Once a month, all the machinery stops running at Severn, Md.-based Atlas Container. No phone calls get returned and the plant floor is empty. There is a lone receptionist at the front desk and more than 100 employees crowded into one meeting room. The plant's quietness is offset by its employees' loud cheering. The company is viewing its financial statements but employees are not just seeing the final profit numbers, but every financial detail.
Last year, Atlas Container purchased two 66- by 113-inch Ward SV2000 rotary diecutters as part of a $5 million expansion project.
In the box making industry, there are few, if any, companies that provide continuous training to every employee in accounting and finance. Very few manufacturing businesses, public or private, shut down their operations once a month for the whole company to review the income and cash flow statements. But Atlas Container is one of those. A few years ago, company owners, brothers Paul and Peter Centenari, developed the company's Open Book Management (OBM) process. Sharing the company's numbers with everyone from the maintenance staff to the entire customer service department has helped Atlas achieve success, not only for the Centenaris, but for everyone who works for them as well.
Finding Their Way
Paul and Peter have no family history in box making nor had they ever worked at Atlas prior to buying it. In fact, neither one of them really knew anything about the box making business before buying the company in 1989. With their background in investment banking, Paul and Peter were looking for a new business niche. They explored a variety of markets such as plastics, paper, auto parts, and printing before they accidentally found their way into the box business.
At the time the brothers were living in Denver and they looked at acquiring a homemade cheesecake business. After deciding the investment was not particularly sound, they explored the corrugated boxes that the cheesecakes were shipped in. From that point on, they seriously explored the industry. They wrote to approximately 450 plants initially, visited 23 of them and then narrowed that number down further before deciding to buy Atlas.
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The Centenaris developed criteria for what they were looking for. The company they were going to buy had to be profitable, have little or no bank debt, had to be in business for at least 10 years, and the original owners had to be willing to stay on.
All their criteria were met with Atlas. Two of the company's three original owners, who founded the company in 1968, helped the Centenaris with the change of power and both still work at the company. Don Fleegel and Pete Taylor still report to work two days a week even though they retired from the business more than 12 years ago.
"We like this business because it's a disposable product," Paul says. "It's regional. It's under-managed and under-marketed. It's capital intensive. It's basically a mundane product but it sells to a number of different industries. It absolutely is a business where you can acquire other companies and grow. That's what we ultimately wanted to do."
The first year was rough for Paul, Peter and the business. As Paul puts it, "basically, we drove it into the ground. We were acting like investment bankers, not like manufacturers."
Atlas Container moved to its 250,000-square-foot facility in Severn, Md., when it purchased a McMillan Blodell plant in 1993.
After that wake-up call, the brothers changed their way of thinking and Atlas' numbers went up. They then started an acquisition spree. The company bought two of its competitors in a year and a half. Both companies were shut down and the employees and machines were merged into Atlas' operations. In 1993, the company bought a MacMillan Bloedel plant in Severn and moved the entire Atlas operation there. The transition and adjustment period was difficult, Paul says, and it took the company awhile to get its feet stabilized. Atlas has since bought or acquired seven companies since 1998, bringing its total purchases to 10 within 10 years.
Growing In The Right Direction
The company has continued to grow at an unbelievable rate – approximately 22 percent a year for the last decade. The company has gone from 45 to 270 employees, with sales going from $6 to $60 million. "If we continued our growth pattern, we'll be a $250 million business in six years," Paul says.
Atlas currently has a facility in Alexandria, Va. in addition to the Severn plant. Atlas Alexandria Packaging is the company's newest acquisition but the company is slightly different than Atlas' prime base. It is a finishing operation that carries packaging supplies, including selling boxes in small quantities. The relationship works out well between the two plants since the Severn plant can supply the Alexandria site with small runs of boxes.
Because of the company's rapid acquisition spree, Atlas has acquired several machines and installed them into the plant. The company also found the need to buy additional machinery to keep up with its growing business. The company completed a $5 million expansion project in the past year, including purchasing two 66- by 110-inch Ward Machinery Co. flexo rotary diecutters. Atlas created a partnership with Ward in conjunction with the purchase of the machinery, including key training for Atlas crews. The company also purchased two Martin stackers, a C&M conveyor and a palletizer/unitizer.
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"We've definitely increased our efficiencies by adding the new machinery," says Purchasing Manager Kim Hall.
The new buys were added to the company's Ward and Koppers two-color presses, its two Koppers two-color flexo folder-gluers, two Emba flexo folder-gluers (a two-color and a three-color), and its two Martin two-color flexo folder-gluers with diecut sections. When the company moved to the Severn facility, it broke into the corrugated market with its Langston B-flute and Koppers C-flute corrugators.
In the future, Hall says the company would like to expand to five-color process printing to break into the display market. "I think the niche can be filled with the equipment we already have," he says. "All we have to do is add more colors." The company currently has two designers and Paul agrees that the graphics market will be the area to expand into. "We see it as the growth area and we want to continue to grow," Paul says.
Last year, Atlas produced 900 million square feet and hopes to improve that number dramatically by its latest acquisition currently in the works. The 250,000-square-foot Severn plant runs three shifts while the Alexandria plant runs two.
Atlas has a varied customer base, primarily selling to Maryland, Pennsylvania, Virginia, Delaware, and New Jersey printers, manufacturers, end users, and distributors who resell them again. Paul attributes Atlas' diverse customer base to how well the company has survived during the recent difficult economic times.
But Paul knows his company's product is pretty basic so to distinguish itself, the company has carved itself a niche in the huge market.
"Our focus is on quick turnaround," Hall says. "Paul likes to refer to us as the Fed-Ex of the box industry. Many can give the quick turnaround when times are slow, but Atlas can supply you when you really need it, when times are very busy."
The same day or next day service is why Atlas has continued to grow at such a huge rate, Hall says. Hall used to work for one of Atlas' customers, a printing company, so he was able to witness firsthand Atlas pulling through for its customers in tight times.
"When Paul and Peter first bought the company and when they moved to this facility, I set up a back-up supplier in case they weren't able to pull through," he says. "I didn't have to use those back-ups then and I can assure customers they don't have to have a back-up now. Atlas have managed to maintain a great level of service despite growing enormously."
Despite the company's market niche, Paul says the company's real strength is in its hard-driven work force. "We have such passionate employees and they really care about the company," Paul says. "I'm definitely most proud of the people."
Paul says there is a direct correlation between employee satisfaction and morale, and between customer satisfaction and profits. If you can improve employee satisfaction, the customer is satisfied and the company is more profitable so it benefits Atlas to make sure its employees are happy. Paul and Peter are constantly trying to do that. A few years ago, the company hired a training manager, built a learning and a fitness center and remodeled the bathrooms so they are accessible from the office and the plant, promoting greater interaction.
As a result of the company's OBM process, Atlas has developed an open-door policy with everything in the company. Atlas created its OBM system because "we get the best out of our employees when we inform them," Paul says. "When we get the best, they become partners, not just employees.
"If you can somehow create a line of sight from what they do every day and how it affects the financial statements, you're going to create a passionate work force that wants to make a difference and a profit."
OBM is the process of sharing the company's numbers with everyone from the maintenance staff to the entire customer service department. Its principles are treat everyone like an owner, then everyone will feel like an owner and take on the responsibility of an owner.
At the monthly meetings, the financial statements are displayed and everyone can see if the company's target was hit. They can see if their department spending is up and they can then explain why or figure out a way to reduce it.
"They have the opportunity to directly see how they impact the profit level," Hall says. "Everyone then feels the impact of tough times and they figure out how to do their job better and more efficiently."
Prior to the monthly meeting, the company has weekly departmental huddles to discuss what is going on. Then the company has lead team meetings to discuss numbers, each department and machine productivity levels, and financial statements.
The company offers many contests as incentives for employees to work more efficiently. There are monthly sales games and profit goals. Those games are broken down into department levels and then even further into shift and machine levels. Each crew for a machine in each shift has its own mini-game, whether it is based on production, lower spoilage or other categories.
In order for the employees, most of whom have never had any financial training, to understand the financial statements they are viewing, the chief financial officer teaches a 12-week financial session. Many, if not all, employees attend the classes. This is especially beneficial since the company initiated a stock program in 2000. The company, an "S" corporation that cannot have more than 70 shareholders, sold phantom stock to more than 100 of its employees beginning in February 2000. So the company no longer has more than 100 employees, it has more than 100 owners.
As owners, the employees vote on all major issues, instead of Paul and Peter making all the major decisions. For example, the company needed to invest in a robotic slitter and the corrugator employees had to decide which supplier to buy it from. Paul and Peter, who own 80 percent of Atlas, wanted to buy from one supplier but the majority voted on Marquip. So the company now has a Marquip slitter-scorer.
The company's OBM has impacted every aspect of the business, something Paul and Peter say is definitely for the better. That sentiment is unanimously echoed by the rest of the Atlas staff.
"I've seen the consolidation and buyouts in every industry and I experienced it first-hand before joining Atlas," Hall says. "Even though the company is growing larger, it is still keeping the $5 million company mentality it started with. Once people get a feeling for the company, they experience that warm-fuzzy feeling that Atlas offers."