From the factory floor to the stadium seats, CEO wants to deliver total package
MARY ELLEN PODMOLIK / CHICAGO TRIBUNE
Before the first pitch was thrown at the South Bend Silver Hawks’ home opener last month, team owner Andrew Berlin stuck his hand under all the soap dispensers in the men’s and women’s bathrooms to make sure they worked.
He went to the hardware store to buy brooms to sweep the concourse. He stood inside the left-field gates as ticket holders arrived, shaking their hands to welcome them on a chilly April evening.
Berlin, a hard-driving, detail-oriented Chicago businessman, had taken every precaution to ensure a good night.
What he couldn’t anticipate was that the first foul ball of the season would sail over the roof of Coveleski Stadium into the parking lot and land squarely on his black Cadillac Escalade, leaving a dent.
“Maybe it’s good luck, like when it rains on your wedding day,” he said with a chuckle.
At almost 52 and chairman and CEO of an eponymous packaging company that should pass $700 million in revenue this year, Berlin is hardly ready to craft an exit strategy. But the purchase of the Class A Silver Hawks in November was more than a vanity play.
It’s a business turnaround opportunity — Berlin expects the team to return to profitability this year — and schooling to prepare him for his next goal.
“I’d like to buy a Major League Baseball team,” Berlin says matter-of-factly. “That’s the plan, but it has to be a Central Division team. I don’t want to go far from home, and Chicago is definitely home. How bad can the day be if you wake up and say, ‘I’m involved with baseball.”
Berlin Packaging LLC has become a packaging industry juggernaut as a result of organic growth and, more recently, acquisitions; it has had 19 consecutive years of sales and earnings growth. Its customers come from 12 industries and include such familiar household brands as Downy, ACT mouthwash, Target and Turtle Wax. Berlin’s Studio One Eleven design division designed a frog-shaped Pampers Kandoo hand soap container that last year won an international design award.
No customer accounts for more than 5 percent of the business, and Berlin doesn’t sell to the auto, construction and high-tech sectors, which are industries hard hit in an economic downturn. When consumers are pinched financially, they may tradedown to a less expensive shampoo, but that shampoo still comes in a plastic container.
“You know what’s great about packaging? Even in a recession, we make money,” Berlin said.
Indirect route
Berlin attributes a fair measure of his success to his 83-year-old father, Melvin Berlin, a self-made man who bought a metals company in Chicago in 1967 and renamed it Berlin Metals LLC.
Berlin worked there, and at a long list of other jobs, while putting himself through Syracuse University, earning a Bachelor of Arts in political science. Afterward, he earned a law degree from Loyola University Chicago Law School because, he admits, he had a romantic notion about becoming a lawyer. In hindsight, he acknowledges, a Master of Business Administration might have been better.
Berlin practiced law at the firm that was then Katten Muchin Zavis for 23 months. He found it an incredibly inefficient business, helping clients work toward trial for months, only to have them settle right beforehand.
In 1988, Melvin Berlin negotiated a leveraged buyout of Alco Packaging. Andrew, then 27, left the law firm to join his father as director of marketing and general counsel at Alco, which had $69 million in revenue. He was named president a year later, and the company changed its name to Berlin Packaging in 1990.
Berlin established itself as a one-stop resource for product companies in need of plastic, glass and metal containers and closures, offering package consulting, design and mold development, transportation and logistics, and financing. It contracts with other firms to do the actual manufacturing, which keeps down Berlin’s capital expenditures and operating expenses.
In mid-2007, when annual revenue topped $300 million and the company had 25 locations nationally, private equity firm Investcorp took a majority stake, and Andrew, who put an undisclosed but “substantial” amount into the deal, remained CEO and was named chairman.
Its latest acquisition, finalized last week and the third since 2010, of Connecticut-based Lerman Container, increased its presence to more than 80 sales offices and warehouse locations, and it will allow Berlin’s annual revenue to push past the $700 million mark this year.
“Our acquisition play is not a slash-and-burn play,” Berlin said. “I’m not saying slash and burn doesn’t work. In many cases it does. But ours is more of a growth play. We’re not really looking to buy troubled companies, but if there’s a deal out there, and it’s priced right, we’ll certainly set out to turn it around.”
Despite doing this as long as he has, Berlin has lost none of his competitive zeal. Borrowing from Nike founder Phil Knight, whose mantra was “Crush Adidas,” Berlin likes to say, “I derive joy from crushing the competition.”
“He was really modest about what he’d done. He’s ambitious, but in the right ways,” Bennett said. “I can’t say I could see the brilliant businessman in Andrew way back then, but I did see someone who was charming and intelligent and made a big impression on me and my sons.”
As a student, Berlin took a “World of War” class that included a trip to European battlefields. Professor Bennett brought his sons along. When he told his sons he had become reacquainted with Berlin and asked if they remembered him, they certainly did.
“Andy was the first guy who gave (then-14-year-old Matthew) a beer on the Channel steamer,” Bennett said.
Finding, keeping the best
Berlin’s interest in making people feel included has carried over to his professional life. Early on, Berlin said, he realized he had to be good at recruiting and retaining good employees, so his strategy is to create a corporate culture in which they feel vested in the company’s performance . Every employee participates in the profit-sharing plan, and every new hire, from truck drivers to top executives, is taught how to read the company’s income statement.
“We want everyone in the company to cut operating expenses, improve productivity somehow and increase sales,” Berlin said. “You can impact the bottom line no matter what position you’re in, because every person in the company has ideas. You act on everything that doesn’t cost you money. You have to show you’re listening, and a company with big ears is going to get some really great ideas.”
Berlin doesn’t like to benchmark his customer loyalty against packaging firms, but instead against some of corporate America’s most admired companies, names like Disney, Four Seasons hotels and Apple. In keeping with that idea, he doesn’t recruit just from within his own industry. Package designers have come from toy companies, and sales and marketing professionals have been recruited from the hospitality industry.
He looks for recruits who have the intelligence, creativity, imagination, integrity and sense of humor to fit into Berlin’s culture. “It is the search for traits before skills,” he said. “Skills can be taught. Traits can only be recruited.”
A company, Berlin reasons, boils down to a few different kinds of people. An employee with poor values who isn’t making money for the company should be let go. Employees with good values but poor results need to be better trained. Star employees with good values and great results need to be embraced and retained. Then there’s the fourth type.
“What do you do with the guy that makes a ton of money for you, but he’s a (jerk)?” Berlin said. “We cut him. Culturally, they drag down the rest of the company, because they’re sales leaders, they’re de facto leaders in the company. It sets a bad example.”
Does he put more pressure on employees than other companies do? “Yes,” he answers without hesitation. “In the interview process we ask people if they derive joy from crushing the competition. Some people blanch at that. Some people really believe there’s enough business for everybody out there.”
Berlin said the company can boast an employee retention rate of 93 percent, and customers know it.
“To see a guy keep all of his help for so many years is just amazing,” said Scott Scharg, co-founder of It’s a 10 Hair Care, a Deerfield Beach , Fla., personal-products company that is among Berlin’s customers. “He leads by example. It’s like we’re working hand in hand, together for the same goal.”
Joking with Scharg in the owner’s suite on the Silver Hawks’ opening night, Berlin said they should have a “ladies night” at the ballpark that involves It’s a 10. He wasn’t joking; it is now being planned.
When the competition calls, Scharg said, “I don’t even take the calls most of the time. You can always shop on price. People are knocking on your door, but it’s the integrity of the company. These people care, and it starts with Andrew.”
Said Berlin: “I can’t say my bottles are necessarily better than anyone else’s bottles, and we don’t hold any patents that let us charge whatever we want to charge. We work in a competitive industry. Your competitive advantage has to come from the people you hire, train and retain.”
Game plan for firm, self
Berlin’s plan for himself includes guiding the company and its employees until his mid-60s.
Investcorp’s purchase of the company generated a significant amount of cash for Berlin, and with the company continuing to do well, he is confident he could buy a Major League Baseball team with a consortium behind him. But he doesn’t want to stray far from home.
A dozen years ago, divorced and with three daughters, Berlin saw the woman who would become his wife in Heathrow Airport’sAdmirals Club. As it turned out, they were on the same flight. Andrew and Courtney married 8 1/2 years ago and are now parents to two young sons.
To plan for his next career, he has been learning the business side of baseball since his purchase of the Silver Hawks, an affiliate of the Arizona Diamondbacks. Berlin is a limited partner in the Chicago White Sox, which has given him such perks as a World Series championship ring and a nice setting for his 50th birthday party, but he has no input on the team’s management.
Joe Hart, hired by Berlin as president of the Silver Hawks, is helping him learn.
Hart, a 17-year veteran of minor league baseball, was working for Ripken Baseball’s Charlotte Stone Crabs when he heard that Berlin needed a team president and contacted him. A week later Hart was sitting in Berlin’s home, intrigued.
“He admitted he doesn’t know about minor league baseball, but he wanted to learn it,” Hart said. “He said, ‘I don’t hover, but I want to learn.’ He comes with the passion and the idea of either go big or go home. He wanted to go over the top for the overall fan experience.”
In conjunction with his purchase of the team for an undisclosed sum, Berlin negotiated a 20-year lease with the city and invested $2.3 million in the ballpark. The city of South Bend invested another $1.75 million, on top of the $7 million in renovations they had already put into the facility.
“He was very straightforward about what he wanted but was always very respectful of what the city had already invested,” said former South Bend Mayor Stephen Luecke. “He was very clear that if the city wasn’t able to put in any more money, he wouldn’t buy the team. He’s really bought into the community in a positive way.”
Upgrades to the 25-year-old stadium included more outdoor suites, new concessions, a Budweiser-sponsored picnic garden, a splash pad and an expansive, sponsored family entertainment area with giant inflatables dubbed Applebee’s Fun Zone.
Berlin’s goals for the team? “Number one, we make money. Number two, we have fun doing it. And number three, I know it’s going to sound cheesy, but we’re in the business of making memories. I love making memories for these little kids.”
The Silver Hawks won the season opener against the Fort Wayne TinCaps and drew a crowd of 4,700. Attendance at games, where tickets sell for $6 or $8, is up more than 50 percent compared with a year ago.
Last year the team drew fewer than 113,000 visitors for the entire season. Hart and Berlin want to see that number swell to 300,000 within three years.
To help it get there, Berlin regularly trades emails with South Bend residents about the team. In fact, he said he has received several good ideas from a nun at the University of Notre Dame.
His love for the game, though, hasn’t eclipsed his passion for packaging. Baseball, at least for now, is just a bonus.
“I love the way we’re building this business,” Berlin said. “The ultimate team sport really is business.”