Family Partners Consider the Future
The owners Of Newman & Company take an informal approach to family governance. How will their leadership structure evolve when the fourth-generation team is in charge?
BY HEDDA T. SCHUPAK
Talk about green trend to the Newman family and they’ll smile and say it’s about time the rest of the world caught up with what they’ve been doing for nearly 100 years. Newman & Company, founded in and based in Philadelphia, is Pennsylvania’s leading recycler and supplier of rigid paperboard, Company president Bernard Bud Newman, 72, is extremely proud that every product that goes out the door on a Newman truck is made from 100% recycled materials. No tree has ever been cut to make a Newman product, the family says.
Six family members currently work in the business. The family is close-knit in the way that Jewish families can be: They argue often, sometimes loudly, and bust each others chops mercilessly, but they give every family member a voice and they’ve got each other’s backs.
“Always!” emphasizes fourth-generation member Susan Ferman Paul, 50, Bud Newman’s niece, who works in sales.
“We all have the same goal, to sustain a 100-year old business,” says Bud’s daughter Rachel Newman Schwartz, 42, also a fourth-generation member, who is director of marketing. “Whatever our differences are, we all want the same thing: to be here 100 more years.”
“When we had a family party for Hanukkah, the kids would be tearing into their presents, and our dads were tearing into the boxes to see if it’s one of ours,” says Paul with a laugh.
I generally agree with my sister.” chimes in David J. Newman, 45, vice president and general manager. “That’s a first!” interrupts Schwartz with a wink at her brother.
David Newman says the varied nature of the business means there’s room for the varied talents of the family members who run it. Bud, who is celebrating his 50th year in the business this year, is the last of the third generation in the company. His children and their cousins emphasize that the company would not be where it is if not for Bud’s leadership.
Jessica Newman Solomon, 46, sister of Rachel and David, is corporate secretary and also works in sales for one of the company’s affiliates, Bridge View Paper. Her cousin Michael B. Ferman, 48, is Susan Paul’s brother and vice president of operations. The Fermans’ mother is Bud’s sister, Lynne Newman Ferman. They have another sister, Michelle, who isn’t in the business. Their father, Nathan, worked in the family company for 39 years.
Newman rigid paperboard is used in a variety of products, including jigsaw puzzles and high-end packaging like Tiffany & Co. jewelry boxes, though not in the softer, folding variety of cardboard that’s fashioned into boxes for pizza, cake or department store gifts. The company doesn’t make finished boxes, only the paperboard that goes into them. “When we had a family party for Hanukkah, the kids would be tearing into their presents, and our dads were tearing into the boxes to see if it’s one of ours,” says Paul with a laugh.
Recycling from the start
In the early 20th century, many Jewish immigrants got into the scrap business. It was low-end and easy to enter: Collect old paper and rags, bundle them up and sell them to a dealer who would then take them to a paper mill. David Newman, Bud’s grandfather, was one of those peddlers. His business soon grew big enough that he was able to sell his scrap to paper mills directly. It wasn’t a glamorous business, but it fed the Newman family: David; his wife, Annie Rosengarten Newman; and their four children. The oldest son, Isadore (Bud’s father), and the only daughter, Esther, both left school after eighth grade to help in the business. Two younger sons, Louis and Milton, remained in school.
“My Aunt Esther was involved in business at a time when women weren’t,” says Susan Ferman Paul. “All [the family] were exceptionally bright, but Esther was the smartest of them all.” Esther Newman Solodar had strong business acumen, and her brothers often considered her views to be the last word on a topic—even, says Paul with a laugh, if they thought they were the ones in charge. “She reminded you of a tiger or a lioness who would let the cubs play all over her, and then suddenly swat them when she had enough,” Paul says.
When World War I broke out, Jewish box makers in Pennsylvania felt as if the paper mills were cutting them out of the supply chain. According to the Newman family, they approached David Newman and said, “If you build a mill, we will support it.”
With financing from relatives, Newman was able to buy a used paper machine and an old tin mill along the Delaware River in South Philadelphia in 1918. He restructured the building into a paper mill. His children Isadore and Esther, then teenagers, worked with him. At the time, the business was called Phil Fiber Boxboards.
The mill ran well until the Great Depression, when the paper business, like everything else, was hit hard. So hard, in fact, that the company went into receivership in 1929. Luckily, rescue came in the form of a paper distributor who did business with the firm. He lent the money to keep the business going, which David Newman paid off within three years, the family recounts. By 1940, Bud Newman says, his grandfather had “just had enough” of the business and sold the mill.
David Newman died in 1943. “My father and his brothers were yearning for something to do,” says Bud Newman. “They tried buying and selling pulp, but that didn’t work out. They also got into the mounting business for display advertising, but they didn’t like that either.” Around late 1949 or 1950, the brothers bought a parcel of land farther north along the Delaware River, in the Tacony section of Northeast Philadelphia. “It was a swamp,” says Bud Newman bluntly. But they designed and built a paper mill, bought some machinery and opened for business in 1952 as Newman & Company.
When Bud started in the business, his two cousins, all three uncles, his aunt and his brother-in-law were all working there. Nathan Ferman—father of Susan and Michael—retired in 2001. Cousins Sheldon Solodar and Mervin Newman retired in 1988 and 1990, respectively.
Bud Newman’s early career in the mill mirrored his father’s, he says. “Because my father was co-opted into the business, when I was about 14, he decided I didn’t need to waste my summers or school vacations playing baseball or loafing around, I needed to come work in the mill,” Bud recalls. He worked all over the mill, mostly in manual labor, and was mentored by the various department supervisors.
“These were people I looked up to, admired, and had great regard for, that took me under their wing,” he said. “I was curious about everything, I wasn’t lazy and, fortunately, I’m quite mechanical. Over the years, whatever talents I brought to the party came to the fore, and eventually they let me into the office—probably because I washed my hands first,” he quips. Bud Newman married in June 1963 and enlisted in the Army. Following his active duty, he rejoined the company. In time, he was able to implement his own ideas.
Newman & Company has expanded over the years. The business gradually acquired more and more land adjacent to its Tacony facility. Today the company covers 40 acres—less space than it needs, according to the family. It serves 700 accounts worldwide.
The business also has three affiliates: Bridge View Paper Co., United States Recycling Inc. and the brokerage division of Mill Corp., a logistics company. All of the affiliates are majority owned by the principals of Newman. “All our ancillary businesses are complementary now,” says Michael Ferman. The family at one point had ventured into “some tangents that didn’t work,” but has since abandoned those lines of business, he notes.
Among the company’s 200 employees are some “good people who made a bad mistake,” notes sales representative Mark DiMento. Several ex-convicts work at the plant. “If they’re willing to work, we’re willing to give them a chance,” says DiMento. Some ex-cons don’t last long, but those who stay do become very good employees, he says. As much as possible, the company has tried to avoid layoffs. Occasional cuts have been necessary, but “nothing like the Depression,” says Bud. Preferably, employees’ work weeks will be cut back by one or two days to avoid layoffs.
Newman & Company was described as “fiercely independent” in a November 2012 article in Board Converting News, a trade publication. The family is tight-lipped about how ownership of their enterprises is divided. Despite the scope of their business and the number of family members involved, they take an informal approach to governance. “We don’t have a family council; we have lunch together,” Bud Newman says. There’s no requirement or prerequisite for a family member to join the business, other than a genuine desire to be part of it. Susan Paul recalls sitting at the kitchen table just after she graduated from college. She had a degree in marketing and, within three weeks, had joined the business. She got engaged in the employee lounge at the plant, she adds. Jessica Solomon says the company has instituted flexible schedules and work-from-home assignments for female employees—both family and non-family—trying to balance careers and motherhood. “Because my aunt [Esther] had a family,” she says, “we’ve always been very sensitive to the fact that if women work here, they’re going to need not just maternity time but time to attend to rearing the family if, in fact, they follow a traditional role.” But Bud Newman is adamant that there’s no coddling. Adjustments in workload are accompanied by adjustments in remuneration, he says. Every member of the family has been initiated with grunt work. “People respect you more if they know you can do their job and have done their job,” Bud says. Even the female family members had jobs on the plant floor. One summer, Jessica’s job was to catch sheets of paper as they came off the paper machine, and Rachel spent a summer painting the roll-off trash containers. The Newmans have not used a family business consultant. The only consultant the company ever hired was a utilities expert to help make the plant more energy efficient, says fourth-generation member David Newman. However, non-family managers sit in on major decisions. Key non-family executives include sales manager Charles Wismer, 51, vice president and chief financial officer Lee D. Cohen, 59, and Michael Eckert, 49, mill superintendent. “There are very few isolated meetings where it’s just us,” says Bud Newman.
Planning for the future
Bud has the final word on conflicts that can’t be resolved. He says there are relatively few deadlocks, and he would prefer to stay out of the discussion. But “Every once in a while you have to realign the order of who’s in charge vs. who thinks they’re in charge,” he says. “I’m sort of the old guy you come to when you can’t bring closure on your own,” Bud says. “Because of who I am, it bodes well for resolution. I’m very blunt and I say what’s on my mind. I’m not always right, and it’s not always perfect, but it’s still a business and at the end of the day, you go home.” What will happen when Bud is no longer around to serve as a tiebreaker? “I’ll be dead,” he jokes. “What do I care?” Turning serious, he adds, “The bottom line is, they [the fourth generation] realize that if they want the company to continue, they’re going to have to work it out. So far, no one person has been given authority to dictate what the answer will be, so all the solutions now are by consensus.” The fifth generation of Newmans—17 cousins in all—ranges from age three to 19. Already both Jessica Solomon’s and David Newman’s children have worked at the company during the summer. “We joke with each other, but we’ve been at holiday tables together our whole lives, “ Solomon says. “Rachel and I used to just worship Susan in the early 1980s. We were kids and she came in wearing her Candie’s and Jordache jeans and we just thought she was it.” Despite his aversion to family business consultants, Bud Newman says he has planned for the financial future of the family and the business. But he declines to discuss the company’s succession plan. “We’ve done lots of family and estate planning, just in case,” Bud says. “You can’t please all people all the time. It’s one of the dilemmas of life. It’s evolving. We see what to do and what not to do. It’s not blind, and it’s not without emotion.” Bud Newman says he takes to heart the saying, “Don’t worry about what you don’t have control over.” The rest, he says, is beshert, which means “fated” in Yiddish. “I’m the luckiest guy I ever met,” he says with a proud smile.
Hedda T. Schupak is an editor and analyst specializing in fine jewelry and luxury retailing. She is the editor of The Centurion Newsletter, a weekly e news magazine in the luxury fine jewelry industry.
Reprinted from Family Business Magazines November/December 2013
© Family Business Publishing Company • 1845 Walnut Street, Suite 900 • Philadelphia, PA 19103-4710
(215) 567-3200 • www.familybusinessmagazine.com