Question:
A tempest has rolled across Big Sky Country, shattering Montana's only Fortune
500 company and raining resentment and regret among those stranded in its
aftermath.The storm took the form of one of the most surprising corporate
collapses in the Rocky Mountain West - yet one that few outside of Montana know
about.Amid its fury, hundreds of jobs were lost, history and wealth wasted,
greed decried.
Answer:
Ensconced below the Continental Divide in Butte, Mont., executives of Montana
Power Co. dismantled and sold the 90-year-old company piecemeal to devote all
its money and their attention to their promising but risky telecommunications
division, Touch America.
It was a disastrous bet. With $2.1 billion from the sale of Montana Power
squandered, Touch America careened toward bankruptcy this year. Some momentum
came from Denver, where Baby Bell Qwest sought to savage and then salvage its
smaller rival.
"The rock of the community was always the utility company," said Jim Smitham, a
52-year-old Montana Power retiree who watched his stock, converted to Touch
America shares, spiral from $500,000 to $50. "And now our rock is a bunch of
pebbles, and some of the pebbles have washed downstream."
Towering above Butte are 14 gallows frames, massive steel structures that once
lowered miners thousands of feet into the honeycombed interior of "the richest
hill on Earth."
Today, they linger as ghosts of Butte's glory days.
Even mining - the industry that ballooned Butte's population to above 100,000
in the early 1900s and spurred officials to name the city's streets after gold,
iron, silver and platinum - has abandoned Butte.
The 130-year-old copper mine in Butte went on indefinite suspension in 2000 as
energy prices soared and copper prices sank. The mine's closure left Montana
Power Co. as Butte's only significant employer. It has proved to be a perilous
reliance.
"We've had about five years of total economic uncertainty in this community
around Montana Power Co.," said Evan Barrett, executive director of the Butte
Local Development Corp. "And that uncertainty has economic impacts."
By Barrett's count, Montana Power's closures and divestitures have cost Butte
548 well-paying jobs in the past 10 years. Add unrelated mine closures, and
Butte-Silver Bow County's 34,000 residents have lost 1,414 primary jobs and an
estimated 2,475 secondary support jobs, Barrett said.
Any job loss hurts Butte, where the median per-capita income registered $24,197
in 2001, compared with $41,222 in Denver. Many storefronts in the city's uptown
core stand empty. More people leave the city than move to it.
City officials say Butte can persevere, as it did during past mining strikes.
"Our folks are tough, and they can bounce back," county Chief Executive Judy
Jacobson said.
Yet even rugged folk raised in this rugged land take pause at the dismantling
of Montana Power.
Founded in 1912 to feed power to ravenous mining companies, Montana Power was
the state's only enterprise listed on the New York Stock Exchange, its only
Fortune 500 company. Now that centerpiece is gone.
"It was like watching an unbelievably bad dream unfold," Barrett said. "Every
possible worst-case scenario seemed to come to fruition. We're emerging from
the shell-shock right now, grappling with a changed future."
Harbinger of disaster
The winds that signaled Montana Power's transformation and eventual demise
arrived in the 1990s as the company's executives predicted an impending
deregulation of the power industry across the western United States.
Years earlier, the federal government deregulated the industry's
wholesale-supply business, meaning power distributors could choose their
suppliers.
A regional-planning panel recommended that Western states plan for power
industry deregulation.
Few in 1997 sensed deregulation as a harbinger of disaster. But David Ewer did.
The Democratic state representative from Helena already bore political scars
from his failed effort earlier in 1997 to oppose the state's video-poker lobby.
But, as a self-described liberal raised in Massachusetts, Ewer sometimes found
himself at odds with corporate interests.
Ewer became the staunchest opponent of Montana Power's bid to drive a
deregulation bill through the Montana legislature in 1997. He tried to attach
dozens of amendments to the bill to torpedo it. He called for two special
sessions to slow the deregulation effort.
The ominous parallels between California's deregulation nightmare and the
quickly-degrading energy situation in Montana are as chilling as they are
accurate. Now, with his state facing a $38.2 billion budget deficit,
California's Gov. Gray Davis has earned the dubious honor of being the first
California governor to face a recall election. In large part, it was actions
related to his state's energy crisis that put Davis' head on the chopping
block. Montana has the opportunity to avoid similar disastrous decisions,
but it may require a "pre-emptive strike" to make sure they don't happen.
Actually, according to CBS News last night it was all driven by NY
bankers who wanted their millions in fat fees for the "reorganization."
The shareholders were also kept in the dark by the Board and Sr. Execs
who walked away with $15 million while the employees lost their jobs and
their pensions. There WILL be people ending up in jail on this deal.
