PHOTO BY JOHN LANDRIGAN

 

 

 


AGAINST

PRIVATIZATION

On this issue, at least, the
International Brotherhood of Electrical Workers have made common cause with MLGW management

by John Branston

 
 
Brent Hall has climbed utility poles in ice and rain, handled hot wires carrying 23,000 volts of electricity, endured two weeks of intensely painful treatments for burns following an accident, and helped negotiate a four-year contract for his union, the International Brotherhood of Electrical Workers Local 1288.
Now he is ready for his latest challenge – defending municipal ownership of Memphis Light, Gas and Water.
Anyone who thinks MLGW can be sold for $800 million or even twice that would be well advised to consider Hall. The IBEW Local 1288, which he serves as president, has 1,900 members. It is the only union at MLGW, representing skilled and unskilled workers in all three divisions. And on this issue, at least, the union has made common cause with management against privatization.
Hall was at the city council meeting in December when Mayor Willie Herenton announced plans to study the possible sale of the utility company. He was there again Tuesday when Morgan Keegan presented its report on MLGW. And he was sitting at a table squarely in front of the podium on New Year’s Day at The Peabody when Herenton talked about unions and several other issues.
The mayor didn’t mention the IBEW by name, and he has repeatedly emphasized that he is merely studying the city’s options regarding MLGW and has no predisposition himself. But Hall has no doubt the union will be a hot issue in any analysis, along with privatization, the cost of utility service, and the efficiency and market value of MLGW.
The fate of MLGW will ultimately be decided by the public in a referendum – if events progress that far. But in the public relations campaign already under way, Hall plays an important role by virtue of his job and his trade.
His story offers a glimpse into the macho fraternity of utility linemen, which is one slice of the corporate culture of MLGW. Linemen are the cowboy icons of the electric-utility industry, rugged men in helmets, sunglasses, and thick rubber gloves, braving the elements and deadly voltage to keep the power running to homes and businesses. There is a rare esprit de corps among them stemming from roots that tap Kingsbury High School, union pride, and the vanishing world of the trade apprenticeship.
The IBEW is a somewhat misleading name. The union includes only a handful of licensed electricians, all of whom work inside the company headquarters downtown. A large part of the membership works in clerical, administrative, or housekeeping jobs.
Then there are the skilled tradesmen, troubleshooters, and service representatives. The fraternity of journeymen linemen has its counterpart in those groups, each of which has its own dangers. “Hot” gas can ignite and kill a welder trying to join two pieces of pipe. Water under extremely high pressure can literally take a man’s head off. Then there is the only slightly less frightening prospect of thousands of angry customers trying to get through to 544-MLGW during a power outage – a telephone number that seems to be constantly busy, regardless of the weather or hour.
In many ways, the dangerous, physically demanding work of the skilled tradesman is the antithesis of the job of the brainy, high-paid investment bankers and consultants who get paid handsomely to sell companies to other companies or turn public trusts like MLGW into “IOUs” or investor-owned utilities. In a year, linemen earn about one-third of the $150,000 the city is paying Philadelphia utility consultant Rotan Lee for three months’ work.
Between now and the middle of March, Lee and the investment bankers at Morgan Keegan will figure out what MLGW is worth, what it does and doesn’t do well, and how it could be sold. But if their reports are not to arrive on the mayor’s desk DOA, they will have to reckon with Hall and the IBEW. And that could be tougher than any financial or legal problem.
Hall is 32 years old, married, and the father of two children. His black hair is beginning to turn gray. He generally wears jeans and cowboy boots and his green nylon union jacket. He lives in Bolton and owns a pickup truck, but his IBEW position entitles him to drive the union’s Crown Victoria.
He grew up in the hardscrabble Nutbush neighborhood north of National Cemetery in a strongly union household. His father was a Memphis bus driver and, later, business manager of the Transit Workers Union. Brent went to Kingsbury High School where he was president of his senior class. On career day, he jokes, there were two lines: “One went to MLGW and the other went to the Department of Corrections.” Kingsbury produces linemen the way some inner-city schools produce basketball players. Nearly two dozen of its graduates are working the wires for MLGW.
After graduation in 1983, Hall was accepted into the linemen’s apprentice program. Like other “grunts,” he spent his first year on the ground. He helped journeymen with their tools and equipment. He crammed for tests. And he drove the truck – a duty which falls to the low man on the seniority pole. Like other apprentices, he endured the gentle hazing of having gloves full of sweat dumped on his head or Dixie cups full of water spilled in his lap.
After a year he got his tools and climbing gear. He learned to manipulate the thick rubber gloves which fit inside oversized leather gloves which are worn outside of heavy rubber sleeves, making it a challenge to attach a nut to a bolt in dry weather, much less an ice storm. A pin hole in a glove can be fatal. So linemen roll them up to make air bubbles in the fingers before putting them on.
“You’d be better off taking my wife than my gloves or sleeves,” says Hall.
In three years, he took 21 tests on 18 books. His entire fourth year was spent in the field. He continued to learn his trade under foremen who would always let him do a job the hard way before showing him an easier way. “That’s what this whole trade union thing is all about,” says Hall. At the end of the year, he went to the training center on Raleigh-LaGrange Road to take his field test.
“Your regular foreman trades places with you. Then you have to get up in the bucket with a second-year guy and work the pole. Your whole four years rides on that one day.”
Always Hall was conscious of the danger around him, the wires silent, motionless, and deadly. Several years ago MLGW linemen went from “hot-sticking” high-voltage wires with a fiberglass pole to “gloving” them by hand. Gloving is 10 times faster, but more dangerous. Hall proudly recalls the time linemen from other cities came up to him at the Linemen’s Rodeo in Kansas City saying “I understand y’all rubber-glove 23,000. I ain’t never done that.”
In the third year of his apprenticeship, Hall got second- and third-degree burns on his arm and side when he was working on an underground cable and it blew up. He went through a painful healing process called debridement which involved repeatedly scalding and removing outer layers of skin.
“Any grown man who doesn’t cry or says he doesn’t cry, let him go through debridement,” says Hall.
It could have been worse. A few years later, another lineman was badly burned by a hot wire. Hall went to the hospital to comfort him and hold his hand. But the injured lineman’s hands were gone, burned completely away along with his arms up to the elbows.
Another time, Hall and a lineman were working on a pole in a field near Millington. Hall went to the truck to get something. Then he looked back to see his partner being electrocuted, his body rigid, fire shooting out of his hands and smoke from his feet. By the time Hall raced back across the muddy field and climbed the pole, the lineman had broken loose from the hot wire but was unconscious and hanging upside down from the top of the pole. Using the pole-top rescue techniques he learned during his apprenticeship, Hall managed to right his partner and bring him down where a bucket loader could take him to the ground. The lineman survived with burns on his hands and feet.
“It seemed like it never took so long to climb 30 feet in my life,” he says softly.
Shortly after becoming a journeyman, Hall ran for a union position and was elected to the executive board. In 1995 he was elected president. Two months of negotiations in the fall of 1997 led to a new four-year contract covering scores of job descriptions, from housekeepers at $8.22 an hour to telephone service advisors at $12.97 to $16.83 an hour to skilled tradesmen at $22.69 an hour. Overtime can increase that significantly, but Hall says MLGW has spent so much money maintaining its infrastructure that overtime is generally confined to storms.
“I really enjoyed the ice storm of 1994,” he says. “It was the hardest I’ve ever worked, but after a couple of days you were working on adrenaline. There is definitely satisfaction in working for the public.”
People still come up to him and other linemen and thank them for the job they did.
As a skilled tradesman in a booming economy, Hall would not personally suffer under privatization. He could make more money in other parts of the country. Southern California is currently offering more than $27 an hour plus a $10,000 bonus and moving expenses. But Hall is married to Memphis. He proudly talks about the 16 linemen who volunteered to sink poles in the ground and run air-conditioning to Camp Cordova in summer heat, saving them $3,000, and of the new soccer fields in southeast Shelby County where MLGW volunteers are putting in lights. The utility has a policy of donating its equipment for nonprofit organizations if its employees will donate their time.
“The quality of life in this community would go down if MLGW was investor-owned,” Hall says. “If an investor-owned outfit came in here, I would leave.”
He pulls a framed document off the wall of his office. It is his apprenticeship certificate. “That’s my ticket,” he says. n

 

Point Man For Shaking Up MLGW

A Philadelphia lawyer thinks he has a better way for Memphis’ public utility.

PHOTO BY LARRY KUZNIEWSKI

Rotan Lee is a man who wears many hats.
The 48-year-old Philadelphian is a lawyer, utility-company board chairman, public relations specialist, and business consultant. Last June, he offered his consulting services, in the name of Pennsylvania-based Genesis Teleserv Corporation, to Memphis Light Gas and Water, which he saw as “well-positioned to follow an aggressive acquisition strategy.”
“At the heart of my business proposition is a desire to become an added-value strategic advisor, providing mission-critical knowledge and experience in the highly competitive, deregulatory evolution of public utilities,” he wrote in a June 10, 1997 letter to MLGW president Herman Morris. Lee promised to “transform the core team into a chorus, all reading the same sheet of music and singing the refrain” of the pursuit of excellence.
Nothing came of the proposal. But eight weeks later Lee made another pitch in Memphis, representing a different consulting firm – Talleyrand Atlantic of Bethesda, Maryland. This time his prospect was Mayor Willie Herenton and the City of Memphis. Again the subject was MLGW. But the scenario and the pitch had changed. Now, instead of being pursuer, MLGW would be pursued.
“Memphis Light, Gas and Water could be well-positioned for sale or full outsourced management,” Lee wrote Herenton in August. “Timing here is sensitive to exacting the highest value proposition.”
A formal proposal to Herenton followed in October, with a price tag of $325,000, expenses included. There was some haggling over price and other details. Then, in December, bingo. Six months after Lee approached MLGW about pursuing acquisitions and improving customer service, he signed a contract with the city for $150,000 plus expenses to “maximize” MLGW’s assets, conduct a public relations campaign on privatization, and “investigate and research all possible options relating to the future of MLGW.” His work is to be completed by March 15th.
“I’m one of those people who does not like to be denied,” Lee said in an interview with The Memphis Flyer this week.
Although Lee had met Herenton a couple of times while Herenton was Memphis City Schools superintendent, their relationship began at a 1997 Herenton political fund-raiser. Lee bought his $1,000 ticket and reintroduced himself. He had been doing a little research, and Memphis stuck out as a huge municipally owned utility. And Lee liked what he had read and heard about Herenton.
“He was the kind of political personality I liked,” said Lee. “He was an economic development black mayor with a good relationship with white businessmen. He was my kind of guy. This is a mayor I like because he takes risks.”
At the fund-raiser and at breakfast the next morning, they talked briefly about the changes coming in the utility industry. Herenton told Lee he had been thinking about many of the same things himself. When Lee’s approach to MLGW didn’t go anywhere, Lee went back to Herenton.
“My first inclination was to go to the utility itself,” Lee said. “What I saw was a utility that was basically on autopilot, with an interim chief executive, Herman Morris, who had been general counsel but had no operations experience.”
Morris, who has since had the “interim” struck from his title, recalls meeting Lee last summer. He said he sent his letter to the vice president of customer service.
“If we had had an issue or need to pursue that particular type of consultancy, I would expect they would have been on the list,” said Morris.
Morris said when he later learned that Lee had gone to the city, he thought “it did present an interesting turn of events.”
Lee sees MLGW at the threshold of the kind of major changes that the telecommunications and financial services industries have undergone in the last decade or so.
“I have a basic premise that every municipal utility has to evaluate its position,” he said.
He insists that “evaluate” is not a euphemism for “sell” and that there are other options, such as selling or restructuring one division while keeping municipal ownership of others. But he is convinced that change is coming. “Whether I do it or this mayor does it, it’s going to happen.”
Lee, a big, confident man who enjoys debate and has hosted a radio show in Philadelphia, boasts a resume studded with educational, business, and civic honors. The son of a physician, he graduated from the University of Maryland Eastern Shore and Antioch School of Law in Washington, D.C. He was chairman of the board of Philadelphia Gas Works from 1994 to 1997, and president of the Philadelphia Board of Education from 1992 to 1994. He is a partner in a Pennsylvania law firm and chairman of Talleyrand Atlantic, described as “a venture management and strategic planning firm.”
In addition to his contract with Memphis, he is a consultant to the New Jersey American Water Company. “He does strategic planning services,” says Dan Kelleher, president of the investor-owned utility.
Lee and his wife, a homemaker, have three children, ages 16,14, and 5 years old. They attended Philadelphia public schools (as did Lee himself) until this year, when Lee enrolled them in Catholic schools in search of more challenging coursework and leadership opportunities.
Since he was appointed to the school board 10 years ago, he says he has “done a 180-degree turn on my thinking about education,” becoming a proponent of charter schools and accountability.
As head of the school board, he favored privatization in negotiations with the four unions that dealt with the schools.
“My premise was, tell me why this internal process should not be privatized, tell me how it could be equally cost-effective or more. Otherwise, let’s privatize it. Of course, that didn’t go over too well.”
A test comparison was done with the maintenance and transportation union.
“To the union’s credit, they were as good, which was enough for me,” Lee said.
Lee was appointed chairman of the Philadelphia Gas Works by the mayor. He had learned “a fair amount” about utilities during stints as a congressional staff member in the 1970s and through his law practice. He believes the gas works should be sold because “I just don’t think it can survive” in Pennsylvania’s deregulated environment, which has seen scores of companies enter the market. If it stays in business, the gas works will also become a reseller of electricity, Lee believes.
Lee says he is aware that he can expect strong opposition to changing MLGW from unions and politicians.
“Nothing,” he says, “is more difficult than to take the lead in a new order of things.” n– John Branston

A Hidden Value

Morgan Keegan CEO Allen Morgan suggests Memphis Light, Gas and Water may not be yielding sufficient returns for the city.

In December of 1995, Mayor Willie Herenton and Morgan Keegan CEO Allen Morgan Jr. paid a visit to MLGW president William Crawford.
“When the mayor called to set it up, I told someone they either want to sell us or get control of our $800 million pension system,” says Crawford, now retired and living in Collierville. “The first thing they brought up was the proposal to sell MLGW. The way they presented it, it would be a local sale, where you would maintain the same management and local control. At that point I kind of laughed. How do you sell us to anybody and assure local control?”
There was one follow-up meeting with an investment banker at Morgan Keegan and some number-crunching, “then it just kind of died,” Crawford says.
Morgan Keegan and the mayor continued to meet with MLGW officials after Crawford retired at the end of 1996. Morgan acknowledges that one meeting with Crawford’s successor, Herman Morris, on September 19, 1997, included the mayor’s son, Rodney Herenton, who works for Morgan Keegan in corporate finance. Morgan says Rodney Herenton has not and will not be involved other than that one meeting, which Morris characterized as “a conceptual-type discussion.”
Both Crawford and Morgan recall the 1995 meeting as cordial. But Crawford made no secret of his skepticism then, and now, two years later, he is outspoken in his criticism of the renewed talk of possibly selling MLGW for $800 million.
“I think the whole thing is a farce,” he told the Flyer. “You read about the fleecing of America, well, I call this the rape of MLGW. I don’t think two or three years from now we would know where the money went.”
Crawford retired in December 1996 after 40 years at MLGW. He started as a laborer, climbing smokestacks to take flue samples and working the midnight shift while he attended college at the University of Memphis. He worked his way up to director of labor relations and signed the first contract with the International Brotherhood of Electrical Workers Local 1288 in 1970.
“I have a unique record,” he says. “The only two strikes we had [in 1972 and 1975] occurred when I was chief negotiator for MLGW. But we all came out the better for it.”
He was appointed president of MLGW by Mayor Dick Hackett in 1991. His tenure set a tone for generally friendly labor relations that is reflected in management and the IBEW Local 1288 making common cause against privatization.
MLGW is the largest municipally owned three-tier utility in the country, with $1.37 billion in assets, over $1 billion in annual operating revenue, and an $850 million pension fund.
Morgan, who on Tuesday made his first presentation to the city council in 30 years as a Memphis businessman, has a different point of view.
“MLGW is a major asset of the city which may not be yielding sufficient returns,” said Morgan.
Morgan Keegan says MLGW has a value of $803 million, including cash and investments of $320 million.
The question, he says, is this: “Is the ownership of a utility by a city the most effective use of the city’s resources? Generally, we would say MLGW is run pretty well. But that is not the point. The point is it’s been sort of a hidden value. We brought to the attention of the mayor what the market values are.”
The public will get the last word, and Herenton says he is keeping an open mind until March 15th when consultant Rotan Lee finishes his report. But the issue has prompted some unusually sharp exchanges about a utility company that heretofore had all the sexiness of water.
“MLGW has performed extremely well as a municipally owned utility for its entire existence,” says MLGW president Herman Morris. “The general sense of the employees with whom I have spoken is that it is working well as municipally owned and could continue to work well.”
Crawford is less diplomatic.
“It’s all money-driven,” he says. “I would question why Morgan Keegan would be the ones to structure the sale. Maybe there’s somebody as good or better than they are. I don’t think they’re as concerned about the long-term impact as what’s in it for them.”
Morgan says that is the nature of business.
“Our business is financial restructuring,” he said. “People try to paint us as having a vested interest. Well, everybody has a vested interest–unions, employees, management, us, the citizens. I could say the same thing about the management of MLGW. They have their own agenda, which may be no change.”
Crawford says there is no rush to sell MLGW because “it’s going to do nothing but increase in value.”
As for deregulation, he says the gas side has been deregulated since 1993 “and the transition was so smooth I don’t think many people even knew it.”
“The only thing deregulation offers MLGW is the opportunity to buy power cheaper than they are buying it,” Crawford said. “As a public entity, they can pass that on directly to ratepayers. If they were private they could stick some of that in their pocket.” n – John Branston

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