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Chances are you own 10 of these; City's Poly-Seal makes nearly 2.5 billion caps, spouts, lids; From bleach to pretzels; Packaging

THE BALTIMORE SUN

Take a look in the pantries or medicine cabinets of a typical home and chances are you'll find at least 10 products made by Poly-Seal Corp., the Baltimore manufacturer that's rebounding from a fatal outbreak of Legionnaires' disease in its Portal Street factory last year.

The ubiquitousness of the company's work is hardly surprising. Poly-Seal's factory annually churns out nearly 2.5 billion plastic caps, lids and spouts for such household names as Clorox, Clairol, Arm and Hammer, Murphy's Oil Soap, Prestone and Utz.

"Either by product-line or size, we have the largest line of stock [standard-size] closures in the country," said Robert C. Weilminster, the company's vice president and chief financial officer.

The company, while well known in the packaging industry, likely would have maintained its low local profile had it not been for the widely reported October 1998 Legionnaires' outbreak that killed one worker and disrupted production.

Now, after winning praise for the forthright and aggressive way the crisis was handled, the privately held company and its 550 workers have gotten back to business as management looks for ways to increase the firm's annual sales of about $50 million.

The company is aiming for annual sales growth of 3 percent to 5 percent and wants to increase profit margins by concentrating more on lucrative custom caps or by offering specialized services, such as installing foil seals inside caps for some customers.

In an industry where consolidation is accelerating, Poly-Seal would even consider a business-boosting acquisition, if the right company becomes available at the right price.

Poly-Seal also has its researchers developing new products for the estimated $2.5 billion plastic cap industry. The industry as a whole is growing at roughly a 4 percent annual rate, according to independent analysts and trade-journal researchers.

These initiatives are part of a growth strategy set into motion by company President William J. Herdrich, who joined the company as part of a management-transition team in 1994 during a strike by the company's workers. Herdrich became president -- ahead of schedule -- the next year.

"What I saw was a company with really good revenues, good talent and great customers," said Herdrich, a West Point graduate. "It just needed to do things a little bit differently: spend more money on research and development, add new products, put in some new equipment, and embrace new ways of management."

A lot of that has already happened. Herdrich made a number of staff changes, including recruiting Weilminster from Ellin & Tucker, a regional accounting firm.

Poly-Seal closed its two other Baltimore-area plants, consolidating production at its 250,000-square-foot factory in the Holabird Industrial Park and cutting about 100 workers.

Stephen Lightner, president of United Steelworkers Union Local 6967, which represents hourly workers in the plant, credits Herdrich with improving relations with employees and said the executive is open to suggestions from workers on the factory floor.

Packaging is a $72 billion business in the United States and is an increasingly important industry as companies try to make their products more easily identifiable and user-friendly to shoppers. For instance, the newer pop-up shampoo caps allow users to open the spout with a press of the finger.

Twenty to 30 main players dominate the "closure" end of the packaging-production business -- industry parlance for the companies that churn out an array of twist-off caps, container seals, squirt caps and plastic spouts like those in liquid detergent bottles.

And competition has grown intense, said Bert Miller, president of Phoenix Closures Inc., a family-owned company of 250 workers in Naperville, Ill., and a Poly-Seal rival.

A big reason: Consumer-product companies, locked in ferocious competition, are being forced to hold prices down -- or cut them -- meaning they must squeeze their own costs and pressure suppliers to cut prices, too.

Poly-Seal, which does about 95 percent of its business in the United States, and sells to packaging distributors and directly to consumer-product companies, acknowledges that the current marketplace is a tough one.

Some customers are keeping inventories tight because of economic problems abroad.

Not ordering as much

"It's not that we've lost business," Herdrich said. "Customers are just not ordering as much. Packaging has been flat. It built up at the beginning of [1998], but slowed down as customers pushed back orders, trying to cut down on inventories."

Marginal players -- those with $2 million to $4 million in sales -- have been pushed out of business, leaving private firms such as Poly-Seal and Phoenix to compete with bigger public companies such as Owens-Illinois Inc., said Miller of Phoenix Closure.

Owens-Illinois, a Toledo, Ohio, company with $5 billion in annual sales, would seem a formidable rival because it makes both con- tainers and caps.

But Miller said many independent container-makers don't want to give their cap business to Owens, a rival. So these firms seek out companies like Poly-Seal and Phoenix to provide caps, spouts and other types of sealing devices.

Poly-Seal, for its part, has tried to make sure that price is not the only factor customers consider when searching for a plastic cap supplier, Herdrich said.

First, the company offers extra services, such as installing the foil seal.

A second key is meeting customer needs. For instance, one customer called to say that its Poly-Seal-capped bottles were leaking. Poly-Seal found that its caps were fine but that the "landing" on the bottles was crooked so that even when the the cap was twisted tightly, the bottle wasn't sealed.

Poly-Seal slightly modified its cap so it would seat on the defective bottle and the leaks stopped, said Production Manager William E. Freyer. That saved the customer time and money because it didn't have to retool its own production line and junk all the bottles it had already turned out.

5,000 different caps

Poly-Seal also offers a broad product line -- as many as 5,000 different caps -- meaning it can serve most customer requirements.

The third key to success is innovation. Poly-Seal aims to develop two new cap products a year.

One recent invention was an adaptation of the pop-up-spout cap. By making the cap flare out at the top much like a vase, a container can be stored on its head, so the liquid gathers at the bottle's top and its contents can be squeezed out immediately when the consumer wants it -- an ideal feature for products like lotions, said Freyer.

The different "look" this cap gives the container also helps Poly-Seal's customers differentiate their products from rivals', said Weilminster, the Poly-Seal financial officer.

Poly-Seal's roots in Baltimore reach back into the 1930s, when it was the Standard Cap & Molding Co. Poly-Seal emerged in 1969 out of that company's bankruptcy.

The closely held company is now owned by the estate of the late Edward Litchfield and some of Litchfield's family members in New York state and Connecticut.

The family tends to be relatively hands-off, however, leaving the managers it hired to run the company's day-to-day operations. The family also has been very willing to reinvest in the business, company officials said.

"The family prefers to maintain a very low profile," Weilminster said.

The Legionnaires' outbreak put Poly-Seal in the local spotlight. Five workers were infected by the bacteria and one died. The company's openness with workers, investigators and the public together with the quick response to resolve the outbreak won praise from employees, the community and even rivals -- some of whom confirmed that they stood ready to help Poly-Seal fill customer orders.

'Complete professionalism'

Even before the outbreak was confirmed as Legionnaires' disease, Herdrich shut down the factory half where the ill employees worked. Managers held conferences with workers several times each day, updating the employees on what was happening.

"They handled the affair with complete professionalism," said Kent Louviere, head of Acadiana Plastics Manufacturing Inc., a Poly-Seal rival in Lafayette, La. "They did all they could to protect their people, they did all they could to protect their customers. They have a quality management team."

Lightner, the United Steelworkers local president, says of the outbreak and management:

"We don't always see eye-to-eye. But during that situation, they communicated with us with candor, they got the employees the information first, they apprised us of the situation and told us of the plan of attack. All in all, we have a good relationship. And I've worked here for 20-some years."

Pub Date: 2/28/99

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