Carma Laboratories, Inc. History

Address:

5801 West Airways Avenue
Franklin, Wisconsin 53132-9111
U.S.A.

Telephone: (414) 421-7707
Fax: (414) 421-0737

Private Company
Incorporated: 1937
Employees: 71
Sales: $50 million (2002 est.)
NAIC: 325620 Toilet Preparation Manufacturing

Company Perspectives:

Produce a product that will do what you claim for it. Sell it at an affordable price. And treat your customers like human beings.

Key Dates:

1937:: Alfred Woelbing develops Carmex, a new lip protection formula, for his own personal use.

1940s:Fuel and ingredient shortages the hinder production of Carmex during World War II.

1950s:Positive word-of-mouth leads to healthy growth of the Carmex brand.
1957:: Woelbing moves the production of Carmex from his home to a manufacturing in the western Milwaukee suburb of Wauwatosa.
1973:: Founder's son, Don Woelbing, joins Carma Labs and introduces an assembly line approach to the manufacture of Carmex.
1976:: Carma Labs relocates to a new facility in Franklin, Wisconsin.
1988:: Carmex is sold in squeezable tubes, marking the product's first packaging change.
1993:: Carma Labs holds an estimated 9 percent share of the U.S. lip balm market.
2001:: President and founder Alfred Woelbing dies at the age of 100. Woelbing explained how the upgrade was in line with the company's simple, straightforward approach to doing business, commenting: "We want the best packaging machinery and materials we can get for our investment dollars. But we don't want machines that are difficult to run and maintain, nor those loaded with electronics. Such machines require considerable training. They also pose a difficulty for us in that there aren't many technicians in our area that can repair them. We believe our business is efficient because of its simplicity. That includes packaging. We've found that by making a good product and selling it at a reasonable price, people have beaten a path to our door."

By the early 2000s, Carma Labs had expanded distribution of Carmex to include every state. In addition, the company had expanded internationally, marketing its products in Australia and some areas of Europe.

In 2001, Carma Labs bid a final farewell to its president and founding father. Sixty-seven years after starting the company, Alfred Woelbing passed away at the age of 100. Until the age of 95, Woelbing had continued to drive to the office every day by himself from his home in Rubicon, Wisconsin. After suffering a stroke in 1997, he continued to visit the office about once a week.

By October 2002, a survey reported in several newspapers, including the Chicago Tribune, revealed that lip balm sales at pharmacies, supermarkets, and discounters--excluding retail behemoth Wal-Mart--had increased 8 percent over the previous year, reaching $281 million. As the lip balm market grew, so did rumors that popular lip protection products like Blistex, Carmex, and Chap Stick were addictive. Responding to rumors that it included fiberglass and other irritants in its lip balm to create dependency, Carma Labs posted a disclaimer on its web site negating such claims. In the March 11, 2003 issue of the Pittsburgh Post-Gazette, Richard Chin concluded that so-called lip balm addiction was "an urban legend, an Internet myth and utter fallacy, at least according to manufacturers and doctors."

With its evolution from Alfred Woelbing's kitchen stovetop to status as a leading, family-owned American enterprise, Carma Labs is an amazing success story. Given the rapid growth of the Carmex brand through word-of-mouth testimonials, as well as a strong retail market, the company's future appears to be secure.

Company History:

Based near Milwaukee in the town of Franklin, Wisconsin, Carma Laboratories, Inc., is a one-brand, family-owned company that manufactures Carmex lip balm. Founder Alfred G. Woelbing was at the helm of Carma Labs until the age of 96, at which time his son Don and grandsons Paul and Eric assumed management responsibilities.

Carma Labs uses custom equipment to produce Carmex products. For many years Carmex was available in only one formula, which was sold in tiny white opal glass jars with yellow metal lids. However, Carma Labs began offering the product in squeezable tubes during the late 1980s, followed by a stick version containing sunscreen. By the early 2000s, a peppermint formula was added to the company's product lineup.

Carma Labs prides itself on adhering to ethical business practices with customers, suppliers, and employees. "I am proud of my position," says Paul Woelbing. "It's very rare for a family business to survive into the third generation. My job is one of stewardship. Many customers, our long-time employees and my family all depend upon the continued success of Carma Laboratories, Inc. I was an art teacher for ten years prior to joining the family business, and teaching was the best training for the business world; business is pretty basic once you have an established and successful running company. It's the ethics and people skills that really make the difference in the long-time health of an organization."

With regard to pricing Carmex, Carma Labs takes a somewhat old-fashioned approach by printing prices directly onto containers. "This comes from my grandfather's belief that a customer should know their cost for a product," says Woelbing. "We sell Carmex for the lowest price possible, which allows us to make a reasonable profit. From another standpoint, I believe that it makes sense for us to continue to put the price on the container in that we tend to be amongst the lowest priced products on the market. Because we buy ingredients and packaging in such large quantities and because I pay every bill every week ... we get materials for very good prices. Because of this, we pass our good prices on to our customers."

This philosophy of honesty and integrity is ingrained in the very fabric of Carma Labs' culture. The company's web site talks about the organization's friendly and homey atmosphere and includes the following simple statement from Don Woelbing: "We want people to come to work and enjoy it."

Humble Beginnings: 1930-56

Carma Labs' origins are closely linked to the Great Depression years of the early 1930s, when Alfred Woelbing lost his job as a buyer for Schuster's Department Store in Milwaukee. Woelbing's experience buying cosmetics, toiletries, and pharmaceuticals led him to develop his own lip balm called Lyptone--not the Carmex brand that brought him so much success in later years. Woelbing produced Lyptone from his home and marketed the product for a quarter.

Eventually, Woelbing sold Lyptone to a New Jersey firm for the then handsome price of $2,500. His entrepreneurial spirit led to the development of Shynebright, a silver polish that he also produced independently. Woelbing sold Shynebright to department stores, grocers, and jewelers in Chicago and Milwaukee. Other products Woelbing invented included a silver polish called Maid of Honor and Blue Flame lighter fluid. Although Shynebright was his primary source of income, in 1937 Woelbing developed Carmex, a new lip protection formula, for his own personal use. Carmex provided relief from both cold sores and chapped lips, and Woelbing started selling to product to others.

In the November 10, 1986 issue of the Milwaukee Journal, Woelbing told Gerald Koss: "I wanted something for my own cold sores, so I mixed up a batch in a kettle and tried it on myself. Then I made the rounds of drugstores, leaving a dozen jars at each place. I'd tell the proprietor, 'This is for you. If you sell out, here's my card and you can re-order. If you don't sell 'em, just throw 'em out.' Well, you know how it is--whatever the man sold was clear profit, so he sold out, all right. The rest was word of mouth. And that's how it worked. My wife and I did all the mixing and jar-filling and label-pasting ourselves at home, and it got so that's all we seemed to be doing. We almost hated it when a big order came in."

When the United States entered World War II during the 1940s, a wide variety of manufacturing companies faced shortages of the raw materials needed to produce their products. Carmex was no exception. According to the company, a shortage of lanolin--which the military used for greasing equipment and stopping rust--placed limitations on the amount of Carmex that could be produced. Fuel shortages also served to restrict growth. While Woelbing was too old to serve in the military during these difficult years, he went to work for a company called Allis-Chalmers. There, he served in the purchasing department and had some involvement in the Manhattan Project, which led to the development of the atomic bomb.

However, these wartime challenges were only temporary. Production eventually was allowed to continue unhindered, albeit in a primitive manner. As Carma Labs explains on its web site: "After the war, Alfred and his wife continued production of Carmex from their home, pouring the mixture by hand into its little glass jars, from a 12-quart kettle they kept warm on a hot plate. Alfred sold the product himself from the trunk of his car."

Expansion and Modernization: 1957 and Beyond

During the postwar boom of the 1950s, positive word-of-mouth led to the healthy growth of the Carmex brand. Woelbing remained the product's sole spokesman and salesperson, and no advertising was used. By 1957, this success eventually prompted Woelbing to move production from his home to modest, rented manufacturing space on West State Street in the western Milwaukee suburb of Wauwatosa.

Simple production techniques continued to be employed at Carma Labs throughout the 1960s and into the early 1970s. It was not until 1973 that an assembly line approach was used in the manufacture of Carmex. The transition from hand-pouring Carmex into glass jars occurred when Alfred Woelbing's son, Don, joined the company. The younger Woelbing previously worked in the masonry field. After joining Carma Labs, he purchased used assembly line equipment in nearby Chicago and reconfigured it for the manufacture of Carmex.

Strong, steady growth continued at Carma Labs during the 1970s. In 1972, success allowed Alfred Woelbing to stop making sales calls. Prior to that time, he made rounds to prospective buyers in Wisconsin, Illinois, and portions of Indiana. After operating for almost 20 years in Wauwatosa, Carma Labs relocated to a new facility in Franklin, Wisconsin, in 1976.

For almost 50 years, Carmex was distributed primarily in the Midwest. Exceptions included California, Texas, and locations in the Rocky Mountains where skiing was a popular pastime. However, this changed during the 1980s. By mid-decade, Carma Labs had begun to extend its reach to additional markets. In 1988, the first major change to Carmex occurred when the company installed a tube filling and sealing line and began offering the product in squeezable tubes. According to the May 1994 issue of Packaging Digest, this change was implemented based on feedback from consumers who wanted an alternative to "finger dipping" Carmex from glass jars. Initially, the company encountered leakage problems associated with the tubes, which were sealed with heat. A solution was found in ultrasonic sealing equipment. Shortly after tube production began, two additional filling and sealing lines were added in only four short years, due to increased demand.

After 53 years of steady sales increases, Carma Labs sold an estimated $10 million worth of Carmex in 1990, or more than 11 million jars and tubes of product. At this time, 89-year-old Alfred Woelbing still headed up the company he started, driving to work from his home 46 miles away in a Ford Festiva and working more than eight hours per day. Amazingly, the company had managed to grow without the use of advertising and had never accumulated any debt. It counted celebrities like Charlton Heston among its base of faithful consumers and received positive feedback from customers in the form of letters, poems, and even a country song. The company also had contracts in place with the Pentagon to supply soldiers in Operation Desert Storm with Carmex in order to protect their lips.

Despite its success, Carma Labs continued to operate under relatively simple conditions until 1991. At this time, the company was preparing to expand its plant for the fifth time. It still kept records on paper instead of using computers and had no fax machine. Humorously, in the January 26, 1991 issue of the Milwaukee Journal, Alfred Woelbing remarked: "There's more stress than there needs to be. We're always rushing. They always tell me to get a fax machine because it speeds things up. What in the hell are we speeding things up for? We're going to reach the end of the road fast enough." Continuing, Woelbing remarked on his amazing longevity with the company, explaining: "Work is the best therapy I can think of. It's a lot better than doing nothing and waiting for the undertaker."

In 1993, Carma Labs held an estimated 9 percent share of the U.S. lip balm market, according to the October 11, 1993 Milwaukee Sentinel. The following year, the company reported that more than 80 percent of its employee base, which then ranged from 25 to 30 workers, was hired through leading temporary services like Manpower, Inc. and Olsten Staffing Services.

Around this time, Carma Labs had performed another upgrade to its packaging equipment in order to keep pace with rising demand. In the May 1994 issue of Packaging Digest, Don

Carma Laboratories, Inc. History

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