The secret to success is in recruiting well, training well and retaining talent. And these are three areas that Andrew Berlin has excelled in, as Steven Pacitti finds out.
PLASTICS IN PACKAGING / STEVEN PACITTI
It is difficult in this era of consumer consciousness to escape the term ‘hybrid’ in everyday life. Many people strive to drive a hybrid vehicle which, by combining the traditional internal combustion engine with electric motors, claims to be environmentally friendly. Meanwhile, plastics machinery manufacturers are treading over each other to introduce the next hybrid machine that mixes hydraulics with electrics to deliver cost savings.
Now we have the emergence of the hybrid packaging supplier, bringing its customers everything from package design and global sourcing, to manufacturing, warehousing and logistics, and even consulting and financing.
Keen to wrap his customers in the firm’s hybrid business model is Andrew Berlin, a businessman, attorney and baseball enthusiast who entered the packaging industry after his father bought Alco Packaging in 1988. And the success the company has enjoyed has far exceeded what both Berlins ever envisaged.
“The plan when we acquired Alco Packaging was to fix it up and sell it off. We’ve now had the business for 25 years,” explains Berlin. “Once you’re in packaging it’s difficult to get out.”
What makes it easier to stay in the industry is sales of US$800 million and an annual growth rate of almost 25 per cent, which is well ahead of the general growth of the US packaging industry of around 2-3 per cent. And until recently the company had achieved all of this through organic growth. Two acquisitions in 2010 and another two last year further expanded the company, but as Berlin explains, the company has not lost its roots in organic growth.
“The acquisitions we have made were jewels in the packaging industry,” says Berlin, who – as a limited partner of the Chicago White Sox Major League Baseball team and owner of the South Bend Silver Hawks Minor League Baseball team – has a fascinating backdrop to his business career.
“We acquired US Container Corporation (USC) in October 2012,” he says. “The company’s focus is on industrial packaging, which is an area we had not done a great deal in. So the acquisition expanded our product line and bolstered our Western US geography focus.”
Berlin Packaging has retained all of USC’s facilities and intellectual assets, with Andrew Berlin saying that the plan is to “grow it, not slash it”. In addition, Berlin has already upgraded USC’s Information Systems (IS) to its own. As for USC’s Sunburst Bottle web-store, Berlin will maintain it and run it alongside its own Freund Container brand, which also has a strong e-commerce presence.
Although having more than 90 locations around the US, Berlin Packaging does not actually make packaging. It contracts out all of its manufacturing, giving it the status of ‘hybrid’ manufacturer.
“We build moulds, design packaging, and distribute. We also have three consulting firms that work closely with clients,” explains Berlin. “We established Berlin Financial Services in 1991 and we loan money at zero per cent to customers to help them buy equipment, which ties in their business to us. We also established E3 consulting services to help companies Enhance both the Balance Sheet (Efficiency) and the Income Statement (Earnings). We brought consultants onboard from Bain & Company and we loan these to customers.
“The third consulting firm we have is Studio One Eleven, which is a full-service package and graphic design firm that also provides marketing services to help customers gain a competitive edge.”
The only company in its segment to be ISO 9001 certified in the US, according to Andrew Berlin, Berlin Packaging is so proud of its own operational track record with customers that it owns the website www.99percentontime.com, which demonstrates how the company’s disciplined approach has enabled it to ship 99 percent on time for 107 consecutive months and counting.
“This was achieved by having a balance of the right amount of inventory at all times,” he says. “We start heavy on inventory with a new customer so we never run out of stock, and then buying habits form and you can fine tune the system.”
And training is very important to Berlin, who is now the company’s chairman and chief executive since his father’s retirement. “For me, the future is to progress what we do now. If a company behaves correctly, then the business model is good. We have a good work ethic among our 600 staff, and what is important to me is creativity and behaviour. Putting the right people in the right job is key.”
Alongside the USC purchase, Berlin Packaging has also acquired All-Pak, Continental Packaging Solutions, and Lerman Container since 2010. All-Pak brought geographical advantages in addition to its active presence in the pharmaceutical and nutraceutical industries. As for Continental Packaging Solutions, Berlin says that as it was a local firm active in the same industry, the deal strengthened the Berlin core and added some great customers. Meanwhile, Lerman has an east coast US focus, which introduces geographic advantages.
“All chief executives of these firms had done a great job, so it was easy to integrate the businesses into ours.” And more acquisitions are planned.
“The focus of these buys will be on geography and product line extension. We will also remain dedicated to rigid packaging, as there is significant untapped business here for us. In the US the rigid packaging market is worth $55 billion but our sweet spot represents about $35bn of this market, so there is plenty of growth potential.”
That is not to say that Berlin Packaging has not considered flexibles (it has), or for that matter the market outside of the US. Not only has it partnered with companies in Europe, such as Sanner for pharmaceutical packaging distribution, but Berlin confirms that the company is actively looking at European opportunities.
Around 60 per cent of the company’s business is in plastics, although it has also increased its metal output with the USC buy, and has activities in glass too.
“We sell closures as well, because I think you should sell a closure if you sell a bottle,” says Berlin. “Some converters in our industry have relied far too heavily on one big customer but no one firm is more than 5 per cent of our business.”
Aside from seeking trophies from the sports teams in which he has an interest, Berlin says that he is not interested in receiving awards for what his packaging company does. He wants to show customers how they can earn more money.
“We offer unique innovation and creativity, while others don’t, because we are always looking at competitive advantages. There are only three ways to make more money, and that is to increase sales, reduce expenses and improve productivity.”
Compared with five-to-ten years ago, when custom products made up 25 per cent of Berlin’s business, this has now risen to 40 per cent. Although with 35,000 stock keeping units (SKUs), the sheer volume of bottles that Berlin has in its portfolio gives the appearance that every product is custom-designed.
PET and polyethylene make up the majority of Berlin’s business, but Andrew Berlin says that the company can follow any trend. “PET is popular, while PP is good for hot-fill. Eco resins have promise but need development. You need to make sure that you are not enlarging your carbon footprint in order to make a bottle that makes you feel good. And cost-wise, customers do not want to pay a premium for it.
“We were the exclusive distributor for ICI’s Biopol (PHBV) eco-resin back in the mid 1990s, and Wella used it for hair products as it was a good PR story for them. But the material was very expensive at about $10 a pound.”
As passionate about his sports as he is his packaging company, Berlin even admits that he sees best practices in his sports businesses that could be transferred to his packaging operation. Part of the company’s service to customers includes them sending out Starbucks coffee thank you cards; Berlin says his company is in the business of delighting customers.
But Andrew Berlin will not be resting on his laurels on the back of impressive sales and growth, because he did not get where he is today doing that. As he himself admits: “We are often pleased, but never satisfied.”