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Saturday, Dec 9, 2023

BOXES—Out of the Box

A family-owned manufacturing company in sun valley has done just fine after decades in competition with some of the giants in the packaging business Marfred Industries Year Founded: 1965 Core Business: Corrugated box manufacturing Revenue in 1999: $50 million Revenue in 2000: $60 million Employees in 1999: 284 Employees in 2000: 309 Goal: To grow and improve its market share Driving Force: The growing demand for high-end corrugated box packaging among small to mid-size businesses In 1965, Rubin Fenster got out of the grocery business. He’d learned his lesson. Fenster had realized that he could save money in his Glendale store by making his own paper bags. Then Rubin Fenster, now 90, realized he could make money by selling them to other stores. But it was never easy, said Marvin Fenster, Rubin’s son, now the 60-year-old president of Marfred Industries. “I went to one of our vendors to pick up some products there and the guy on the loading dock said the owner wanted to talk to me,” Marvin said. “He said, ‘Let me tell you right off: do not do what your father is doing. He’s going in the wrong direction. Sell industrial packaging, corrugated boxes.'” The Fensters quickly realized it was a technology that had been available for years, with lots of commercial appeal. So, Rubin Fenster sold the grocery store and took himself and his two sons into their new business. Machines that made the corrugated packaging were expensive, but they bought one. “We sometimes had to work all day and all night just to fill an order,” Marvin Fenster said. In the company’s first year, working out of a 1,200-square-foot Glendale storefront, the company struggled to make sales of about $50,000 with a small list of “mom and pop” stores for clients. But by the mid-1970s, the company had moved into more than 100,000 square feet of office and manufacturing space in Sun Valley, serving small to medium-sized businesses. Despite business lulls and high paper prices through much of the 1990s, the company has merely persevered at times and flourished recently, posting a record $60 million in revenue last year. Naming the company after sons Marvin and Fred, Rubin Fenster grew an enterprise that once employed just the three of them to one with 309 employees and $60 million in sales last year, up from about $50 million the year before. The founder of the company still works every day in the company Marvin and Fred (vice president in charge of operations) now run, occasionally even going out on sales calls. Marfred today targets a high-end market with boxes featuring four-color graphics on glossy paper and custom-made box designs, favored particularly by computer and electronics firms. Marketing director Brian Malloy said the company has invested heavily in new equipment that accommodates the high-end customer. “We’ve found that there is a higher margin in that market, so we’re aggressively pursuing it,” he said. But, with the persistence that has sustained Rubin Fenster since he came to this country as a boy in 1916, as sluggish sales at computer and tech firms have meant cutbacks on box orders, Marfred has moved once again into a new line, this time food packaging. The company is also launching its new on-line e-business this month, allowing customers to place orders on the Internet. “Our objective was never to always be a ‘me too’ company and go over and see what the customer is using and say we can do the same thing,” Marvin Fenster said. “We’ve always been very creative.” With the addition of a 100,000-square-foot warehouse in Sun Valley in September and a new distribution facility in Las Vegas, the company’s total number of facilities has grown to five, totaling 475,000 square feet of work space. The others are in Lakeview Terrace, Pacoima and North Hollywood. Heather Lowry, a spokeswoman with the industry group Fibre Box Association, said Marfred is among the nation’s top 20 independent box manufacturers in an industry dominated by giants like Chicago-based Smurfit-Stone Container Corp. and Weyerhaeuser Co. Mark Weintraub, an analyst with Goldman Sachs in New York, said companies like International Paper and Smurfit-Stone have little to worry about from independents like Marfred. “They have their customers and the smaller companies have their niche that they serve well,” Weintraub said. According to the trade publication Pulp & Paper, corrugated box production in the U.S. grew by 27 percent between 1990 and 1999. Still, because of the fluctuating price of paper, many box makers struggled to turn a profit. But according to the Fibre Box Association, shipments of corrugated boxes throughout the U.S. are down 3.5 percent from last year, or by 324 million square meters in the last quarter of 2000. “Because our product is heavily weighted on the ultimate cost of raw material, we could have a fiscal growth in the number of units we sold, but show no growth in sales,” Marvin Fenster said. “So, we shift our focus to adjust for the economic changes going on.”

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