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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Technology company’s family focus builds future

Lee Tate founded Tate Technology Inc. in 1992 after decades with Texas Instruments, Univac and Key Tronic Corp.

With his children grown, he says, he could risk starting his own electronics assembly company, heeding a father who had long ago advised his six children to work for themselves.

Lee alone achieved independence, and for his efforts Tate was recognized last week by the U.S. Small Business Administration as the Family-owned Business of the Year for Washington and the Northwest, including Alaska.

Tate is midway through a succession plan that will ensure the company on East Trent remains a family enterprise. Son Scott joined his father three years ago and is gradually taking the wheel as he buys controlling interest.

Scott says he had a “cush job” selling industrial- control products for a Utah company. Then he got a “now-or-never” call from Lee, 60, who wanted either Scott or daughter Tracy Cavanagh to step up when he steps aside.

Scott says the summons was a once-in-a-lifetime opportunity to take control of his future at far less personal financial risk than his father had taken.

Lee says Tate struggled until Telect Inc. came looking for a subcontractor. Liberty Lake-based Telect was growing exponentially during the telecom boom of the late 1990s, and lots of that work spilled over to Tate. The work force expanded to more than 160 before a fearsome reversal that cost dozens of jobs at Tate, many hundreds at Telect and thousands in the fragile Inland Northwest electronics industry.

“None of us reacted fast enough,” says Lee, who nonetheless kept Tate in business while all but a few competitors closed or moved their operations out of the United States.

In part, Tate survived by being family-oriented as well as family-owned.

Lee says Tate, as a contract manufacturer, sells labor. Its 30-odd workers, many or them immigrants, get paid time off, 401(k) plan matches, medical insurance and, most impressively, help with mortgage down payments.

Lee says Tate makes the loans at 4 percent for five years. Employees might pay 7 percent at a bank, he says, while Tate would get only 1 percent on its deposits.

“We make a little bit more and help our people,” he says.

No wonder turnover is near zero percent.

Tate, with revenues of about $4 million, has a customer base of about 100 companies, Scott says. Although electronics is the bread and butter, the company mixes lotions for ProKera Cosmetics in its clean room and has done similar work for other customers.

Recently, Tate has become the testing and repair depot for Chinese-made flashlights based on technology developed by Moscow-based Ivus Industries.

Lee predicts more manufacturing will be done in the U.S. because labor and shipping costs will increase, and customers will want faster turnaround times.

To get more of that business, Scott is moving Tate toward International Organization for Standards qualification.

“I’m already not the right guy to drive this company,” says Lee, who expects to become more of a part-time, back-seat adviser as the leadership transition continues.

Scott says he’s not sure how fast that might happen, but that’s the risk he has to take.