Ex-Itron Team Leading Servatron To Prosperity Manufacturing Work For Itron Is A Big Part Of Success Story

Four former executives of Itron Inc. have created a spinoff company now doing all the low-volume manufacturing for the market leader in meter-reading equipment.

Servatron Inc. started operating in May and has already supplemented the work done for Itron with two other contracts, said President Larry Panattoni.

If the company performs well on that work, he said, employee ranks could exceed 100 by year’s end.

Servatron started with 78 former Itron employees, including the founders; Panattoni and vice presidents Tod Byers, John Miskulin and Keith Swenson.

Other former Itron employees and workers provided by local agencies are used on a part-time basis.

Next week, Panattoni said, the full-time workers will receive stock options as part of a package of incentives intended to keep in place a highly skilled, veteran work force.

“We want our employees to be real players in the business,” he said.

Profit-sharing and a 401(k) plan will also be offered. And, Panattoni said, there will be profits this year.

He said the company will not accept a contract that does not include at least the barest of margins. Unprofitable contracts are not fair to employees and, ultimately, are not good for the customer, he said.

Panattoni said officers turned down a potential $1 million contract last winter partly because there was no money in it for Servatron.

“That was hard to do. That was our first outside customer,” he said.

Itron contracts generate more than 90 percent of Servatron’s revenues, which Controller Shawn Taylor said are running at an annual rate of almost $13 million.

Projections call for the Itron share to drop below 50 percent within five years, he said.

Miskulin said officers would like to build a customer base of eight to 12 companies in different industries with different product cycles to avoid the drastic production swings that plagued Itron.

Panattoni said Itron, a spinoff of the former Washington Water Power Co., will stay involved at Servatron.

Itron took an equity stake in Servatron in return for production equipment, which remains in 29,000 square feet of space in the rear of Itron’s headquarters on Sullivan.

Panattoni said the bid to form Servatron came together quickly last November, when Itron was in a reorganization that included closure of its Boise operation and shifting all high-volume manufacturing to a plant in Wauseca, Minn.

Forming Servatron not only preserved many of the jobs Itron was cutting away, he said, the new company provides infrastructure for small high-tech companies that have developed products they do not want to manufacture themselves.

And, he said, Servatron can also act as a repair depot, as it is does for Itron.

Miskulin said Servatron has no plans to develop its own products. The company has only its skills and the capabilities of its equipment to sell, he said.

But, added Swenson, Servatron’s manufacturing engineers can help companies design a product with the lowest cost, most efficient manufacturing in mind.

He noted the company team responsible for circuit board production has been together five years. Its production line can implant 30,000 pieces an hour, he said.

“It isn’t something you just jump into,” Swenson said.

Panattoni said Servatron officers will spend the rest of the year renewing some of the certifications held by Itron and generally shaking down their new enterprise.

The company has plenty of capital for operating and growth, he said.

Eventually, Servatron will do an initial public offering of stock that will allow its employees to exercise their options, Panattoni said.