold to another group of Swiss investors. Then Anthony Industries, a larger company listed on the New York Stock exchange, bought the controlling interest and began business maneuvers that ultimately resulted in moving K2’s manufacturing to Guangzhou Province, China (“in order to remain financially competitive”). The corporate offices moved to Seattle in 2006 and, today, the company is owned by Kohlberg & Company, a private equity firm that focuses on leveraged buyouts.
Sawbones continues today as a local asset, employing 160 workers in our community. And further, to both ensure the company’s future and as an expression of his gratitude, Foss Miller and his business partner Denzil Miller have given ownership of the company to the workers who helped them build the business. Foss continues as the CEO and the employees remain here as healthy contributors to our economy. In contrast, K2, though exciting while it lasted, is little more today than an interesting part of Vashon’s history.
So, what’s the message in this story? Well, I believe that herein lay lessons that should be considered in the evaluation of our relationship with two other companies—one, Puget Sound Energy, a foreign-owned, for-profit utility that currently provides our electricity; and the other, a potential replacement: a locally-owned, nonprofit Public Utility District that could a provide that same service. Let’s contemplate their relative merits.
PSE delivers both electricity and natural gas in our state and does a good job except in its production of massive amounts of greenhouse gases. Operating in this region known for its renewable hydro-electric energy resources, PSE stands out as a very big polluter—deriving 59% of its electricity from carbon-based fuels. Yes, they often emphasize (in their published image) their wish to “become green”, and they do generate nearly 10% of their power from the wind, but the dirty facts are clear—the majority of their product continues to comes from burning coal and natural gas!
PSE is a wealthy company with a great deal of infrastructure—electric meters, poles, wires, vehicles, transformers, gas lines and electricity generating plants—but in several important ways they resemble K2. In 2009 all their outstanding stock was purchased by a private equity company and, thereby, was taken out of public ownership and control. The details are interesting—PSE’s owners are organized under the Macquarie Global Limited company, based in Australia. They brought together the assets of three Canadian investment companies and an Australian Infrastructure Trust to provide the funds necessary for the takeover of our electric utility. (And, by the way, our Utility and Transportation Commissioners in their latest PSE negotiations approved their rates—the highest in Washington—and guaranteed their investors a 9.5% return on the company’s equity.)
In short, PSE, although a company of great wealth (largely accumulated with income from our rate payments), operates in our community but is not ‘of it’. In any final analysis they are, like K2 became, a global business controlled through the strategies of off-island investors with profit centers in another country.
Contrast that with the other 64 utilities that deliver electricity in our state. Over 40 of those are locally operated nonprofit companies. They own their poles, wires and transformers, and purchase power from the federal Bonneville Power Administration at a low cost. Only 3% of BPA’s electricity is generated by burning fossil fuels! Those nonprofits employ local people and sell electricity at a rate that is, on average, 20% cheaper than what we pay PSE. All of which, it seems to me, contributes to a strong argument for KEEPING THINGS LOCAL with a Public Utility District!