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Four entrepreneurs who created Washington wine industry


 
The young entrepreneurs who bought the state's main winery with money they didn't really have then gave their wine a name that became the soul of what would eventually be a dramatically successful industry represent the little-known "rest of the story" of Washington wine.

      
     Kirby Cramer
Details of the story were recalled by two of those four entrepreneurs after they read last week Flynn's Harp, which focused on Ste. Michelle Wine Estates and the role its president and CEO, Ted Baseler, has played in presiding since 2001 over the growth and success of the company and its impact as leader of the Washington wine industry.
                                                            
   
      Don Nielsen
The four were typical of the young entrepreneurs coming of age in the pre-high tech early '70s in this state who wrote their own success stories in industries ranging from coffee (as in Starbucks' Howard Schultz) to retailing (the Nordstrom third generation took the company public) to medical instruments (Wayne Quentin and Hunter Simpson).

As detailed last week, the 1967 Washington Legislature had approved a bill to, for the first time, permit California and other quality wines to be sold on retail shelves alongside the basically fruity wines produced by the couple of wineries located in this state. At some point, the Washington wine industry would have to change to survive.

The four who emerged to save the wine industry became dramatically successful in various business sectors over the coming years. Wally Opdyke, Kirby Cramer, Don Nielsen and Mike Garvey came up with the money to buy American Wine Growers, a producer of mostly fruity wines with high alcohol content that Nielsen referred to jokingly as "skid road" wine.

Nielsen and Cramer, with Garvey and Opdyke as investors, had already formed a young company called Environmental Sciences in 1969 to take advantage of the need for high-quality rat cages for the pharmaceutical industry, becoming eventually the largest in that industry.

Then Opdyke, the only one who had much knowledge of or interest in wine, convinced the three friends to join in putting up the $100,000 necessary to buy the $3 million-revenue American Wine Growers, its winery and acreage.

Cramer recalled, in an interview this week, that the families who had owned AWG for years were convinced to sell the business for $3 million and the purchase took place after Cramer and Opdyke convinced Seattle First National Bank and an insurance company to each put $1.5 million with plant and acreage as collateral.

"We basically bought it on our good looks." Cramer chuckled, "but we thought it would be an interesting investment and Wally was a marketing genius, leading us to change the name to Ste. Michelle Vintners, start putting corks in the bottles, and started work on the chateau that is now the company's headquarters."

Meanwhile, knowing that creating quality red wine would take several years, Wally, as president of the company, guided growing and bottling of riesling, a white-grape with what Cramer referred to as a quick turnaround time.
In what Cramer described as "a marketing coup," Opdyke entered the Ste. Michelle riesling in a California wine competition and it took the gold medal.

"For a Washington wine to take the gold medal in a California competition in the early '70s was something no one could have imagined," Cramer said. "The gold medal made the Washington wine industry."
The legacy of that marketing coup is that today Ste. Michelle is the nation's leading producer of riesling.

Under Opdyke's leadership, the four put together a prospectus looking to raise $3 million to grow the company with more land, grape growing and production. Cramer recalls putting together an eye-catching prospectus cover that displayed a number of wine labels, including the new label for Ste. Michelle.

The four would be the first to concede that luck plays a huge role in success. But not the roll-the-dice kind, but rather where preparation meets opportunity. So it was with the four, over the years, prepared t seize opportunities that came their way.

Thus the prospectus, instead of landing in the hands of prospective investors, which Cramer admits now probably weren't many, the prospectus landed on the desk of a top executive at U.S. Tobacco, which was seeking to diversify at the time. Before long the deal had been struck that paid off the loans and left the entrepreneurs with $4 million in stock to share 18 months after their $100,000 investment.

"The dividends the year after the sale equaled my original investment," Nielsen quipped.
Having overseen dramatic growth for Environmental Sciences Corp, in 1972 they purchased Hazleton Laboratories from TRW and took the name of Hazleton, a contract laboratory that conducted toxicology testing. They took Hazleton public in 1977, had additional stock offerings in '78 and '80.

By 1982 Hazleton had become the largest independent biological testing company and life sciences laboratory in the United States, as well as the largest manufacturer of laboratory equipment in the world.

Garvey, who in 1996 launched a law firm that would become one of the most respected in the Northwest, and Opdyke were involved in the purchase of K2, which had been bought by Cummins Diesel from founder Bill Kirschner, who had bought it back. And the four also bought some 140 condos at a Colorado resort from Ralston Purina.

"It became the big thing in the early '70s for big corporations to think they should diversify and so they bought businesses they knew nothing about and eventually new leadership would ask 'what are we doing with this' and would sell it off for a cheap price," Nielsen observed. "Entrepreneurs looked for those and that's how we got into K2 and Colorado condos."

In 1987, Corning, Inc., purchased Hazleton but retained Nielsen as CEO for five years and when he retired in 1992, Hazleton had grown to $165 million in sales and employed 2,500 people in five countries on three continents. 
For the past approximately three decades, Nielsen and Cramer have continued to guide companies and serve on numerous boards while Garvey proceeded to build Garvey Schubert and Barder into one of the region's most respected law firms. Opdyke stayed for some years at the helm of Ste. Michelle before becoming closely involved in a corporate role with U.S. Tobacco.

Cramer was named a few years ago as a laureate of the Puget Sound Business Hall of Fame. Nielsen was selected this week to join the Business Hall of Fame as a 2017 laureate and will be honored in May at the annual induction ceremonies.

 

 


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NIelsen calls for major education overhaul

As the 2015 Legislature looks down the double barrels of a pair of multi-million dollar education-funding challenges, one ordered by the court and the other by the voters, a new book by former Seattle school board president Don Nielsen calling for a major overhaul of the basic structure of education is attracting increasing attention.

Don Nielsen 

Nielsen, a successful businessman who turned his attention to education and began a 20-year role as education activist, including two years traveling the country in search of good ideas and a decade on the Seattle school board, says funding isn't the issue. "It is the system and the people who populate it that need to change."

But the Washington State Supreme Court, in a January 2011 ruling that ordered the legislature to fully fund basic education and last fall held the lawmakers in contempt for failing to comply with that order, says funding IS the answer. Then voters, by a bare majority, in November approved Initiative 1351 to limit class sizes. That brought an additional multi-million-dollar reality to legislative deliberations.

And as the issues relating to education funding come under increasing scrutiny, there is increasing visibility for Nielsen, who seems to be at the epicenter of discussion about the future of basic education in this state, and elsewhere. His book, Every School: One Citizen's Guide to Transforming Education, has become a national focal point in discussions about the future of public education.

The book has led to speeches before a long list of Rotary clubs and other organizations, beginning late last year before the Seattle Rotary Club. Another five rotary talks are scheduled for next month, and radio interviews are occurring on talk shows across the country.  

"Most of what we're hearing is that we need more money and lower class sizes, but we have tried that and it hasn't worked," said Nielsen. "We now spend three times as much per child in inflation-adjusted dollars as we did in 1970 and we also have four times as many adults in our schools with only eight percent more children."  

While Nielsen confides he has little hope that his ideas will ever pass muster before a legislature in this state because of the power of the forces opposed to dramatic change in the public education system, a legislature closely divided politically may decide that a dramatic education-funding change should be accompanied by other dramatic changes.

It's logical that Nielsen would take a businesslike view of analyzing what changes are needed for basic education to work since dramatic success as an entrepreneur over nearly a quarter century preceded his personal commitment to learn about education's needs, and then seek to bring those about.

His business success involved co-founding in 1969 a start-up biological and chemical testing company that he helped grow into the world's largest company in its industry by the time he had taken it public. He then helped guide its acquisition in 1987 by Corning, which kept him on as CEO of the firm, Hazelton Corp., and over the following five years he doubled the company's annual revenue to $165 million.

Newspaper editorialists, policymakers and lawmakers from both parties have begun to suggest that if more money must be spent on education, then perhaps dramatic change in the system itself should be considered.

And the fact that Nielsen is reaching audiences on talk shows in cities across the country suggests that what he describes as an "obsolete" system is facing serious scrutiny in states other than just Washington.

"Basically, my premise is that the system is obsolete and needs radical change," he told me in one of several phone conversations  in recent days. "However, like a failing business, you don't embark on radical change with the people who created the problem in the first place.  So, to fix our schools, we must first fix the people and we must do so at all levels; teaching, leadership and governance."

As a frank and to-the-point kind of a guy who has brought an entrepreneur's focus, innovation and zeal to his pursuit of improving education, Nielsen has stirred critics who were protective of the status quo while attracting respect and support from those who shared his view that the structure of education needed to change.

Interestingly, the latest Elway Poll shows that for the first time in seven years, economic issues are not at the top of the public's wish list for legislative action. Rather it is education.

Stuart Elway, president of Elway Research, says his poll shows that 65 percent of those polled think the Legislature should do as much as possible without cutting other programs or raising taxes, 51 percent think education funding is the first priority and 48 percent says it will be necessary to raise taxes to meet education's funding needs.

Nielsen, a 1960 graduate of the University of Washington, where he was student body president in his senior year, seeks to have education reform seen as an issue that transcends politics.

"Fixing our schools, so they effectively educate every child should not be a partisan issue," he told me.  "I am hopeful that the Republican Party will soon recognize that and take on education as their primary issue.   The Democrats have claimed schools as their issue for the last three decades and our schools have not improved. Time for a change."

The changes that Nielsen espouses boil down to three key steps.

"First, we have to improve the quality of teachers," suggested Nielsen, who says a key first step is eliminating certification laws, which he refers to as "the culprit" because they give "education schools a monopoly over the supply of human capital that can work in our schools."

"Next we must improve leadership," he said. "A quality principal will give you a quality school but certification laws again hinder our ability to hire top leaders for our schools."

We also must address governance, not just leadership. We need high quality, competent people governing our schools.   In urban systems, I would recommend going to appointed school boards or even eliminating them altogether and have the superintendent become part of the mayor's cabinet.  

Nielsen decided, after his decade of schools leadership at the local level, that the necessary changes couldn't be achieved locally. And he suggests the fact No Child Left Behind Act has produced disappointing results, and may be dramatically altered in this Congress, suggests Washington, D.C., isn't the place to drive necessary changes.

"To improve America's schools, we need to do so at the Statehouse," said Nielsen.

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