Joseph P. Kearney graduated in 1973 with a Ph.D. in Nuclear Engineering. He also took courses from MIT's Sloan School of Management. In 1989 he founded U.S. Generating Company, which is an independent power producer, generating electricity and selling it to electric utilities. The company has 900 employees and sales of $390 million. Headquarters are in Bethesda, Maryland; the company has 17 generating stations around the country. After graduation, Mr. Kearney took a position as assistant to the chief scientist at a nuclear company and later was a budget analyst for energy issues at the OMB under President Ford. He then started a company bringing project finance and technology into the oil fields. Later, he set up major new subsidiaries at Fluor and at a large natural gas company.
When two major companies wanted to get into the independent power business, they turned to Kearney and financed his new venture. These two partners put in $1 billion of equity; the rest was borrowed from foreign banks (U.S. banks were effectively out of the market at the time because of the real estate crunch).
With electricity deregulation proceeding in many states, independent generators will no longer be guaranteed contracts with major utilities. As a result, there is tremendous competitive pressure to reduce generating costs--and to do so without ignoring environmental controls. The company's strategy is to go beyond the minimum environmental requirements and to build a good relationship with the host community. In addition to speeding up the approval process, this extra environmental investment maintains staff loyalty and enthusiasm. A well-motivated staff, in turn, is essential to any effort to reduce generating costs. In the long run, the enthusiasm of the staff will do more to lower overall costs than the extra environmental investment will raise them.
The company pays above average wages because it wants above average performance from its staff. It is pushing decision-making responsibility down to all employees. Because the generating plants are computer controlled, computer literacy is a must for even the lowest-ranking staff members. There are strong financial incentives throughout the company salary schedule. "People can do incredible things when they feel good about their company." Kearney cites the example of an employee who flew across the country and back again on his own initiative to pick up a part and re-open a stalled plant in 24 hours--two days faster than would otherwise have been possible.
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