IL-14: Bill Foster and ETC

by , posted on Monday, February 4th, 2008 at 7:11 pm

Originally posted at Fireside 14 and Daily Kos.

As a newcomer to the political scene in IL-14, Bill Foster, more than most, has had to spend time telling voters his “story,” has had to spend time, and a lot of money, introducing himself to a community he had been a stranger to until he moved back to the district from Washington, D.C., a month or so after he announced he would be a candidate for Congress back in Illinois. From the beginning, his story has been based upon the notion that he has a track record as a “successful businessman and accomplished scientist” that spoke to his abilities as a problem solver, and that he would be able to build upon that prior experience to become a successful problem solver as a politician, too. “Businessman, Scientist, Democrat for Change,” as one of his campaign slogans puts it.

Here is the thumbnail description of Foster’s career as a businessman that his campaign offers to those seeking to learn more about that part of his life:

Before coming to Fermilab, Bill was a successful businessman. When he was 19, Bill and his younger brother started a business from scratch in their basement. Starting with $500 from their parents, they built a company that now manufactures over half of the theater lighting equipment in the United States. Their equipment is used on Broadway shows, Rolling Stones tours, the great Opera houses, half-time shows at the Super-Bowl, and at churches, schools, and community theaters throughout the country. Their company sells millions of dollars of equipment around the world and provides over 500 good jobs — with good pay and benefits — here in the Midwest.

On one occasion, Foster campaign manager Tom Bowen put a finer point on the equation, stating that “as a businessman, [Foster] has experience solving problems close to home like meeting payrolls and budgeting for the future.” But for the most part, the blockquote above is representative of what has been consistently said by the Foster campaign about his career in business. Bill and his brother started a company from scratch while they were still in college, and now that company is enormously successful. And while there is much that is left unsaid in the gap between the beginning and the end of this part of Foster’s story, it is clear that the point that everyone is supposed to be taking away from this narrative is that Bill Foster played a major role in the development of an extremely successful company and that this accomplishment is evidence that he can be expected to be an effective member of Congress.

The problem with all this, however, is that no one has ever tried to fill in the gaps in the story of Bill Foster’s career as a businessman in order to see what the truth of the matter really is.

The story of the founding of Electronic Theatre Controls, Inc. (ETC) has been told many times through the years. Fred Foster was a freshman at the University of Wisconsin taking courses with theater professor Gilbert Helmsley “with the goal of becoming a theater lighting designer.” As Fred tells it, “The new thing back then was using solid state electronic devices to control lighting, and the lights at the university’s Mitchell Theater were run by a state-of-the-art, quarter-million-dollar control console known as a Q-File.”

I said to my brother, who’s a couple years older than I am and was at that point a physics undergraduate student, “Bill, you gotta come down and see this really cool computer.” His direct quote was, “Gack! We can do this for $5,000.”

What Bill Foster realized, and it’s fair to say that there would be no ETC if he had not realized this, is that by using microprocessors instead of solid-state electronics, it would be possible to create a lighting board that did everything the state-of-the-art Q-File could do, but at a fraction of the cost.

Fred, Bill, and a couple of their friends, Gary Bewick and Jim Bradley, started talking about building a microprocessor-based board of their own. The four of them, along with another friend, Bob Gilson, told Helmsley and others of their plans at the professor’s annual Christmas party in 1975. They were met with scepticism that it was possible to do what they were proposing, but they decided to give it a try anyway. According to Fred Foster:

we started buying parts or scrounging parts from the physics department, using the labs in the physics department or the basement of my apartment, and put this thing together through the course of that year. It generally broke down that [Bill] was writing software, Gary did the hardware, Jim did text editing and some things around the edges, and I was the theatrical input into it.

We each threw in $300 and had a quarter of the company.” And by the time of Helmsley’s Christmas party in 1976, they had a working demo.

Our next concept was to sell the idea to Kliegl, which was the pre-eminent company in the business at the time. There was a USITT conference down in Washington, DC [in March 1977], so my brother and I put Mega Cue in a box and went down. We showed the board out of our hotel room. It was like turning tricks. We would go down to the trade show floor and go up to Century or Kliegl and say, we’ve got a light board to show you, and bring them up to the room. And empty the ashtrays between each trip. (Laughs) …

That was the same year that Kliegl was introducing Gordon Pearlman’s Performance system, which was kind of the same piece. So we got to the show thinking we were going to sell it to Kliegl, but we went to the Kliegl booth and just were completely deflated. Oh, we were despondent. Bill and I didn’t know what to do. But eventually we worked out a deal with Ken Vannice at Colortran, and there was an opportunity to turn Mega Cue — we call it Neander-Cue now — into a real product.

The company was incorporated that spring, and ETC was in business with Bill Foster as President, a title he would hold until 1979. But what kind of business was it? “We sold 15 consoles the first year,” Fred has recalled. “But we weren’t paying ourselves and we were still building the units in a bedroom.”

Fred Foster: At that point we had no real idea of becoming a business. We could just barely make the product. Bill had graduated from UW [in 1976] and moved on to Harvard, so we would race sailboats in the summertime and have this business on the side. We would wait until we were six weeks late on delivering a product; initially we built them in my brother’s bedroom at my parent’s house. So Ken Vannice would call up, plaintive. We were dodging his phone calls, but he’d get my mother on the phone, and she would be apologetic and say ‘Oh, Ken, I’m so sorry about this. I’ll see if I can get the boys to call you back.’ (Laughs)

Interviewer: You were what then, early 20s?

Fred Foster: Yeah, I was 18 or 19 when I started, so it was right around 20.

Interviewer: So it’s not like you were taking the business side of things very seriously.

Fred Foster: My parents will tell stories. My mother did our bookkeeping initially. We had a checking account, and when she took them over she said to my brother Billy, ‘There’s no balance in this checkbook. How do you do this?’ He said, ‘Well, I kind of eyeball it.’ (Laughs) My mother kept all these letters over the years. She was going through her files a few years ago and found a letter in my handwritten scrawl to her saying that the insurance settlement from a car accident that I was in had come through and I got $750. So now I didn’t have to borrow the money from them for my share of the company. A real fly-by-night operation.”

Fred Foster still has an original check register for ETC in which the average balance was around $100, and it turns out it was Fred, not Bill Foster, who “had to worry about $100 checking balances and making payroll.” The year after Bill went off to Harvard to work on his Ph.D. in physics, Fred dropped out of college and he “paid his bills working as a stagehand while building ETC.”

There’s a great Colortran story. At one point my brother and I were out in their offices in Burbank; Bill was programming and I was just kind of hanging around, and it was 11 or 12 at night. I was wandering around the engineering section, and I came across a file cabinet that said memory system. And I said, “Oh, this is interesting.” I looked around to make sure Ken wasn’t watching me, and I opened up the drawer and I found a folder that said ETC, and I thought, “This is even more interesting.”

I pulled out the folder and found an internal memo that referred to us as “the flakes from Wisconsin who would rather be sailors.

About a year and a half into their contract with Colortran, the boys at ETC began to think that maybe it wasn’t such a good deal after all. “We would sell something to them for $5,000, they’d put a $1,000 box around it and sell it for $30,000. We didn’t seem to think that that was very fair, so we said ‘We’ll re-up the contract, but you have to pay us $60,000 in development fees. Which they didn’t think was very fair. Because, quite honestly, we had a deal that didn’t involve that.” But ETC was about to find themselves between a rock and a hard place, because they hadn’t negotiated a very good contract with Colortran when they started their business. And it wasn’t just because they weren’t getting a good price from Colortran for their product.

there was this big flaw in the contract where there was a performance requirement. Because they were afraid of us going out of business — quite rightly so — we had to put all of the technology, the drawings, the circuit board, artwork, the source code, etc. in an escrow account out in California. So if we went under or didn’t perform they could take the technology and produce the console.

They were allowed to order up to 15 units in a 30-day period, and if we didn’t deliver in that 30-day period, technically we were in default and they could get the escrow package. And everyone knew we couldn’t do this.

A short time later Jimmy Bradley and I flew out to negotiate the contract, we went into the conference room and [Colortran’s Ken] Broder walked in, dropped a copy of that order on the table, and said, “You know that we can drive you out of business.” And Bradley, not really thinking about it, said “Go ahead. I’d rather go sailing in the Mediterranean.” And I said “I can run lightboards on Broadway and make a damn sight more than I’m making now.” And it was amazing. Broder’s face looked like one of those wax faces in a horror film. It just decomposed in front of us.

Fred Foster and Jim Bradley called Colortran’s bluff, and it worked. They got what they wanted. But what’s most interesting about this anecdote for our purposes, is that when the showdown came between ETC and Colortran, Bill Foster was nowhere to be found. It was his brother Fred and Jim Bradley who flew to California and had it out with Colortran. Not Bill, the President of the company.

The next key moment in the history of ETC came when an opportunity presented itself to develop a working relationship with Disney that would ultimately allow ETC to begin selling it’s product under it’s own name and end it’s problematic marketing agreement with Colortran a few years later. Bill was along on the trip to the Mouse Kingdom in 1979, but Fred’s description of why Bill went along helps us, finally, to see most clearly the role Bill Foster actually played in the early development of ETC. “I’m not an electronics guy,” says Fred, “so I got my brother Bill to come out to Anaheim with me to discuss the project with Disney’s imagineers. …”

Bill Foster wasn’t a serious, or even particularly successful businessman during his days at ETC. Contrary to what his campaign manager has claimed, ETC was not a place where Foster gained experience solving problems close to home like meeting payrolls and budgeting for the future. While he held the title of company President for a few years, what he really was was the “electronics guy,” “the firm’s technical whiz.” Later, a profile of the company written after Bill had been at Fermilab for a few years would describe him as ETC’s “chief engineer,” but there seems little reason to believe he was actively involved with the day-to-day operations of the company in any manner whatsoever by that time. Indeed, there is little evidence that Bill Foster had much of anything to do with the development of ETC into the success it is today, since almost all of the companies’ growth came years after he had moved on to his career as a physicist.

Here’s Fred Foster again, who by 1996, if not earlier, was “the only one of the original four still active in ETC“:

So we picked up a few friends and we started working in the basement of the flat that I had and a year later we had a box that could do everything that three racks of electronics could do. We started selling it and found a company to distribute it for us.

But my brother and our other partners drifted away

But if Bill Foster had far less to do with turning the company he co-founded into the industry giant it is today than he would have us believe he did, it is nevertheless true that he remains a co-owner of ETC, holding a 24% share in the company, and he has always been a member of the Board of Directors. So, what should we know about the company that made Bill Foster the extraordinarily wealthy man he is today?

Well, one thing Bill Foster wants us to know about ETC, as noted above, is that it provides jobs. Unlike the ETC of Bill’s day, and for many years after, when the company was really nothing more that a half dozen or so people working in a building with no sign on the door, that it shared with a machine shop, “hidden behind a couple of garages and sheds,” ETC has in recent years employed as many as 600 people, all told.

Bill Foster has also stressed that these are “good jobs — with good pay and benefits.” That ETC is basically a great place to work. In fact Madison Magazine ranked it as one of the “Best Places to Work” in the Madison area a couple of years ago. There is profit sharing, company-paid, state-supported English classes during work time, employees are allowed to donate vacation time to other employees in need of time off due to family emergencies or illness, and, according to the Madison School District, ETC is one of “the most consistent employers of students with severe disabilities.” After the tsunami disaster, when employees asked if there was something the company could do to help, ETC decided to match contributions made by their employees. And much has been made of the design of their new corporate headquarters, where

ETC has gone way beyond the call to make everyone feel at home by placing cubicles at the windows and the executive offices in the belly of the department. Carpet is reserved only for the conference rooms and places where people need quiet. Everywhere else there’s sanded concrete. And the factory floor, which could easily be dark and hollow, is alive with reflective materials that bounce back the light from windows and bulbs.

ETC has even been known to give the employees free ice cream, and to take them all to see the occasional Star Wars movie when a new installment in the series came out.

Bill Foster also wants us to know that

“… for 30 years my brother and I have been absolutely committed to keeping those jobs in the Midwest, and we have. Um, there is a well-oiled machine that all of you who are businessmen are well aware of, to offshore things. There are consultant firms that will come in, photograph your manufacturing process, and build you a factory to specifications in a Chinese city you’ve never heard of, and they will build your product for half price. [Inaudible] And for years and years my brother and I have been offered that sort of deal, and it’s been “no sale.”

But there are some other things one should know as well.

ETC didn’t actually create hundreds of jobs in the Midwest all by itself, instead “it has grown to be a leader in its industry … by purchasing companies and distributors in key markets.” On a couple of occasions, the companies they acquired have been packed up and moved to Wisconsin, along with some, at least, of their employees. The first company ETC acquired was Lighting Methods, Inc. (LMI) of Rochester, N.Y., in 1990. ETC was the smaller company, it only had 20 employees at the time and LMI had 65, but ETC was the more profitable of the two. A bank loan and a second mortgage on the home of Fred and Bill’s parents financed the deal. ETC’s original plan was to quickly close down the Rochester plant and move just a few LMI employees to Wisconsin. “But that six weeks turned into six months and the lame duck work force in Rochester took production 30 percent higher than it had ever been under previous management,” Fred Foster said. “We decided we had made a big mistake and started relocating (the Rochester workers).” Twenty-five workers from Rochester ended up making the move to Middleton. Similarly, eight years later, employees of Irideon in Dallas would transfer to Wisconsin as well, after ETC acquired that company and closed up shop in Texas.

At one point, however, ETC chose to become smaller, or if not smaller, to employ fewer people, in any event. This was in the wake of 9/11. “Blaming a slowdown in business after the Sept. 11 terrorist attacks that compounded an already soft economy,” ETC laid off 60 of it’s 520 employees in November. Most of the 60 worked at the corporate headquarters and factory in Middleton. It was reported that “those who lost their jobs ranged from manufacturing to administrative employees.”

Immediately after the layoffs ETC “began seeing stronger orders in December” and by May had employees working overtime. Six months after the layoffs, in spite of the fact that, according to Fred Foster, “[o]ur orders and our order backlog is stronger than it ever has been,” ETC still had hired almost nobody back to fill the positions left empty by the layoffs. A month after that Foster said “This company is running lean and has been more profitable than ever before.” But it was not the money, he said, that explained why he wasn’t rehiring any of the laid off workers. It was that “I never want to get to the point where we were before, where we lay off people.” Hmmm.

And what did ETC do with the newfound profits “running lean” brought it? Acquire another company. In June 2002 it was reported that

Electronic Theatre Controls Inc. has purchased transtechnik Lichtsysteme, the lighting division of German transtechnik GmbH, extending its reach into European markets.

Company founder and CEO Fred Foster said the acquisition, completed late last week, will enable the private Middleton firm to double its revenues in Europe. Details of the deal were not disclosed. It’s the fifth acquisition for ETC

The acquisition of transtechnik Lichtsysteme is symbolic of another aspect of the “good jobs” ETC provides. A significant percentage of them are no longer in the Midwest, and not even elsewhere in the United States, but overseas. “About 10 years ago [ca. 1995], we felt like we were strong enough in our home market that we started looking offshore. That’s when we opened our Hong Kong office.” Other offices would later be opened in London, Rome, Copenhagen, and Holzkirchen, Germany. And the company’s “offshore” growth hasn’t been confined to this growing list of sales and service call centers. By 2005, ETC had “more than 100 employees in Europe, living and working in seven countries,” and their products were “manufactured and assembled in multiple locations — Germany, the Netherlands, the UK and US.”

In light of all this overseas expansion, it should come as no surprise that the City of Middleton — home to ETC for the thirty years Bill Foster tells us he and his brother Fred have been saying “no sale” to those who wish to tempt the company into moving it’s manufacturing to someplace like China — is less than certain it can count on the Fosters to keep their word about such things. When the company built a new $20 million headquarters in Middleton a few years back, it did so on 43 acres that were a gift to the company from the city.

City administrator Mike Davis said the property is valued at $580,000. The city also borrowed about $1 million to add fill and make improvements so the land — part of a flood plain — is fit for construction.

Davis said it’s a winning proposition for the city. Providing the land will keep more than 400 jobs and an estimated $400,000 in annual tax revenue in Middleton.

The city really wanted to keep them here as a home-grown, high-tech employer,” Davis said.

And that was by no means all the City of Middleton was willing to do to make sure that ETC wouldn’t pack up and leave.

To Keep Company, City Cuts Through Red-tape Jungle
Judy Newman , Wisconsin State Journal :: FRONT :: A1, Sunday, July 18, 2004

… The city of Middleton has drawn praise, as well, for accommodating businesses. City staff met every week for more than a year with developers working on the new building for ETC, Electronic Theatre Controls, said Frank Miller, vice president of Erdman Holdings and managing architect for the ETC project. “They made it a priority,” Miller said. “We felt like they genuinely wanted ETC to stay.”

ETC is clearly a business with a conscience, but it must never be forgotten that it is a business, first and foremost, and when push comes to shove it is quite naturally going to do what is in management’s best interest, not what is best for some sort of idealized collective ETC “family.” It may not be overtly anti-union, but the fact is that ETC is not unionized, something Bill Foster has acknowledged on the campaign trail more than once when challenged, and it seems clear that when times are tough, the low men and women on the totem pole will bear the brunt of those hard times. Not the “stars” in the sales force, not the engineers, they’re “talent.” No, it’s the administrative staff, and the blue collar workers of the shop floor — unorganized, unable to collectively bargain in their own interest, and easy to replace — who are the first to go.

There is a name for labor relations of this sort: paternalism. Fred Foster seems to be a genuinely caring guy who makes a sincere effort to make sure that the people who work at ETC, all of them, are treated right. Assemblers elsewhere in the electronics industry rarely if ever have it as good as they do at ETC. But at the end of the day it’s still paternalism, and paternalism is but the kind face of anti-unionism. And all the free ice cream and movies in the world will not change that fundamental reality.

But in closing, I think it is important to take one last look at “The Concept,” (the name given to the product ETC was built on, when they were finally able to sell it under the ETC brand rather than through their marketing arrangement with Colortran), the innovation Bill Foster envisioned in the blink of an eye one day, long ago.

Here’s what the board does:

During a normal stage production, stagehands manually twist knobs or move levers to dim lights, turn spotlights off and on, or change background lighting.

But ETC’s device makes this a one-finger operation. The Concept is programmed for movement on the stage as the scene or dialogue changes.

“After the director decides where each actor will be on stage and how the action will flow, the lighting director then programs the movements and the necessary lighting. On opening night, someone simply follows the dialogue and hits the ‘cue’ button and the lights change automatically,” Foster explained.

The great thing about the system is that for the next night’s performance, nothing has to be done because the lighting board is still programmed. The process eliminates stagehands and makes production easier and cheaper.”

“The process eliminates stagehands and makes production easier and cheaper.” Ah, yes. The “creative destruction” of capitalism. It’s what made Bill Foster the multimillionaire he is today. And it’s one of the things that makes him just about the last person in the world I want “solving problems” on my behalf on Capitol Hill.

Jeffrey Hearn
Research Director,
Friends of John Laesch


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One Response to “IL-14: Bill Foster and ETC”

  1. […] financial disclosure statement from his stint in IL-14 showed that he’s sold out of ETC (the company owned jointly with others, including his brother who ran the business) and his wealth at that time seemed to be locked up in a promissory note, in combination with the […]