S&K Electronics Poised to go the distance

Remote Flathead Valley electronics manufacturer making strong connections within high-tech industry

PABLO – Don’t tell Larry Hall about the old real-estate adage that success comes down to three things: “Location, Location, Location.”

By John Stromnes of the Missoulian

Hall heads a firm, S&K Electronics, http://www.skecorp.com/ that is in as unlikely a location for a thriving state-of-the-art electronic manufacturing and service company as you will find – Pablo, Montana.

Pablo is an unincorporated community between Missoula and Kalispell that is the seat of government of the Confederated Salish and Kootenai Tribes. It boasts a tribal college, a lumber mill, an elementary school, a convenience store, two taverns, a Tex-Mex cafe, a trailer park, two used car lots and a very modest post office. Highway 93 and a seldom-used railroad branch line run through Pablo, but not much else.

Pablo is in the middle of the Flathead Indian Reservation, and is surrounded by hayfields and pine forest, with a wilderness area containing a viable population of grizzly bears only a few miles east. The nearest watercourse is Mud Creek, which flows just south of town.

But Pablo is home base for S&K Electronics, a tribally owned and managed circuit-board manufacturing and electronics assembly firm that has grown steadily over 20 years. Its long-term mission is to create jobs for tribal members, not profits for the tribal government. But it has been making profits – and returning dividends to tribal members – for almost a decade now.

At first subsidized by the tribal government, it has been turning a profit since 1993, and now employs 92 people in assembly and “low-impact” manufacturing of high-tech electronics components for such firms as Xerox, Hewlett-Packard, Northrop Grumman, Raytheon and some smaller Montana high-tech firms as well.

The jobs are the kind of high-skilled, good-paying jobs that communities much closer to major markets, transportation corridors and business capital and technology networks would envy.

Yet S&K has prospered despite a location some 70 miles distant from the nearest interstate highway, major airport or discount brokerage. It sold $9 million in products last year, and had $15 million in sales in 2002, just before spinning off its information-technology contracts to a newly formed sister firm, S&K Technologies, headquartered in nearby St. Ignatius.

Both firms are owned by the tribal nation, not individual stockholders or venture capitalists.

But Hall said this can be an advantage, not a drawback.

“Truly, the tribal mission is to provide jobs over the long run. But like any business, we have to make a profit,” he said.

The tribal government has acted like a responsible, conservative investor – it takes a hands-off approach to the enterprise, which is governed by a tribally appointed board. Hall or board members report to the tribal government several times a year, and the elected Tribal Council resists “micro-managing” the business, despite occasional temptations.

“There is no magic formula” in creating and maintaining a successful relationship between the business management and tribal political leadership, he said.

“It is truly a balance.”

The tribal government, as a conservative investor, has been patient, unlike stockholders of many publicly owned firms, who expect immediate returns, and measure progress from quarter to quarter, rather than year to year or even decade to decade.

Hall said businesses in rural areas like Pablo, or in Montana generally, have to be nimble and customer-oriented to succeed. But don’t sell Montana short for its technological expertise.

“We have not had to hire out of state for any of our people,” he said.

Some highly trained specialists have been recruited from firms in Montana’s “Silicon Valley” – the Bozeman area’s Gallatin Valley.

And tribal employees are the backbone of the enterprise, in accordance with the firm’s mission of providing good-paying jobs for tribal members over the long term.

“We are not a backwater, by any measure,” he said. “There is a skill pool in Montana that did not exist 10 years ago.”

A good education has always been valued by the tribal membership, and emphasized as an important value by tribal government leaders and elders. Salish-Kootenai College has been in operation since 1975, and works closely with the tribal businesses, he said.

“Education has been paramount for the tribes,” he said.

Although the firm’s location in western Montana is relatively remote from the business, capital and technology networking available in larger urban areas, once a rural business has established credibility with its customers, it is easy to keep a stable, highly trained work force motivated to do its best.

“Since we choose to live here, every day we’ve got to do our best,” he said.

John Stromnes covers the Flathead Valley for the Missoulian. You can reach him at 1-800-366-7186 or [email protected].

© 2002, Missoulian, Missoula, MT
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