Des Moines Register
01-21-07
How, why Telecom snatched Maytag's old space
Alan Wells says his Newton company is taking a risk and helping the community; some see little benefit.
By WILLIAM RYBERG
REGISTER BUSINESS WRITER
Newton, Ia. - Alan Wells laughed when the idea was first pitched to him over the phone.
The deal: The company that Wells heads, Newton-based Iowa Telecom, would buy the former headquarters of Maytag Corp. and turn major parts of the complex in downtown Newton into the main offices for Telecom.
It was a David-and-Goliath real estate proposal. The headquarters of the former
Fortune 500 company could swallow up the Iowa Telecom office staff of around
400 in a single gulp and still have room for another 1,000 workers or more.
"There's a lot of space," says Wells, Iowa Telecom's president, chairman and chief executive.
And the new owner of most of Maytag's headquarters is Iowa Telecom.
David is moving into Goliath's old house. Wells will keep the lights on at the old
Maytag headquarters.
"Iowa Telecom is taking a substantial risk," said Jon Ewing, a Newton City
Council member and supporter of a multi-faceted plan that included Telecom's purchase of major Maytag office buildings.
The payoff: Iowa Telecom gets prime space to grow and to put all of its office staff under one roof. Newton avoids an empty landmark building near its town square.
Whirlpool, based in Benton Harbor, Mich., bought rival Maytag last March and announced in May that all operations in Newton would be closed by late 2007, eliminating 1,800 jobs divided about equally between the headquarters and a washer/dryer factory.
The Telecom deal grew out of the Newton Transformation Council, a group of community and government leaders given the job of helping Newton adjust and thrive without Maytag, a community cornerstone since the company's founding in
Newton more than 100 years ago.

The transformation council and community leaders decided they needed a buyer for the headquarters as a whole to keep the buildings from going empty, said Kim
Didier, executive director of the Newton Development Corp., the community's economic development group.
Telecom, after Whirlpool's departure was announced, expressed an interest in leasing parts of the structures. Wells was asked if Telecom would buy nearly all of it.
Wells may have laughed at first, but he took the proposal seriously. He checked out the buildings, crunched some numbers and decided that Telecom could make it work by using some of the space and leasing out the rest. He sold the idea to the Telecom board of directors.
"The communities we're in are important to us," said Wells. "We only grow when our communities grow."
Major parts of the deal included Whirlpool's sale of most of the headquarters buildings to Telecom and transfer of two buildings to Des Moines Area
Community College, which will use them to create a vocational high school career academy near the main Newton campus.
Some former manufacturing buildings will be demolished to create a park-like space between the DMACC campus and the Iowa Telecom offices.
The buildings cover about three city blocks.
Wells likens the project to a shopping mall. Iowa Telecom and the Newton
DMACC campus are the anchors. The key now is to find tenants to fill in the rest of the space.
Wells is confident, although he says it could take a year or two.
Some space can't be filled for now, he said, because it has been leased back to
Whirlpool, while the appliance maker winds down its Newton operations.
Iowa Telecom is working with the Newton Development Corp. and other community leaders, looking for prospects.
Several central-Iowa and out-of-state companies have already expressed interest, Wells said.
"Newton is still a pretty attractive community," Wells said.
The office spaces are in good shape. Features include sophisticated laboratories

where Maytag did research and development work for its appliances.
With or without tenants, it costs money to mow the grass, clear the snow, keep the lights on and run the furnace in the winter and the air conditioning in the summer. Ewing estimates basic costs run more than $1 million a year.
Wells expects Iowa Telecom to be totally moved in sometime this year.
Wells sees himself as a hands-on manager, who expects a lot from his employees and thinks employees do better when they have a good time at their jobs.
Danny Carroll, Iowa Telecom's director of community relations, said Wells is a classic certified public accountant.
"When Alan looks at the budget or looks at the numbers, he knows it's in the best interests of the company, our customers and employees to do what those numbers say need to be done," Carroll said.
Some view Telecom's purchase price of the Maytag buildings as a sweet deal, said Ewing, but the deal has risk. The price: $1.5 million for buildings with an assessed value of $12 million, when they were operational.
Iowa Telecom "undertook tremendous responsibility and risk," said Ewing. "There may be some day where that was a heck of an investment, but it's not going to be a short-term return ... and it's not without risk and exposure."
Ron Foreman, another City Council member, however, says he sees little benefit for the city.
An expanded DMACC presence in Newton is good, but overall the various parts of the deal produce no financial gain for the community, Foreman said.
"We can put a spin on anything, but as far as actual hard financial gain, I have yet to be shown where it's going to be coming from," Foreman said.
Backers of the plan say it was important just to make sure that the Maytag buildings didn't wind up empty or demolished.
The large complex near the downtown is "almost iconic," said Tim Borich, Iowa
State University's director for university extension for community economic development.
If the building were to go empty, it could become a negative symbol within the community and for outside business prospects looking at Newton.

Didier said an empty building can begin to deteriorate quickly, and the emptiness can make it harder to sell.
"Nothing good happens to an empty building," she said.