Dillard Paper Company History

Company History:

Dillard Paper Company, one of North Carolina's largest privately owned corporations, has long been a major distributor of paper, packaging materials and equipment, and such related products as sanitary maintenance equipment and supplies, and graphic arts equipment and supplies. Its primary market has been the Southeast, where, in the mid-1990s, it maintained 24 distribution centers in seven states--Virginia, North Carolina, South Carolina, Tennessee, Alabama, Georgia, and Florida. Dillard Paper also owns a chain of retail paper stores called If It's Paper (with more than 40 offices in the Southeast), as well as two "converting" companies--Dillard Plastics (converter/manufacturer of plastic bags) and Dillard Converting (which converts jumbo roll stock paper into specialized paper products). In 1991, Dillard Paper was purchased by International Paper Company, a multibillion-dollar corporation, which wanted to expand its own distribution business. Dillard Paper, however, was allowed to continue to operate as an autonomous company.

Dillard Paper Company was named for its founder, Stark S. Dillard, who was born in 1894 in Lynchburg, Virginia. His father died when Dillard was just three years old, leaving Dillard's mother alone with 12 children. As a result, Dillard and his siblings had to find work at an early age. When he was 11 years old, Dillard took his first job--folding boxes for Old Dominion Box Company, which was owned by his older brother David. Over the next few years, Dillard's work load at Old Dominion increased to 11 hours a day, six days a week. However, in 1910, Dillard was fired by the company's general manager, another older brother. Reportedly, Dillard had become close friends with a railroad engineer who regularly passed by the box company in his train. "He'd toot and I'd wave," Dillard later explained, noting that "my brother thought I was killing time and decided to make an example out of me."

Dillard, just 15 years old, then went to work for Hughes Buggy Company, where he initially performed odd jobs and was later promoted to a sales position. It was in sales that Dillard would find his talents. Four years later, he and a friend, Evans Caskie, found jobs as salesmen for the Alling and Cory Paper Company, headquartered in Rochester, New York. They both worked for Alling and Cory for three years, and, after gaining this additional experience, the two men decided to go into business for themselves, forming Caskie-Dillard Paper Company in Lynchburg. Begun with Caskie's money, the new company opened in November 1916 and over the next few years experienced remarkable success.

Even so, Dillard and Caskie began to disagree over where the company should expand. Caskie wanted to keep the business in the North Carolina town of Charlotte and the Virginia town of Lynchburg, while Dillard wanted to open a division in Greenville, a town in the northwestern part of South Carolina. Although remaining friendly with one another, Dillard and Caskie decided to end their business relationship in the fall of 1925. Meanwhile, Joseph J. Stone, owner of a large printing company in Greensboro, North Carolina, was encouraging Dillard to establish a paper distribution center there. Dillard agreed to do so, and in 1926 he moved to Greensboro, borrowed $25,000, rented a building in the downtown area, and opened his new business, which he called Dillard Paper Company. "I had no dreams of building a paper empire or being a rich man," Dillard confessed. "I just wanted enough to keep my wife from having to work in a dime store and to give my children a few more advantages than I had," he wrote.

At first, Dillard Paper was largely a solo operation. Dillard said of the early years, "I ordered the paper, unloaded it, wrapped it up, delivered it, collected for it, deposited the money in the bank and bought more paper." Its first product was printing paper, with most of its deliveries going to printers, such as Stone, but, in 1930, Dillard Paper added industrial paper to its inventory. As the owner of his own company, Dillard was able to make the most of his great talent in sales, and orders of his products boomed, so much so that in 1929 the company had to move into a larger facility, located on West Lee Street. A growing number of salesmen were also employed by the company. Then, in 1934, Dillard opened a branch in Greenville, the location where he had hoped to expand at Caskie-Dillard. Additional offices would be opened in Charlotte (1936) and in the Virginia cities of Roanoke (1941) and Bristol (1944).

The year 1936 has special significance for the company. On the evening of Friday, April 2, a tornado spun toward Greensboro, causing extensive property damage and killing 13 people. The Dillard Paper facility on West Lee Street was also hit, and its supply of paper was taken up by the storm and spread across several counties. Much of it landed on a farm about 40 miles away. Dillard, who was in Greenville during the tornado, rushed back to Greensboro to find his building in ruins. He began cleanup operations right away, moved his business temporarily into a warehouse on Davie Street, and ordered a new supply of paper. He borrowed additional money to pay the costs. A few days later, however, this paper, too, was ruined when the warehouse leaked during a thunderstorm. The company managed to survive the disasters, and Dillard would come to see them as a blessing, noting that "It united the organization. The boys jumped in and worked night and day." The founder also kept his sense of humor. A woman told Dillard that during the tornado she was riding in a streetcar in Greensboro when suddenly a case of toilet paper came flying through a window. Dillard responded, "Ma'am, that's just the kind of service we try to provide."

After World War II, Dillard Paper entered a period of great expansion, in part through acquisitions of other companies. The company began by purchasing Cape Fear Paper Company of Wilmington, North Carolina, in April 1947, followed by the acquisitions of Bibb Paper Company of Macon, Georgia (April 1950); Volunteer Paper Company of Knoxville, Tennessee (also April 1950); Palmetto Paper Company of Columbia, South Carolina (May 1950); and Standard Paper Company of Augusta, Georgia (October 1951). Then, in March 1952, the company opened a new branch in Raleigh, North Carolina.

In the early 1950s, Dillard suffered two heart attacks, and, although he was able to continue his work at a somewhat slower pace, many were concerned about his health. During this time, "D" Month, a sales contest held each May, was established by the company's management in 1950 in honor of Dillard. The contest had two parts. The first was an intercompany competition for the Stark S. Dillard trophy (a large silver Paul Revere bowl), awarded to the salesperson who had the greatest percentage increase over his or her personal quota. Second and third place finishers were also recognized, as was the top finisher in each division. The second part of the contest, called "D" Month, involved Dillard's key suppliers and included cash and merchandise awards based on sales of specified products (later the company would establish competitions for employees not directly involved in sales). Despite the awards, the true prize in the contest was the prestige of being a top seller, and the contest did prove to be a strong incentive for boosting sales, a goal that all members of the company--even those in the warehouse or in purchasing--were expected to work toward. As a result, May, which had traditionally been a period of slow sales, consistently became the year's most successful sales month, and the "D" Month contest has been repeated each year into the 1990s, becoming an important part of Dillard Paper's corporate culture. In addition, about every four years "D" month has been followed by a sales conference in which management, salespeople, and representatives of mills came together to meet one another and plan for the future.

While the company was thus increasing its sales through various employee incentives, including the Stark S. Dillard award and "D" Month contests, it was accomplishing the same goal through additional acquisitions. These included Sommerville/Seybold Paper Company of Atlanta, Georgia (February 1953); Kelley Paper Company of Winston-Salem, North Carolina (November 1953); Piedmont Plastics of Thomasville, North Carolina (September 1959); and Southern Paper and Supply of Richmond, Virginia (September 1960). A new branch was also opened in Birmingham, Alabama, in March 1957. With its 16 branches (including its headquarters) in 1960, Dillard Paper had become the largest paper distributor in the Southeast, employing about 600 people.

Dillard Paper was also becoming more than just a paper distributor. The company's purchase of Piedmont Plastics, renamed Dillard Plastics, allowed it to enter the field of converting jumbo roll stock plastic material into new products, such as plastic bags. The company previously had difficulty finding the various types and sizes of plastic bags requested by its customers. Some new products were complements to existing ones. For example, Dillard Paper, which sold paper towels, also came to sell towel racks and soap. An important service provided by the company was the converting of jumbo roll stock paper into new products. Large rolls of paper were cut into smaller ones, for instance, and paper and cardboard were cut into specific shapes and sizes for numerous products, including the insert board found inside packages of women's hosiery. Most of the products, however, the company distributed rather than produced, and, beginning in the 1960s, the tens of thousands of items passing through Dillard's warehouses were monitored by an increasingly more sophisticated computer system. By 1969, sales had reached about $60 million, and the company was employing some 700 people.

During the 1960s, Stark Dillard remained the company's chairperson, while two of his nephews held the post of president. The first, Edwin Rucker Dillard, became president in 1959 and remain in that position for six years until his death in 1965 at the age of 40. Replacing him was John H. Dillard, who would hold the post from 1965 to 1986. A believer in the future of plastics, John Dillard was committed to continuing the company's program of expansion and diversification. Under his leadership, for example, Dillard Paper opened six new branches or divisions, beginning in July 1971 with the acquisition of Old Dominion Paper Company of Norfolk, Virginia, followed in 1975 by the opening of Dillard Converting, located in Greensboro, which converted paper into specialized products. Also that year, Stark Dillard died. In 1978, Dillard Paper acquired Flowers Paper Company, a small industrial paper house.

The 1980s saw several new divisions of Dillard Paper. The first, established in Greensboro in 1983 as Dillard Packaging Systems, sold packaging equipment, supplies, and parts. The company's reason for entering the field of packaging was simple. Its customers needed these products. Also that year, Dillard Paper created its own trucking operations, Dillard Transportation, also headquartered in Greensboro. This allowed the company to lower the cost of transporting its large and varied supply of products. In 1984, Dillard Paper established a new distribution branch in Lynchburg, notable in part because it was the hometown of the company's founder. Later, Dillard Paper opened a branch in Charleston, South Carolina, in 1986. In 1988, the Mudge Paper Company became a member of the Dillard family. Mudge eventually took on the Dillard name in the early 1990s but became a part of the Northeast Region and ResourceNet International. Another branch was opened in Montgomery, Alabama, in 1990. Also in 1990, Dillard Paper acquired Chattanooga Paper and Woodenware Co. of Chattanooga, Tennessee which operates under the Dillard name.

Thus, by 1990 the company had offices and warehouses in more than 20 cities in the Southeast, spanning from Virginia in the north to Alabama and Georgia in the south. Sales had reached some $500 million. At this time the company also had a small number of offices in Maryland and Pennsylvania. Meanwhile, a much larger corporation, International Paper Company, with sales of some $13 billion, was undertaking its own program of acquisitions. International Paper's empire was enormous and involved the manufacture or distribution of paper, packaging, office supplies, graphic arts products, wood products, and various other items, such as natural gas and photographic film, with divisions in more than 20 countries. However, International Paper lacked a good distribution network in the southeastern and mid-Atlantic regions of the United States, and for this reason it decided to approach Dillard Paper with an offer to buy the company. By March 1991, an agreement was reached allowing International Paper to acquire Dillard Paper, though the agreement also specified that Dillard Paper would continue to operate as an autonomous company.

The merger had immediate advantages for both companies. For International Paper, it expanded distribution business by 25 percent. Similarly, Dillard Paper gained access to International Paper's wholesale and retail distribution branches, which numbered some 250 at the time of the merger. Geoffry Clark, then chairman and CEO of Dillard Paper, explained Dillard Paper's willingness to be purchased: "International Paper approached us and made us quite an attractive offer that got our attention. Dillard Paper was never for sale. We acted in the best interest of our shareholders." He then went on to point out: "Customers and employees will see no change. The culture of the company will not change. The name will not change. We will operate independently. We feel this merger has enhanced our long term position."

It was not long, in fact, before the first visible benefits of the merger were seen. In 1992, for example, International Paper, which had purchased Palmer Paper Company of Florida, placed that company's four branches--located in Jacksonville, Tampa, Orlando, and Miami--under the control of Dillard Paper, thus expanding Dillard Paper's already extensive distribution network in the Southeast. Also at this time, Caskie Paper Company merged into Dillard Paper. Dillard Paper's future success was also linked with that of the paper industry, which operated on a small margin of profit and was intensely competitive. In 1993 Geoffry Clark moved into another position within International Paper and Newell Holt became president of Dillard Paper. Especially important was having a well-trained and hardworking sales force committed to identifying, meeting, and satisfying the customers' needs, and focused on maintaining and developing supplier relationships.

Principal Subsidiaries: Dillard Plastics; Dillard Converting; Dillard Packaging Systems; Palmer Paper Company; Dillard Transportation.

Further Reading:

• "Dillard Paper Merges with International Paper," PICA Scanner [publication of Printing Industry of the Carolinas, Inc.], April 1991, p. 5.
• "International Paper Says It Will Purchase Dillard Paper Co.," Wall Street Journal, March 13, 1991, p. B5.
• "Paper Wholesaler Simplifies Its Cost Allocation," Communications News, November 1991, p. 8.
• Thomas, Jan, "It Huffed & Puffed," The State [regional magazine of North Carolina], August 8, 1959, p. 14.
• Wolter, Beverly, "A $60 Million Middleman," Winston-Salem Journal and Sentinel, February 9, 1969, p. D11.
• Wright, W. B., "Little Stories about Business," The State, January 15, 1966, p. 23.

Source: International Directory of Company Histories, Vol. 11. St. James Press, 1995.