Dec 09, 2012 (Skagit Valley Herald - McClatchy-Tribune Information Services via COMTEX) --
Q: Could you start by telling me a little about yourself
A: Sure. I graduated from Snohomish High School. My undergraduate degree is in electronic engineering -- I went to DeVry University. I graduated from the University of Washington with an MBA. I've been in high-tech industry for ... nearly 38 years. I left a company I worked for 30 years in 2007 and decided to pursue some entrepreneurial things. One of the projects that I got involved in was developing this business concept.
I was born in Arlington, and live in Smokey Point.
Q: Many people in the public have not had a chance to hear directly from you about your plans for the Tethys bottling plant. How would you describe the project to these people
A: When I left Intermec in 2007, my primary objective was to start a business in Washington state ... that would create manufacturing jobs and would do it in a sustainable way, and sustainable in two perspectives.
The first is that the jobs would not easily be outsourced; they would be sustainable manufacturing jobs. The second part of it is that the industry itself would be sustainable; that we would make substantial improvements in the environmental performance of the company and the industry. And, also sustainable in that, for the company, there would be an economic advantage in being here. You've got to have all of those elements or you don't have a sustainable business model.
So, I started doing some research. I spent a lot of time talking to government officials and business development people, industry experts, and ran into some folks who later became my partners. ... One of the things I realized was that the typical economic development model relies on quality of life and tax incentives to bring industries into a region.
So we started researching everything, from natural resources, infrastructure, demographics, education levels, available land and lots of other elements, to basically do an inventory of what we had here in the Northwest. We said, what are the strengths, weaknesses, opportunities, threats associated with many of these different industries What are their economic drivers, and how can we match what we found that the Northwest has with industries that have similar needs and economic dependencies And that's where we landed on beverage bottling manufacturing as a really good match.
Fortunately, it was also a good match for my background because at Intermec I provided solutions to the beverage manufacturers and my largest customers were Coke and Pepsi, along with virtually all of the other bottlers. So I had a lot of understanding of that industry.
Q: We understand that this would be a much larger beverage bottling plant than the industry standard. How big is your planned plant, and what about its business model will make it successful in this industry
A: If the site is available to support it, we'd like to do a full buildout of about 1 million square feet. The average beverage manufacturing plant is more like 150,000, 250,000 square feet. We would like to do 45 to 60 manufacturing lines. The average plant is probably four to 20 lines. There's two primary issues with building a plant of that size. One is transportation ... because your served market needs to be substantially larger than what you can reach by truck. With trucks you can go about 400 miles, which means basically you can cover Washington state, part of Oregon and maybe into Idaho. That's a fairly small demographic area, and you couldn't justify a megaplant based on that.
In order to build a larger plant, we have to have a transportation method that will get us a farther economic distance, and that's rail. So with rail, we can increase that by four, fourand-a-half times. Instead of going 400 miles, we can increase that to 1,600 miles or more. So we have to have a site that has on-site rail capacity, we need to be able to back a train onto our property and be able to load and stage that train, and then have that train leave our facility.
The second thing, of course, that's really important is having a source of water that can support a megaplant, which is where we asked for 5 million gallons of water a day. Now, that is an absolute maximum. We're not likely to use that much, and quite frankly, we hope to be efficient enough to not need to use that much. But that gives us a maximum capacity. We're probably going to use somewhere around 2.5 to 3 million gallons a day at full buildout, but it depends on how successful we are at getting customers.
One of the concepts behind this is that we can basically eliminate a lot of the warehouse space that you normally need in manufacturing, because we use the rail, we'll use the trains as our warehouse. So we will be staging product on trains and sending them out in as near real time as we possibly can.
Q: What are you going to be manufacturing there
A: So for a plant this size, we will have to be able to manufacture virtually all of the beverage product lines ... canned and bottled beverages, which would include sodas, brewed teas and coffees, that you would be able to put in a bottle or can. Flavored waters, energy drinks, virtually anything that you would be able to find on a beverage shelf.
Q: How many jobs will come directly from plant operations, and at what pay scale
A: Our conservative estimate is around 500 jobs, and that assumes a single-shift operation. This plant is likely to operate multiple shifts, but in a single-shift operation, about 500 employees. The average wage in the industry is around $41,000 a year, that's the U.S. average for beverage manufacturing.
Q: How are you and your company qualified to undertake this project successfully
A: How am I qualified Well, I have an MBA. I've been in business for 40 years. I have relationships with beverage manufacturers across the United States and across the world. I am an expert in logistics and in transportation, and manufacturing. The company I ran was a manufacturer. I have good connections to fundraising, so the ability to get the capital, and I have the local understanding and expertise. And I've run a New York Stock Exchangelisted company -- I've run a large public company of about $1 billion.
So, what was the second part of your question
My company. So what I started to assemble is a set of partners with specific expertise in finance and business development and real estate development and we're all local people, so we have, you know, an understanding of, and an appreciation and love for this region. But we also individually have expertise that's necessary to make a project like this go forward.
Q: What are Tethys' longterm plans for the plant
A: Our long-term plans for the plant is for it to be a contract manufacturer. What that means is that we will be bottling beverages for multiple manufacturers. The huge advantage that we will have is the ability to instantaneously produce product for the entire western United States. So when a company wants to do a brand introduction, they can come to one company -- to our company -- and have us manufacture a product for the entire western United States. So the ability to control distribution and merchandising for their brands is a huge advantage that we can offer for them.
Q: Does Tethys plan to develop the site for itself
A: We plan to develop the site and operate it. Now, as you know, once you build something, people will sometimes come to you and give you an offer. That may be an eventuality, but it's not our plan. ... Our intention is to build and grow the business here at home.
Q: What hurdles still remain in getting this project done
A: Having met this milestone now of idling at least 30 acres, we're now entering the feasibility stage. That will take us about a year. And what is the feasibility It's the period in which we determine several things. Is the site actually suitable for what we want to accomplish Can we put the rail on it Can the rail provide the capacity that we're looking for Can the site sustain the size plant that we're looking for What are the environmental impacts What are the transportation impacts
We'll also be doing design. Getting the final site lined up is really important to begin to do the design. So design and feasibility -- about a year.
Then we'll move into the permitting stage ... So that'll take about a year. And then we'll start construction and construction will probably take 12 to 18 months. So it's about a three-and-a-half to fouryear process to get to an actually producing facility from this point in time.
Q: If you could compare this to the proposal for a bottling plant in Everett -- why was that one turned down by the city, and is this any different
A: Everett, quite frankly, had marginal land with regard to size, so the facility in Everett would not have been as large. Most of the sites down there were in kind of the 35-to 40-acre range, which really limited our ability to do rail transportation. So the promise of having greater land was one of the things that was attractive up here.
The other thing, of course, was that we're an investor-led company. So we wanted access, we wanted to have a commitment that we were going to get water if we built the facility. Everett wanted to tie that commitment to a specific number of jobs. And we were not able to reach an agreement on the language of that ....
Q: What would you say are some common misconceptions about the project
A: Number one is, it's a water-bottling plant. It seems like no matter how hard we try to explain that that is not the situation, we can't get past that. The second misconception, I think, is that we are a front for some company. And we are definitely not a front for some other company.
I think another misconception is that the water we will use will have an impact on things like fish, or is related to other water issues in the region. Because we're getting water from the Anacortes supply system, which has an allocation, and because it's river water -- not basin water or aquifer water -- it really doesn't have an impact on the other water issues in the region.
Q: Lastly, is there anything else you'd like to say about the project or the process
A: Sure. I think that a key thing to understand about the project is that this will be a model for the beverage industry going forward; that this plant will be the most efficient plant in the world at beverage manufacturing. From an environmental perspective, it will have the lowest wastewater of any plant in the world. It will have one of the highest energy efficiencies of any plant in the world. It will have the lowest carbon footprint of any plant in the world, because we're using primarily rail transportation versus truck.
It'll also produce far more jobs than the 500. ... A plant of this size will be a center of gravity for the industry. It will start to attract suppliers, contractors, customers will open up offices, open up facilities, build locations in the county. So it will create a substantial number of beneficial additional jobs that support this manufacturing in the entire county.
I think the other thing is that we are committed to doing this in a responsible way. Because we're neighbors, we live in this area; our reputations are tied up around our living in and working in this area.
But ultimately, it will diversify the economy substantially in Skagit County, with an industry that's pretty recession-resistant.
Q: I guess one last question from me: You talked earlier about using a more environmentally friendly bottle. Can you tell me a little more about that
A: Sure, so there are biodegradable plastics that are being developed in multiple varieties, and some of those are now being introduced into the marketplace. Our manufacturing plant -- because it's going to be a brand new plant with all the latest equipment -- will be able to use these biodegradable bottles, biodegradable plastics, and that would be our primary container for plastic bottles. We're going to also be doing cans.
Mark Stayton can be reached at 360-416-2112 or mstayton@skagitpublishing. com. Follow him at Twitter. com/biz_svh.
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