Pride of the Palouse

PULLMAN — Ed Schweitzer casts a large shadow across the Palouse. The company he runs, Pullman-based Schweitzer Engineering Laboratories, is easily the largest company in Eastern Washington outside Spokane County. His concerns capture the attention of regional and state officials. He provides lots of money to charitable and community projects across the Palouse. A multimillionaire who last year spent more than 250 hours flying in his two corporate jets to business sites across the world, Schweitzer represents the American business ideal; he’s an engineer who took a good idea and parlayed it into an industry-changing list of products.

Some Pullman-area residents see Schweitzer, 57, as their version of Bill Gates, an innovator who single-handedly is changing an industry and drawing talented workers to their community.

“He is a small-town Bill Gates,” says Duane Brelsford, who is owner of a Palouse property development company. “But Ed is totally approachable.”

Despite doubling his company’s size in the past five years, and despite having more than 40 offices and two production facilities outside the Palouse, Schweitzer has shown no sign of moving his fast-growing company’s headquarters.

Brelsford and others say Schweitzer enjoys the lifestyle Eastern Washington affords.

“When he goes around and meets people, he gets along with everybody, and calls them by their first names,” Brelsford says.

But Schweitzer’s reputation reaches well beyond the Northwest.

Chuck Newton, a research analyst who writes about the power and transmission industry, says Ed Schweitzer and his company have become corporate models.

The main product Schweitzer developed, in the mid-1980s, is the digital protective relay, a key component used in any large-scale electrical system.

Until SEL developed the digital version, utilities and large electricity users had relied on electro-mechanical relays that had limited ability. “They were nothing but springs and magnets with coils,” Schweitzer says.

Because the digital protective relay is based on miniaturized computer processes, it can store data, transmit information and act like a safeguard against intruders and tampering.

“Along came SEL with a better idea — the digital relay — with lower costs, and Ed Schweitzer’s company started winning market share,” says Newton, whose Maryland-based company, Newton-Evans Research, prepares studies of the electrical and power industry for investors and analysts.

“Now, many smaller companies see SEL and want to emulate what it did, come in, provide what their customers need and become successful,” Newton says.

Six or seven years ago SEL unseated two much larger firms, one of which was General Electric, as the No. 1 U.S. supplier of digital protective relays. Worldwide, privately held SEL is probably racking up annual sales of roughly $200 million and is among the top four companies in the $1 billion-a-year protective relay industry, Newton adds.

Schweitzer won’t disclose company sales or profits, other than to say, “We’ve been profitable ever since we’ve opened.”

Publicly he also doesn’t offer details on how SEL plans to sustain its fast growth pace. At a recent lunch in the company’s Pullman headquarters, Schweitzer told workers that SEL is focused on three areas of growth: new products, sales to industries the company doesn’t serve yet, and improved versions of current products.

What he regards as the company’s key advantages — fast customer service and competitive cost — won’t change, Schweitzer said.

At the luncheon, Schweitzer also announced that SEL had just hired its 1,000th employee; about 700 of those people work in Pullman. The company expects to reach 1,100 employees or more by the end of the year.

After the lunch — catered by a Pullman company and hosted by SEL for all its employees every Friday — Schweitzer led a tour of the 110,000-square-foot main production building.

All of Schweitzer’s buildings reveal an orderly, lean-manufacturing emphasis, where every section and department is neatly arrayed and uncluttered. Many Schweitzer employees wear work gowns and protective eyewear because relays, sensors and other products move from station to station. Whiteboards with project diagrams and notes hang at on nearby walls.

One recent project to develop a new product went from design to production in 12 days, Schweitzer says with pride.

“It used to take up to 90 days for something like that,” he says.

People who know Schweitzer admire his straightforward focus on getting results, both for his business and for Pullman in general.

“Ed’s a hard-nosed, very focused businessman,” says Whitman County Commissioner Jerry Finch. “But whenever there’s a cause that needs help or money, Ed’s always been there and stepped up to help the community.”

Finch, a former grocery store owner, says he’s agreed with efforts by Schweitzer to simplify zoning and planning rules in Whitman County. For years, Schweitzer has urged commissioners there to change a rule requiring a three-year delay before a land buyer can turn property into a commercial or residential development.

Finch says Schweitzer has been heard, with the likely result that county planners later this year will eliminate the three-year rule.

“Ed’s a guy who could have gone anyplace in the country,” Finch says, “but he’s deeply committed to this community.”

From watching him, Finch has concluded it’s not money that drives Schweitzer.

“Success is what drives him. For him it’s about making his ideas work and seeing the results,” Finch says.

Getting those results is not something he undertakes lightly. His associates know he can be counted on to work 12- to 14-hour days.

“He works a lot, almost too much sometimes,” says Schweitzer’s second wife, Beatriz Valdez Schweitzer.

She had been a sales manager for the company at its production facility in Mexico. The two were married last year; she now works in Pullman as SEL’s corporate marketing director.

Schweitzer grew up in Evanston, Ill., a Chicago suburb, the son of a company owner who himself amassed nearly 100 patents in his lifetime. Schweitzer credits his father, Edmund Schweitzer II, with instilling in him a strong belief in hard work and a high regard for workers. He was trained in electrical engineering, with degrees from Purdue and a doctorate from Washington State University.

While holding a teaching position at WSU in the early 1980s, the son began experimenting with what became his own first patent, for a digital protective relay. In 1982 Schweitzer left the university to set off on his own.

He started the business in the basement of his Pullman home. He later moved to a commercial building downtown. Today, 23 years later, the company has seven buildings on its campus on the north side of the city.

Just this spring, Schweitzer announced he bought 92 adjoining undeveloped acres from WSU. The plan, he says, is to help developers there put in restaurants, residences and businesses in what would be the largest mixed-use project in the Palouse.

The goal, he said when the purchase was announced, is to ease a housing shortage in Pullman. The project also could help spur recruitment of talented workers, whose homes could be within a few hundred yards of their offices if they want.

When asked about the possibility of relocating parts of SEL outside rural Whitman County, Schweitzer bristles, suggesting that anyone who thinks Pullman has shortcomings doesn’t understand how his company works.

“If we moved to Chicago, some people would not move there. I know that we’re going to be more successful here than in some other places, like Bellevue,” Schweitzer says.

“I do know we have people who’ve moved here from the Bay area. They want to get their kids in better schools and live in a town with a wholesome environment.”

Several years back, Schweitzer admits he looked at his options for expanding SEL. He looked at Lewiston, Spokane and Moscow.

Idaho state officials offered him hefty incentives if he moved part or all of the company to their state. Schweitzer says he refused their offers.

“I told them, ‘What I really want you to do is put up a sign at the border that says, “Welcome to Idaho, where the state doesn’t play favorites,’ ” he says.

Now that SEL is more than a small family business, Schweitzer says his concern is to ensure the company doesn’t lose its focus.

When he started SEL, the two large players in the industry were GE and Westinghouse. Today, both those companies are out of the power-relay market. Like IBM, which was swamped by upstart Microsoft, both those giants lost their way as smaller firms moved more quickly and captured the business.

“We take our future in our own hands,” he says. “We try to keep thinking about what’s important… We’ve got to be careful that what happened to them doesn’t happen to us.”