Like any chief executive, Tammy Miller's job is to earn profits for stockholders.
What makes Miller smile is that some of the resulting millionaires work in her company's warehouses, not on Wall Street.
Miller is CEO of Fargo-based Border States Electric, the nation's eighth-largest electric wholesaler. It mainly sells electrical products and manages the logistics of getting them to contractors, factories, oil fields and utilities.
Since Miller became CEO in 2006, Border States' annual revenue has more than doubled to $1.2 billion, and its stock has soared. The company is expanding, and now operates in 13 states, after acquiring several competitors, including one in Minnesota.
It's all been to the benefit of Border States' 1,500 employees, who own 100 percent of the company. Over the past decade, shares held by the employee stock ownership plan, or ESOP, have increased in value by an average of 25 percent per year.
"We were a well-kept secret for many years," Miller said recently on a visit to the company's warehouse in Albertville, Minn., which is an example of the company's recent expansion.
It opened in 2010 when Border States won a major contract to supply Xcel Energy Inc. across that utility's eight-state region. Border's Albertville warehouse and offices now employ 32 people, supplying almost everything electrical from power-pole insulators to copper wire.
Part of Border States' secret is that the employees are rated among the most productive in the industry -- hardly surprising since they stand to directly gain -- or lose -- from everything they do. Managers have long promoted an "ownership culture" that includes sharing the company's financial results with all workers each month.
This culture extends to workers like Dan Beberger. As the Albertville branch's lead truck driver, Beberger often is the last link in the supply chain. When he and others have hauled electrical parts to utility line-repair crews in the aftermath of storms, such as the 2011 tornado in north Minneapolis, the drivers are empowered to address problems on their own.
"Things change, and you don't have to run back and go through channels," Beberger said. "You know what you do directly reflects on a company that you have part ownership in, so you make sure things are done correctly. You tend to go the extra mile."
What the company does
When storms wreck power lines, utilities depend on distributors like Border States to quickly deliver tons of material to where it's needed. That's happening now on the East Coast, though Border States doesn't serve utilities there. Its business is mainly in the Midwest, South and West. Even so, company executives said superstorm Sandy has been watched closely, and suppliers were contacted in case emergency needs arose.
Such emergencies represent a small but dramatic slice of the electrical distribution business. Most of the time the business focuses on day-to-day sale and delivery of all things electrical to big customers who have large and varied needs.
CEO Miller said contractors who build homes and commercial projects still bring the most business to Border States, with utilities not far behind. Increasingly, the company is selling not just parts and equipment, but supply-chain services that cut costs for customers, she said.
On a big electrical construction project, for example, components are packed in the order they will be needed. Job-site trailers are wired for electricity, with sensors in bins to notify Border States when one is empty. In factories, some supplies are distributed by vending machines.
Border States grew up in North Dakota, founded in 1952 by two electrical supply salesmen. Many of its customers, then and now, are power cooperatives who in the 1950s were still working to electrify rural America.
The company remained relatively small until the late 1990s, when Border States began a string of acquisitions and invested two years of profits into a computer system that executives say became the backbone of its supply-chain services business. Since 2006, thanks to acquisitions and internal growth, the company's workforce has increased from 744 to about 1,500.
Oil boom has been a bonanza
Border States' Williston, N.D., warehouse, once a tiny outpost, has grown to 60 employees and this year is the company's top moneymaker, Miller said. That region's oil boom requires electricity -- and the products that Border States supplies.
Minnesota also has been a growth region, helped by the 2008 acquisition of Minnesota Electric Supply, a Willmar-based distributor, and Border States' multiyear supplier contract with Xcel. The company now has 216 Minnesota employees, 14 percent of its workforce.
Border States also has pushed into Texas, New Mexico, Arizona and Tennessee through increasingly large acquisitions. The 2004 purchase of a Michigan company that distributed natural gas parts gave Border States the capacity to serve utilities with electric and gas divisions.
In each acquisition, Border States kept most of the new employees, and promoted some executives, though the company is not immune to layoffs. Workers retained from the acquired companies have become employee owners.
"We really do run this company for the benefit of our employees," said Miller. "We practice open-book management so our employees know at all times how the company's doing. Along with that, employees are really empowered and expected to be creative and decisive in their work."
In 2011, a productivity benchmark by the National Association of Electrical Distributors found that Border States' employees were 40 percent more productive than the industry average, Miller said.
James Myott, a partner in an Eden Prairie accounting firm whose clients include employee-owned companies, said research on such firms shows they generally have high productivity rates, and often earn good returns for workers.
But Border States' recent strong growth and performance stands out. "It's extraordinary," said Myott, whose firm, Boulay, Heutmaker, Zibell & Co., is not associated with Border States.
Miller, 52, has been the lead driver of the recent growth. She began her career as a certified public accountant, and has served in various executive positions with Border States since 1991. She negotiated all of the recent acquisitions.
Though the company's stock value fell nearly 7 percent in 2009, its drop was far short of the Dow Jones industrial average's 38 percent drop in the same period. Border States' share price, which is based on an independent evaluation, rose 19 percent the following year, and 32 percent a year later.
The company doesn't publicly report its earnings, though its stock value and other plan financial information are reported to the U.S. Department of Labor. The 2012 share value has not been reported yet, though executives said the increase will exceed last year's.
Each year, Border States adds to employees' ESOP accounts based on a share of their compensation. All employees also get cash bonuses based on profitability. The stock is held in trust until an employee retires or leaves the company, when it is bought back by the plan.
Some long-serving employees can retire with more than $1 million in stock proceeds, which can be rolled into a retirement account. Former CEO Paul Madson, who led the transition to all-employee ownership in 1984, figures it has probably helped at least 150 employees retire as millionaires.
Miller said the company's goal is to grow from the current $1.2 billion in sales to $2 billion in 2017. She said Border States is actively looking for acquisitions.
"What is so rewarding in my job is seeing people leave this company with retirement-income security and more personal wealth than they ever expected," Miller said.
David Shaffer • 612-673-7090