Envelope Mart USA/H.O.T Printing: The Ultimate Family AffairOctober 2013 By Erik Cagle, Senior Editor
Turn back the clock to 1978. A young Greg Shapiro and his wife decide to take a weekend trip from their suburban Detroit home to Toledo, OH, and visit Shapiro's mother, Inez. What he found upon arriving at mom's house was a little bit jarring. It seems Inez Shapiro had brought home her work.
More specifically, the work had consumed her home. Inez literally had jobs sitting all over the place, and it was clear that she needed some assistance. As the Shapiros trekked back up I-75 at the end of the visit, it occurred to Greg that mom's House of Type typesetting business—at this point an apt name, considering the state of Inez's home—was in need of a lifeline.
There were probably a thousand reasons for Greg Shapiro to stay put, though. He had a good job with a Fortune 500 firm in the Detroit area. His wife, Pam, was a registered nurse. Their future looked promising. Why delve into a home-based business operation?
Well, there was one reason to come home: Mom.
In short order, the Shapiro brothers—Greg, Myron and Norm—joined their mother's business. "We made the decision to move," Greg Shapiro says. "My wife worked and supported us. I never took a paycheck that first year. You make those kind of sacrifices to build something for the future. So I started knocking on doors and we began building the business."
Myron came aboard a year after Greg, then Norm—who had actually started his own printing side business after rebuilding a beat-up, $50 Multilith press—entered the fold and the two businesses married.
Inez Shapiro had her own remarkable story. A single mother, she needed a job following her divorce. A friend helped Mrs. Shapiro secure a typesetting job, which she did for several years. She later joined another firm, which suffered a devastating fire that caused the shop to close. At this point, Mrs. Shapiro's friend made a suggestion...start her own typesetting business. Her friend offered more than advice by ponying up a $3,000 loan to help Mrs. Shapiro get started.
The business was destined to succeed. Failure, according to Greg Shapiro, simply wasn't an option. "There was a fear of failure," he admits. "We worked hard and tried to keep our heads screwed on straight. We've certainly made some mistakes over the years, but none were fatal. And sometimes it only takes one mistake to blow away all the years of hard work."
Thirty-five years later, H.O.T. Printing & Graphics and its brother firm, Envelope Mart USA, continues to make all the right calls along the way. The Shapiro brothers have honored their late mother's legacy by growing the company in new and exciting directions. Ten acquisitions, in tandem with organic growth, have enabled the Shapiros to surpass the $20 million mark in annual sales. The company occupies 100,000 square feet of space at three locations (five buildings total) in and around Toledo, and the combined entities employ 130 people. It's a far cry from Inez Shapiro's home-based typesetting business.
Commercial Printing Operation
The H.O.T. segment of the business is a commercial printing operation backed by 40˝ and 29˝ Heidelberg sheetfed offset presses, producing full-color marketing literature for Fortune 500 firms, advertising agencies and nonprofits. It counts manufacturers, health care providers and colleges/universities among its clients.
Complementing the Heidelbergs are two Kodak NexPress color digital presses, a trio of wide-format printing devices and a full bindery. And, while the printing side of the business continues to grow, it represents just a quarter of the firms' combined revenues. A lion's share of the dollars is generated by Envelope Mart.
A national, wholesale-to-the-trade envelope printer and converter, Envelope Mart USA boasts five converting machines and a dozen Halm Jet presses to generate a staggering six million to eight million envelopes per day. Acquired in one of the Shapiros' earliest deals, the company really began to pick up momentum roughly six years ago, when it added converting to the mix.
"The previous owner was kind of old-school, who didn't think there would be a market demand for color envelopes," explains Greg Shapiro, president of H.O.T. Printing & Graphics. "We installed a four-color Halm Jet press, then a second and a third, and business really took off for us. Now, we manufacture a large percentage of our envelopes and we print in-line flexo, as well as litho and digital."
"Adding converting capabilities truly endeared us to some of our major clients," notes Norm Shapiro, president of Envelope Mart. "We've developed a series of value-adds around the commodity envelope. We offer just-in-time deliveries and warehousing that have helped our clients save money. We've also developed patented, reusable packaging that's eliminated the need for corrugated; a tray system that integrates right into clients' high-speed inserters. It cut thousands of dollars per month out of logistical, material handling and corrugated costs."
By instituting software for real-time ordering and job tracking, Envelope Mart further enhanced its relationships with printers, distributors, mailers and in-plants.
The Shapiros are still active in the M&A landscape. According to Greg Shapiro, the deals his firms make are complementary, adding sales along with occasional equipment and personnel. Mostly, they find sellers looking for an exit strategy who can offer volume, improved efficiencies and economies of scale.
On the H.O.T. side, the company has expanded its non-offset capabilities through digital printing, including variable data personalization; wide-format digital printing; and marketing services (including hiring marketing communications specialists). Promotional products have added another revenue stream.
In addition to another converting machine, the Shapiros are eyeing further diversification opportunities in the coming months. Another goal is the eventual consolidation of the five buildings into a single location.
"Flexibility is key for us," says Myron Shapiro, vice president of both entities. "We're not afraid to customize and innovate to meet customers' needs. We also do our homework and make decisions that are well thought out and researched, not spontaneous or rushed."
Above all, the Shapiros act as a unit, in accordance with Inez Shapiro's wishes of a three-way partnership (Myron Jr. has also joined the fold, making it a three-generation concern). The Shapiro brothers may not always agree, but they find common ground to the benefit of both companies. And, while there are no longer jobs sitting on the couch and kitchen table, the Shapiros refuse to rest on their laurels.
"That's part of our success. We operate like we're fighting for our survival every day," Greg Shapiro notes. "We are blessed, but we also know that we can't take anything for granted in this business or in this economy. We've never felt like we arrived...we continue to work hard every day." PI