Folding napkins to ring up sales - small business awards; includes list of winners

Nation's Business, July, 1989 by Michael Barrier

Folding Napkins to Ring Up Sales

Henry L. "Tad" Bretting was fresh out of the University of Notre Dame with a business degree in 1958, but he was not planning to join his family's firm or any other business. He was going to be a professional baseball player.

Bretting spent the summer pitching in the Chicago White Soxhs farm system, but "my arm went bad on me," he says.

Reluctantly, he gave up baseball and headed for the family firm, C.G. Bretting Manufacturing Co. Inc., of Ashland, Wis. His timing was not particularly good. It appeared that the Bretting Co.'s best days were long gone. Tad's grandfather had founded it late in the 19th century as a maker of machinery for sawmills and mines, then of great economic importance in the upper Midwest. But as the economy changed, the Bretting Co. stopped making sawmill machinery, and by the early '40s, it had stopped making mining machinery, too. When Tad joined the company, it had only 11 employees, and sales had shrunk to $120,000 a year. The Bretting Co.'s main business was servicing equipment it had sold many years before.

How things have changed. C.G. Bretting now has 260 employees and annual sales of $30 million--thanks to changes that Tad Bretting started making 30 years ago.

In tribute to his success in reshaping a moribund manufacturing company into a thriving producer of specialized equipment, the U.S. Small Business Administration has named Bretting National Small Business Person of the Year for 1989. He received his award from President ush in a ceremony at the White House.

The top winner is chosen by the SBA's advisory council of small-business leaders from among the 52 Small Business Persons of the Year representing the states, the District of Columbia, and Puerto Rico/Virgin Islands (see listing below). The criteria for seclection include staying power, growth in work force and sales, innovation in products or services, and response to adversity.

To fasten on how Tad Bretting achieved the top honor, just do this: The next time you're in a fast-food restanrant, take a look at the napkin dispenser. Think about how many napkins a fast-food store uses in a day, and the tens of thousands of fast-food stores in this country. Think about the light, unstable paper those napkins are made of, and how difficult it would be to design a machine that could fold those napkins at high speed without tearing them.

And there, Tad Bretting says, you have the key to his company's success: "We were the first ones to really automate the production of paper napkins."

When Tad Bretting started working at C.G. Bretting Co., he recalls, the best available napkin-folding machine required two people to turn out 1,600 folded napkins a minute. He was encouraged by a paper-company executive to design and build something better.

After some trial and error, Bretting and John Trogan, a young engineer, came up with a machine that required only one operator and could fold 2,000 napkins a minute.

Today, John Trogan heads C.G. Bretting's 70-member engineering staff, and the Bretting Co. produces a single-operator napkin folder that can turn out 3,400 napkins a minute. It also sells machinery for folding paper towels, boxed facial tissues, aluminum foil, and wax paper.

The napkin-folding machines are big (70,000 to 80,000 pounds each) and expensive ($500,000 to $850,000 each). They dominate the domestic market--Tad Bretting estimates that his machines have a 90 percent share. Domestic demand may be slackening, as the fast-food industry's growth flattens out, but, Bretting says, "the overseas market is just really starting to take off."

Foreign customers accounted for about 30 percent of the company's sales last year and will probably account for 35 to 40 percent in 1989. Tad Bretting says that his foreign customers, like those in the U.S., have been drawn to the Bretting machines not by advertising but by glowing reports from companies that already have the Bretting folders. "we spend virtually zero on advertising," he says.

Tad Bretting, at 53, has carried the family company to beights his father, the late Lyman Bretting, never dreamed of, Tad says. Yet it took "some fairly heavy borrowing," he adds, to develop the folding machines, and it was thanks to his father's "extremely good credit" that the money was available.

Lyman Bretting never borrowed, Tad says, "except for his house. If he bought a piece of equipment, he paid cash. I learned that if I missed paying a bill on time, he just absolutely hit the ceiling."

But Lyman Bretting decided very early that he could trust his son's judgment. Tad became president of the company while he was in his mid-20s. Even after taking charge, though, he didn't make major decisions--buying an expensive piece of equipment, say--without checking with his father.

"The first machine tool I bought," he recalls, "I spent months putting justification together for it, because I had to borrow money for it, and that was the first time we ever borrowed money to buy equipment." He thought his father would resist buying the machinery until they had the cash on hand to pay for it, "but by the time I got done with the story, his remark was, 'I don't think one is enough. You'd better look at buying two of them.'"