By Kristine Henry Sun
Originally published September 10, 2002
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."
*** Open Book Management ***
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.Managers at the nonunion shop recently wanted to change the penalty for failing a drug test from a 60-day suspension to immediate firing. The employees voted no, and the plan remained unchanged. Employees' evaluations of their supervisors are among factors that determine whether the supervisor gets a raise or promotion. The company pays bonuses when certain profit targets are met. Through paycheck deductions, employees can buy nonvoting stock in the company, and Atlas has a policy of helping employees pay for classes or tutoring for their children.
Employees generally say they like working for Atlas but that it's not a utopia. They say wages - which start at $8 to $9 an hour - could be higher; they wish managers wouldn't use production goals to pit shifts against each other; and they say they don't get a say on everything that affects them, only those issues that managers put up for a vote.
"It's a job, it pays well, and they treat you fairly," said Shane Dickens, a machine operator at Atlas for about five years. "Since many of these issues pertain to us, it's good that they allow you to vote."
Paul Centenari said his father, an Italian immigrant and civil engineer, drilled the value of education into his children. That, he said, is why Atlas promotes GEDs and higher education among its employees. But that aspect of the company, along with allowing its employees a vote in how things are run, is also strongly focused on profits.
"There is a direct relationship between employee morale, customer satisfaction and profits," he said. "This is a business decision. We're not the Red Cross. We can't be doing these things if we're not making money."
The Richmond plant will be one of many new ones if things go as planned. The brothers want to expand until Atlas is at least a $300 million company, which they say could be about a decade away. Then, they might sell, go public or turn it over to their children.
"Or we may continue to grow," said Peter Centenari. "If you ask me 10 years from now, I might say a billion dollars is a good sales number."