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Region needs to encourage local owners Ron Bartizek Business LOCAL

I want to believe Scott Sanfilippo when he says the new Florida-based owners of Solid Cactus will maintain all the operations presently here. And I have no doubt he sincerely wants that to happen. After all, he and Joe Palko sweated and nurtured the Web site design firm from infancy to the point that it employs more than 100 people and does millions in annual revenue. Along the way Solid Cactus became a consistent member of the Inc. magazine fastest-growing list and the Best Places to Work in Pennsylvania rankings.

The fact is, though, that CEO David Brown and other executives of acquirer Web.com will decide from now on where the jobs are, and their calls will be driven in part by Wall Street since Web.com is publicly traded. It’s way too soon to speculate whether or not their choices will be good for the local operation, which will be a separate brand with Sanfilippo and Palko still involved.

There are no guarantees, and a drive for efficiency could lead anywhere. Recent history is not encouraging; barely two years after Commonwealth Telephone was sold to Stamford, Conn.-based Citizens Communications hundreds of jobs have been cut with work transferred to the company’s other offices or eliminated altogether.

“The only ones left here will be the installers, because you can’t move them,” ruefully observed a former Commonwealth/Frontier employee.

That’s one downside to modern technology businesses that grow like wildfire; much of the work can be done from anywhere … Shavertown … Jacksonville … or Mumbai.

But it’s not just high-tech or public ownership that puts local jobs at risk when the boss sits elsewhere. Witness Bertels Can, also sold about two years ago. In March, acquirer Independent Can, blaming the poor economy, shut down the business that was launched in 1922 in Kingston. That left 25 people – half the number working at Bertels before the sale – without jobs.

There’s no way to know whether Bertels would have survived on its own, but it’s pretty certain the odds would have been better had it been the headquarters. Todd Vonderheid, chief executive of the Greater Wilkes-Barre Chamber, said he’s seen instances in which a local branch facility offered better economics than a company’s headquarters but still jobs went there.

“Clearly there’s a different level of commitment” when companies are owned by families that live in the community, he said.

That commitment often spreads beyond the office or factory. Evidence is as close as the expanded Frank M. and Dorothea Henry Cancer Center at Geisinger Wyoming Valley, which reflects the contributions of the Martz Trailways family to local health care.

We can’t forbid companies from selling or merging. So, what can be done to preserve local control? Grow local companies, Vonderheid said. His group and others like it are working on entrepreneurship and “ensuring that we have owners here and not just workers.”

Part of that effort is a new alliance designed to attract venture capital and “angel funds” to support local entrepreneurs. “That’s a key piece for the strategy going forward,” he said, so that a growing company with capital needs has an alternative to ceding control to an acquirer.

That kind of backing may come in handy if Sanfilippo and Palko get the itch to start something new. “They are exactly the type of entrepreneur this region needs to encourage and support,” Vonderheid said.

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