BusinessTN

Few businesspeople in Tennessee will recognize Peter McKee as one of the state’s top CEOs. Given that the 65-year-old McKee has been conducting business in the Volunteer State for less than two years, that’s an understandable omission.

Overlooking McKee among the pantheon of Tennessee CEOs is also understandable given that McKee’s company, an “un-manufacturer” of obsolete computer and electronics parts, is housed in a wing of a Chattanooga hospital and currently employs only a few dozen workers.

Nonetheless, McKee’s executive accomplishments, achieved largely over a three-decade span working in Europe, would suffice to mark him as a standout in the state’s executive community. And if his current stateside plans come to fruition, he could well become a revolutionary in American workforce training and a hero to disabled Americans coast to coast.

Brussels Sprouts
An engineering graduate of the Ohio State University, McKee began his career in Silicone Valley at the dawning of a sudden surge in microprocessor interest. An ambitious young visionary who at the time counted among his friends and colleagues future semiconductor tycoon Jerry Sanders, McKee was designing chips while most computer geeks of the day were still clinging to the promise of the mainframe.

McKee went on to co-found a company called Data I/O Corp., a Washington State-based designer, manufacturer and seller of programming systems used by designers and manufacturers of electronics products worldwide. The company would eventually become the fourth most successful company in NASDAQ history when it went public.

Young, wealthy and by then married with children, McKee moved to Europe where he co-founded an investment banking firm focused on high tech companies. One of its acquisitions was the international division of Memorex Telex, best known as a maker of cassette tapes. At the time, the company was wholly dependent on mainframe computers.

Based in Brussels, Belgium, a socialist country, Memorex was well staffed by a number of aging engineers whom, according to socialist law, were virtually assured of employment until they retired at age 65. No one understands that fact better than the 51-year-old worker, who McKee says has a tendency to allow his or her competitive edge to slip. McKee inherited about 70 such employees in one of his Memorex divisions.

Determined that if he was going to have to pay them they were going to work, McKee tasked the engineers with taking apart warehouses full of mainframe computers. He then began reselling the components. “All of a sudden,” McKee says, “cash started coming through the door.”

Seeing Green
In environmentally conscious Europe, McKee’s “unmanufacturing” operation became a lucrative business. Over time, he began to envision using the same process for personal computers. But a tight labor market kept his plans on hold. Then, on the advice of a colleague, McKee went to Amsterdam, Holland to visit what’s known as a social work place. Expecting to find an operation analogous to a sweatshop, McKee instead found a manicured campus setting he describes as not unlike the University of Tennessee. There, physically and mentally disabled Dutch citizens both worked and lived, enjoying on-site amenities like movie theaters and gymnasiums. Over 30 such facilities exist in the Netherlands, each housing as many as 850 employees.

Inside the work place factory, hooks suspended from the ceiling ran from the front door to the back door delivering parts to assembly line workers, whose disabilities ranged from being wheelchair bound to suffering from brain damage. McKee watched as every eight minutes a shiny new bicycle came off the assembly line. He promptly negotiated a deal with the work place president to lease the facility and its workers from Friday night through Monday morning. Reversing the motors, he soon had disabled workers taking apart computer monitors, PCs, printers, laser scanners and other electronic parts, placing recyclable materials into hanging baskets.

McKee’s business caught the eye of Dutch Queen Beatrice, who even helped finance the company. A country below sea level, Holland shuns land filling. Also a country well represented by the Green Party, McKee’s work was embraced as a significant societal contribution by the environmentalist community. Queen Beatrice even requested that if McKee ever decided to sell his company he do so to the Dutch government. And in 2000, after 18 years in business, McKee did just that. At the time of the sale, the company was generating $85 million in annual revenues.

Recycling Effort
Sixty-years-old at the time of the sale, McKee says he planned to retire. He moved stateside to be closer to his children. Ending up in Florida, he began working with state government on the development of an eWaste strategy. While stalled in that effort, McKee accepted an invitation from a friend to speak at the Chattanooga Chamber of Commerce. He’d never been to Tennessee.

At the chamber event, McKee met Robert Main, president of the Siskin Hospital for Physical Rehabilitation in Chattanooga. The two men made an instantaneous connection. Few people knew better than Main how difficult it could be for disabled persons to find gainful, meaningful employment following rehabilitation. Together, the two began discussing a business plan. They soon launched ReConverting Technologies, a small computer unmanufacturing operation set up in a room in Siskin hospital.

Serving essentially as a demonstration lab for potential investors, the company today employs about 30 people. According to McKee, ReConverting is the only company in America using disabled workers to recycle computers, cell phones and other electronics.

To date, the company is not producing a profit. But McKee, whose entrepreneurial fires are once again stoked, says he has investors lined up and is targeting a supply chain from manufacturers, distributors and dealers who can supply similar systems in bulk. McKee will soon open a factory in Chattanooga, the first in what he plans will be a national rollout to 52 pre-determined locations in larger urban centers. McKee expects to grow exponentially over the next five years, saying he’s confidant of reaching $82.2 million in revenues by 2010. Working in his favor are industry trends showing that recycling obsolete computer equipment is expected to be the fastest growing component of the electronics industry through 2010.

No Longer Obsolete
How does McKee compete against companies like Hewlett Packard that recycle used computer parts using multi-million dollar grinders that churn out quarter size pieces of gold and other metals on a second by second basis? By carefully taking apart a computer bit by bit for maximum resale value, margins are higher than hammering whole devices into bits. And that’s work that blind people or people missing a leg can complete efficiently.

Besides, McKee says he wouldn’t do it any other way. “We are helping a segment of the population that is largely ignored to be employed and contribute in a large way to helping the community and the environment,” he says.

One of McKee’s biggest supporters is former Tennessee Senator and U.S. Secretary of Labor Bill Brock. A noted education reformer during his long tenure in federal politics, Brock is the founder of the North Carolina-based “Bridges” program, a school-based program serving 200,000 students in 20 states that is designed to improve cognition and perception skills through physical activities.

Reached at his offices in Annapolis, Md., Brock tells Business Tennessee that meeting McKee and seeing the work he is doing “touched every button I have.” And in fact the two are in discussions about a possible partnership on the development of a more sensitive and sensible curriculum for training disabled persons.

“We don’t do a very good job in this country of identifying what might be done to improve the productivity of people who have disabilities,” Brock says. “What Peter McKee is doing is good and noble work. It’s important socially and environmentally. And it is potentially very productive economically.

Given the number of unemployed, disabled U.S. citizens that are essentially neglected by U.S. employers, Brock says he doesn’t doubt McKee can develop 50 or more facilities and produce large revenue figures.

Whether or not McKee can reach his lofty financial goals is yet to be determined. Less uncertain is the fact that endorsements of the company’s model are flooding out of Siskin Hospital. One employee interviewed by a Chattanooga television station went from being wheelchair-bound and unemployed for 17 years to working for ReConverting, abandoning his wheelchair and even getting his driver’s license back.

“That has nothing to do with Peter McKee,” McKee relates when asked about that particular story. “That has to do with one man’s respect for himself.”