Brothers glad to be boxed in

Entrepreneurs: Two brothers left investment banking for the box-making business, knowing nothing about it, in 1988. They have expanded the company tenfold.

September 10, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

Paul Centenari was sick of the investment banking business - sick of the "distasteful" behavior he saw, sick of going from one deal to the next without ever getting to really know his clients.

In addition, tax laws were about to change and make the small Colorado firm he owned with his brother, Peter, far less lucrative, and the two resolved to start shopping around for a low-tech manufacturing business to buy and run.

They looked at plastic injection molding, cellular telephones, auto parts, printers and plastic bags before coming close to buying a maker of cheesecakes.

In performing due diligence on the cheesecake company, though, the brothers got sidetracked by the boxes in which the treats were shipped, and that started down a road that led them from Denver and a world of high finance to Baltimore and a life of corrugated cardboard.

"We had no idea what [the box] industry was about; we had no idea that there even was an industry," said Peter Centenari, 46, executive vice president of Atlas Container. "But now, unlike everyone else, when we get a gift at Christmas we look over the box before we open it - how was it made, how well was it made and who made it."

When the Centenaris bought Atlas Container Corp. in 1988 for $3 million, it had 35 employees in one location and had about $6 million a year in sales. Fourteen years and a string of acquisitions later, they have 350 employees in Maryland, Virginia and Connecticut, and about $70 million in annual revenue.

Atlas is also starting a plant from scratch, its first non-acquisition expansion, in Richmond, Va. It's trying to grow while, through initiatives such as an open-book policy and giving employees a say in how the company is run, creating an environment in which workers feel they are more than cogs in a machine.

Among independent makers of corrugated boxes, Atlas is considered large, but independent companies account for only about 20 percent of the market. Large, public companies have the balance.

The brothers settled on Atlas Container in Baltimore's Cherry Hill neighborhood after sending letters to 450 box companies across the country. Of those, 23 wanted to talk and five were interested in selling.

Atlas "was a great business. There was no debt on the books, it paid its bills within 10 days, it had been profitable every year for 10 years, cash was flowing, and the owners seemed to be honest and of high integrity," said Paul Centenari, 45, the company's chief executive.

It took some convincing before they could get a bank loan for two guys in their early 30s who knew nothing about boxes. But the banker who handled their transaction said their business plan was well written and well thought out, and that they had persuaded the sellers to remain at the company and help run the business.

"Which was a great move, because they didn't know Baltimore and they didn't know the market," said John H. Hennessey Jr., who at the time was vice president of corporate new business development at Maryland National Bank. "They were bright, articulate guys, and they had contacts to raise some capital."

A chunk of that capital came from the father of Paul Centenari's one-time girlfriend - Andrea Jung, now chairman and chief executive of Avon Products Inc. - and from the father of a friend Paul Centenari met while attending Dartmouth College and two men he met while at Harvard Business School.

The brothers had equity partners, a loan and sellers who were agreeable to staying on for at least 18 months to help with the transition. But things didn't go well at first.

The acquisition of a rival company in 1993 began in disaster when they tried to fold unionized MacMillan Bloedel in Severn into nonunion Atlas. Many of the workers wouldn't work for the new company. Atlas was moving from its Baltimore location into MacMillan's facility, and nothing was clicking.

"It was chaos; nobody knew what anybody else was doing," Paul Centenari said. "Customers were ordering product and it was getting lost or not going out on time; lines were getting shut down; people were screaming at us. I'd go out to the plant and watch the conveyor system, and it was empty time after time. It was one big nightmare."

Centenari worked 15 hours a day, seven days a week for six months before things began to run smoothly, he said.

Don Fleegle, one of the Atlas founders who has stayed on part time since selling his share of the company, said the brothers were "very eager to learn, but sometimes they would make a decision in an industry they were not familiar with, and there would be repercussions once in a while, but they learned from their mistakes."

The brothers also wanted to try to create a "democratic workplace" where employees are shown the books - everything except other people's salaries - and are able to vote on many of the issues that affect them.

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