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May 18, 2016 02:00 AM

Mack pushes long-term happy customers over short-term profits

Michael Lauzon
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    Mack Molding Co.
    Mack Molding in 1942.

    Not many companies in the plastics industry can boast their business has been in the family for 96 years.

    Mack Molding Co. can.

    Donald S. Kendall co-founded Mack Molding Co. in 1920 after he spent time as a chemist for the Thomas Edison Cos. Mack started with three rebuilt injection presses and experimented with urea-formaldehyde and phenol-formaldehyde resins in its Little Falls, N.J., facility. The company expanded and mostly made bottle caps until World War II, when it switched to mortar-shell casings and other goods for the war effort. After the war it began molding automotive and appliance components.

    The Kendall family bought out partners in the Mack business in 1960. Early jobs included Timex watch boxes and Schick razor handles.

    In 1974 Donald S. Kendall III, the founder's grandson, took over the reigns of the firm. Kendall III, now the company's CEO and chairman, started with a $4 million business and grew it to its current size of about $350 million a year. It grew internally and through acquisition. Its latest acquisition was Synectic Engineering Inc., a custom engineering services company based in Milford, Conn., that it bought in summer 2013.

    Mack Group is now based in Arlington, Vt., and runs 11 manufacturing plants in the United States and Mexico. Mack Molding is the major plastics business among the firm's four divisions. Mack Molding operates six plants in the United States producing molded plastic components and assemblies for diverse industries ranging from medical to electronics to consumer markets. It also makes metal parts and offers design, prototyping and other secondary services. Mack Molding employs about 1,200.

    Other divisions are Synectic, Mack Prototype of Gardner, Mass., which also does low-volume plastics molding, and Mack Technologies, a provider of turnkey system assembly services for high-end electronics.

    Kendall states his family has made it a priority to keep Mack in the family.

    “We would like to keep Mack in the Kendall family for as many generations as we can,” Kendall stated in an email correspondence. “We prefer not to have outside investors whose goals may not align with ours.”

    Family businesses can create a legacy and with it a sense of accomplishment that can be a strong motivator for following generations to carry on the tradition. The owners teach and pass along their values in business and life to the next generation.

    One of Kendall's two children, Will, is interested in the business and plans to continue with Mack. His other son, Scott, has his own business outside Mack but is still an active board member. Both own significant blocks of Mack stock and could decide together how the company would be passed on to their children. Only Kendall family members own Mack stock with Kendall and his two sons owning more than 95 percent of the firm.

    In every Kendall generation there has been someone with the talent and desire to lead the company. Kendall assumed leadership at the age of 27 after his father died. Each generation benefited from the latent knowledge of the business amassed by the former generation. The fourth generation is actively involved in Mack. Nancy and Scott Kendall are board members. Will Kendall is on the board as well as president of Mack Technologies Inc., a business specializing in turnkey systems for high-end electronics.

    From as early as high school family members are exposed to the innermost workings at Mack. They work in departments as diverse as maintenance to sales to prepare them for leadership positions.

    The family feeling spreads throughout the company and Mack has employees whose families have also spanned the generations. Key employees can be treated like extended family and develop bonds that go beyond the typical employer-employee dynamic.

    “We have parents and children, grandparents and grandchildren, husbands and wives, working together,” said Kendall. “It is the nature of operating a family-owned business in small-town America.”

    A family has more freedom in how company employees are treated and the family can make decisions that would go counter to the instincts of third-party investors and management.

    “We are more interested in long-term happy customers than short-term profits, something that would not be acceptable to most outside investors,” Kendall said.

    “Probably the decision to take all of our employees to Disney World for four days for the 75th anniversary would not have been made by a third party. Also 50 percent of our bonuses are based on how happy our customers are. Third parties would probably place more emphasis on profits.”

    This long-term approach can be called “patient capital.” And the family itself also can be a source of “hard capital” to finance business strategies. This backstopping of the business by the family can give the company a competitive advantage when the economy is sluggish and financing through conventional channels is hard to get. Mack has no long-term debt.

    Mack is a big employer in a small town in a sparsely populated state. About 600 work at Mack's three facilities including its headquarters in Vermont. Arlington has about 2,300 residents and the whole state about 626,000.

    The Kendalls are well aware of how important Mack is to the communities, not only for employment and taxes, but also for community involvement and environmental stewardship. Long ago the company ran a bowling alley in Arlington where employees could relax after work. Now it is locally famous for holiday parties, picnics, free fitness classes and an outdoor recreation area.

    Mack has weathered tough times. It got into computer housings when that was a nascent market and then diversified when that market became crowded and the dot-com boom went bust. Now it also counts medical, industrial, transportation, energy and consumer products as its major markets. Over the years it added prototyping, large-part molding, painting, design and high-end electronics assembly to its custom injection molding forte. It brought fresh blood into the business to balance management strengths and currently the important positions of president of Mack Molding and CFO of Mack Group are held by non-family members, Jeff Somple and Florence Belnap, respectively.

    Mack expects to see single-digit annual growth in the near term. Some outsiders might strive for faster returns but the Kendalls have found a formula for success.

    “We have no interest in selling the company,” Kendall emphasized. ”What we are doing is very fulfilling.”

    Read an overview of family-owned businesses and find links to other profiles.

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