Bemis Company, Inc. History

Company History:

Bemis Company, Inc. is a leading provider of flexible packaging and specialty coated and graphics products. Markets include the food, agribusiness, printing, graphic arts, medical, and chemical industries. Bemis' flexible packaging business, which generated $858 million in 1992 revenues, comprises everything from paper bags for pet food to see-through resealable cheese packaging and cold-temperature resistant packaging for frozen vegetables. Roughly 70 percent of all Bemis packaging is for the food industry. Its clientele includes such giants as Philip Morris, ConAgra, General Mills, Inc., Pillsbury, and Archer-Daniels-Midland. Processed meats, cheeses, confections, rice, flour, and breads are among those markets in which Bemis holds a dominant position. The company owes much of its reputation as a leader to its versatility as a packaging printer; measured by the number of individual printing impressions it makes annually, Bemis ranks as the world's largest printer in the packaging industry.

The corporation's other main line of business, specialty coated and graphics products, accounted for 27 percent of 1992 sales but 34 percent of its operating profits. Several analysts agree that this business, devoted to manufacturing pressure-sensitive label stock and other products for many of the same markets as the packaging division, is likely to generate the fastest growth during the 1990s.

Judson Moss Bemis founded the company in St. Louis in 1858. Born in Fitchburg, Massachusetts in 1833, Judson Moss Bemis spent part of his early childhood in New York state. He and his family moved to Illinois in 1838. Bemis flexed his entrepreneurial bent at an early age while working in Chicago as a shipping clerk and dabbling regularly in assorted enterprises, including real estate investment. Determined to launch a permanent business of his own, he contacted his cousin, Simeon Farwell, owner of a modestly successful bag factory. After touring Farwell's factory a few times, Bemis decided to enter the industry himself, with St. Louis as his headquarters. His cousin, though unable to invest money in the new venture, was willing to supply the necessary machinery for start-up operations in exchange for one-third ownership. Thus, at twenty-five, Bemis became his own boss, launching J. M. Bemis and Company, Bag Manufacturers with a pooled investment of $4,000.

The city of St. Louis soon proved an especially fortunate choice, for it had lately become the hub of trade for points both north and south along the Mississippi River and also benefited from tributary traffic stemming from the Missouri and the Illinois Rivers. Until 1866, when H. and L. Chase (considered the country's first bag company) opened a branch factory in St. Louis, Bemis had no serious competition. Indeed, there were at that time few bag manufacturers in any part of the country and none that offered the type of mechanized printing Bemis was planning. In order to overcome lingering skepticism among his customers that the neatly printed, machine-sewn, cotton bags were as sturdy as the more commonplace hand-sewn ones, Bemis guaranteed all his bags against ripping. The company's staff of four was soon filling orders and, after Bemis had sent circulars to most of the city's flour millers, the factory was operating at capacity. Inexpensive, custom-printed Bemis bags saved millers the time-consuming, messy task of stenciling and also appealed to the average consumer, long accustomed to buying flour in cumbersome wooden barrels.

By the end of its first year, the company was only marginally profitable, despite producing bags at the rate of 4,000 per day, and the owner was in desperate need of additional help and capital. Coincidentally, Simeon Farwell had written Bemis asking if a Harvard-educated relative, Edward J. Brown, might be able to come to St. Louis and work at the factory on a trial basis. Bemis agreed, provided that Brown become an equal partner in the business. Brown's diligence as a salesperson and bill collector noticeably enhanced the company's growth, but not to the point that it could sustain three partners; within two years, it was decided that Farwell should bow out.

The company's name then became Bemis and Brown, reflecting its two owners. With the advent of the Civil War, business accelerated, though bank failures and currency fluctuations created numerous headaches for the firm. A premium of 5-15 percent was being charged for Missouri state bank currency by Eastern exchanges at this time. In an effort to obtain the best possible exchange rates for his raw materials, Bemis directed Brown to open an office in Boston, their principal East Coast market. The company also gained an advantage from its entry into the sale of raw cotton, a commodity whose price skyrocketed during the war. Profits from this sideline business helped finance the growth of the company, which began to focus increasingly on burlap production, first of gunnysacks, made from secondhand bags used to ship linseed from Calcutta, and then original burlap sacks, made from imported jute fiber.

In 1867, Bemis's elder brother, Stephen A. Bemis, joined the firm. By 1870, Stephen had become a partner and was responsible for overseeing both manufacturing and selling in St. Louis. Judson Moss Bemis was thus able to join Brown in Boston, where he could more closely involve himself with commodity purchases and the financing of operations. Ultimately unhappy with his partner's managerial style, Bemis requested in 1873 that Brown state his conditions for relinquishing his part-ownership of the business. As biographer William C. Edgar wrote, "So great was Mr. Bemis's faith in the future of the business he had founded that although the sum must have seemed enormous to him ... he did not hesitate to buy Mr. Brown's share of it for the figure he asked--three hundred thousand dollars."

Now named Bemis Bro. and Company (later changed to Bemis Bro. Bag Co.), the bag manufacturer was steadily outshining its competition. By the early 1880s, with still just one factory, it ranked second in volume in the nation to an older, four-factory rival. Prodigious growth via geographic expansion would make Bemis number one in the world by the close of the nineteenth century.

Significantly, Bemis' first branch factory was opened in 1881 in Minneapolis, the city destined to become the company's modern-day headquarters. The evolution of agriculture and the advent of railroad networks had transformed the milling trade into a vital national industry. Minneapolis, the Mill City, had become the industry's new mecca with the rise of Pillsbury, General Mills, and other major concerns.

After its expansion into Minneapolis, Bemis established bag factories in Omaha (1887); New Orleans (1891); Superior, Wisconsin (1896); San Francisco (1897); Indianapolis (1900); Memphis (1900); Kansas City (1903); Seattle (1905); Houston (1906); and Winnipeg (1906). In addition, the company began operation in 1896 of a bleachery in Indianapolis for finished bag goods, and opened a cotton mill near Jackson, Tennessee, in 1900. The company-sponsored village that arose by the mill was eventually dubbed Bemis. This last development was designed to augment the production of the Home Cotton Mills, which had been established in 1870 as a separate corporation, incorporated in 1885, and taken over by Bemis in 1902.

Judson Moss Bemis's son, A. Farwell Bemis, assumed the presidency upon his father's retirement in 1909. In the foreword to Edgar's biography of his father, A. Farwell Bemis wrote that his father's "most remarkable quality of all was his progressiveness, the pioneering instinct. To the very end, progress was what interested him, the latest machine, the latest way. . . ." Although Bemis had already retired, save for his service as a director, this instinct was certainly evident when the company's principals ventured into jute manufacturing in 1913 through the Angus Jute Company of Calcutta. At the time, Judson Moss Bemis recognized the commodity burlap as particularly valuable, a material that was "king of its kind."

Even more forward-thinking than this joint development was Bemis's entry a year later, at a time when textiles were practically the only packaging materials being used, into paper milling and paper bag manufacturing. Paper packaging continued to grow under the leadership of Judson S. Bemis, who followed A. Farwell Bemis. The emerging paper packaging industry was to become the company's bread-and-butter business, particularly during and immediately after World War II. At that time the scarcity of cotton and burlap coincided with a steadily mounting production of paper, particularly in the South. Interestingly, other raw material shortages during the war led to the development of polyethylene, a highly versatile substance that would soon carry the company to its next technological plateau: plastic film packaging. Successfully leading the company through the World War II years and on into the start of its involvement with plastics and pressure-sensitive materials was F. Gregg Bemis. A grandson of the founder, F. Gregg Bemis managed the company from 1940 to 1960.

Although Bemis still continued to produce cotton and burlap in the 1950s and 1960s, its central product base had shifted decidedly toward paper, plastics, and custom-made packaging machinery. In 1952 the company made a firm commitment to research and development with the construction of its own research laboratory and pilot plant in Minneapolis. Seven years later, it inaugurated a long-range growth program to broaden its product lines and seek out new, compatible markets.

Heady growth under Judson (Sandy) Bemis, another grandson of the founder, characterized the 1960s. It was also during this decade that the company consolidated its headquarters in Minneapolis. By 1965, to reflect the company's growing diversity, the name was officially changed from Bemis Bro. Bag Company to Bemis Company, Inc. In 1966 Bemis common stock was listed on the New York Stock Exchange. Between 1959 and 1969 some 20 acquisitions were made. One of them, Curwood, Inc., launched Bemis into a leadership position in coated and laminated films it retains today. MACtac, established in 1959, also has shown excellent growth as a pressure-sensitive materials supplier. Among other acquisitions of the period that remain a part of the company today, Hayssen Manufacturing Company has been a particularly successful one. Acquired in 1966 to broaden the company's offering of packaging machinery, Hayssen today produces several types of state-of-the-art equipment that are compatible with many Bemis packaging materials. Yet many of the acquisitions of this era proved to be a poor fit with the company's key businesses. According to Pamela Sherrid in a 1975 Forbes article, "a multitude of nowhere diversifications" persisted within the company, endangering its long-term health.

In 1978 Howard Curler was named Bemis' new CEO. With Curler's appointment, the restructuring of Bemis began in earnest. Curler's relationship with Bemis originated in 1965, when Curwood, Inc.--then a small manufacturer of film packaging for cheese and other perishable foods he had co-founded--was acquired by the larger firm. He stayed on as head of his company, which became a leader in polymer manufacture and the related technologies of extrusion, coating, laminating, metallizing, and printing. Following his appointment as head of Bemis, Curler continued to focus on these areas, as well as pressure-sensitive materials, while divesting the company of its textile, publication printing, vinyl wall covering, and other extraneous operations. Within four years, more than $100 million worth of businesses were sold. Curler also launched a $140 million capital expenditure program in 1980, in effect betting close to half of the company's assets to become a first-class producer, rather than converter, of sophisticated multi-layer films for high-margin, specialty food products.

By 1990, if not earlier, Curler's bet had paid off. A Barron's report that year declared Bemis a company "with few peers in the field of flexible packaging," noting that "in almost any area of film or plastic packaging, Bemis is either a major player or staking out a position." Heavy capital investment has continued to distinguish Bemis during the early 1990s under Curler's protégé, CEO John Roe (son-in-law of Sandy Bemis). Acquisitions that place Bemis in a dominant market position have also been emphasized. For example, the purchase of Milprint in late 1990 made the company a leading supplier in printer packaging for the candy industry. Likewise, the acquisition of Princeton Packaging in February 1993 placed Bemis at the top in bread packaging. Clearly Bemis seems to have regained its stride, building upon its preeminence in the milling industry of former days with a host of enviable competencies in the complex food markets of present times.

Principal Subsidiaries: Accraply, Inc.; Curwood, Inc.; Hayssen Manufacturing Company; MacKay Gravure Systems, Inc.; Mankato Corp.; Milprint, Inc.; Morgan Adhesives Co. (86.9%)

Further Reading:

• "Bemis--A Century of Bag Making History," Industrial Supply Expediter, November 1962, pp. 1-2.
  Bemis Company, Inc. Annual Report, Minneapolis: Bemis Company, Inc., 1992.
• "Bemis May Acquire Packaging Firm," Star Tribune, December 5, 1992, p. 2D.
• Byrne, Harlan S., "Bemis Co.: Packaging Maker Finds the New Year a Pleasant Surprise," Barron's, April 9, 1990, pp. 59-60.
• ----, "Bemis Co.: Good Things Come in Its Flexible Packaging," Barron's, August 5, 1991, pp. 33-34.
• Edgar, William C., Judson Moss Bemis: Pioneer, Minneapolis: Bellman Company, 1926.
  Guide to Bemis Company, Minneapolis: Bemis Company, Inc., 1988.
• "In Brief," Star Tribune, February 12, 1993, p. 3D.
• Paul, Herb, "Bemis Researchers Find New Products," Minneapolis Star, September 16, 1955.
• Sherrid, Pamela, "Wake-up Time at Bemis," Forbes, June 21, 1982, pp. 50, 54.
• Walden, Gene, "Bemis Company, Inc.," The 100 Best Stocks to Own in America, 2nd ed., Chicago: Dearborn Financial Publishing, 1991.
• "With a Little Bit of Luck," Forbes, December 15, 1975, p. 27.

Source: International Directory of Company Histories, Vol. 8. St. James Press, 1994.