Smyly’s early leadership was foundation of Itron success

When Paul Smyly was hired in 1982 to manage Itron Inc., the five-year-old company was floundering.

There was little business, just $50,000 a month, he says, and its meter-reading product was inferior.

With the small backpack-like device, utility employees could print a customer bill on the spot, then stick it in an upside down plastic cup affixed to the house. The bills frequently fell out and blew away.

Avista Utilities, one of only two customers for the product, would sometimes shut off the power to customers who had never seen their bill. Customers dodging payment would come up with credible “dog-ate-my-homework” excuses when contacted by the utility.

Avista, then Washington Water Power, also owned the largest stake in Itron, which employed 24 at a modest facility in Post Falls. Utility executives were at the end of their patience with their struggling subsidiary.

“I was sort of the last ditch stand for Washington Water Power,” says Smyly, who was hired away from American Sign and Indicator. He was president of that company, then one of Spokane’s technology leaders.

Smyly says a second-generation product Itron was developing when he took over was no better than the original, so he and two other engineers developed what became Itron’s signature handheld meter-reading device. Southern California Edison committed to buying the machines, and the rest is history, although one with its share of ups and downs.

The Spokane Valley company has executed a series of key mergers, the most recent with Actaris Metering Systems in Luxembourg, which added customers and critical technology.

Itself a spinoff from Avista, Itron in 1993 spun off Itronix, the maker of rugged laptop computers. Itronix was purchased by General Dynamics in 2005.

Also in 1993, the company raised about $30 million in its first sale of shares to the public. When shares subsequently soared, then plunged, a distracting shareholder suit ensued.

Patient shareholders now own a piece of a company with a market capitalization of $1.8 billion.

A second spinoff of its Spokane manufacturing operations created Servatron. That was part of a disruptive restructuring in late 1999 that set the stage for an Itron resurgence that continues to this day.

The Actaris merger announced a week ago will create a global metering giant with $1.6 billion in annual sales. The competition includes General Electric and Siemens, two of the world’s industrial giants.

As to Smyly, he handed command of Itron off to Johnny Humphreys in 1987.

His skills best suited him for start-up businesses, Smyly says. Humphreys was better able to grow Itron into the national and international player it became over the next decade.

Smyly moved on to an Australian software company, Computer Power Group, for which he opened a U.S. office. When that company was sold, he and his wife moved into their Spirit Lake home, from which they make and sell Mission-style lighting fixtures under the Mission Spirit.

“It’s a real departure from what I’d been doing,” says Smyly, who says orders sometimes run ahead of his ability to fill them.

He called the Actaris purchase “magnificent” in the way it culminated a two-year courtship between former executives of Schlumberger, the oil industry service company. Actaris had purchased Schlumberger’s European metering operations in 2001. Itron bought its North American electricity metering operations in 2003.

Itron Chief Executive Officer LeRoy Nosbaum is a former Schlumberger executive.

Smyly, who grew the company into one with $25 million in sales, says he’s most proud of the people he brought into the company who were instrumental in its further success, Rob Nielson and Mima Scarpelli among them.

Nielson eventually became president and chief operating officer, and was instrumental in the all-important restructuring of the late 1990s that positioned Itron for the surge in its fortunes that began in 2001. Scarpelli, also a vice president as well as treasurer, was the company’s main spokesperson for many years.

Nielson retired at the end of 2005, Scarpelli last fall.

Smyly wryly recalls the low expectations experts had in the 1980s not only for Itron, but for the automatic meter-reading industry as a whole.

The market, they said, might eventually reach $100 million in total sales, a fraction of the business Itron and its competitors do today.

“We were obviously very wrong,” Smyly says.