LYSANDER –– The new owners of Central Industrial Packaging Supply, Inc. (CIPS) plan to build on the company’s success and continue to expand.

Scott Montagna, CIPS’ new president, says the company is looking for 5 percent to 10 percent revenue growth this year. He says CIPS’ sales grew to a record $5.4 million last year from $4.8 million in 2010.

New ownership

A long-time employee of CIPS, 

Montagna, purchased the company with his two partners Cheryl Latta and Thomas Trunko in January, after the firm’s founder and ex-owner Erick Halliday passed away last April.

CIPS, founded in 1982, is a packaging and distribution firm based in the town of Lysander. Besides designing and customizing packaging and shipping, the company also offers warehousing services, where it holds products temporarily for its customers before delivering them to “any destination the customers would like.”

Before he purchased the business, Montagna had been working at CIPS for 18 years. Serving as one of the company’s top sales representatives, Montagna was not only involved in the sales and marketing side of the business, but also all other aspects.

“I do [packaging] design work. I do delivery. I worked in the warehouse, trying to best design our warehouse to increase our production profitability,” he says.

Montagna’s partners, Latta, who had worked for the company for 14 years, and Trunko, who joined CIPS six years ago, now serve as vice presidents for the firm, says Montagna.

“The opportunity to buy a business … I personally always wanted to do it, so do Tom and Cheryl,” he says. “The most important thing is we love the employees that we work with.”

Montagna says the trio was in early negotiations to buy the business from the company’s ex-owner Halliday shortly before he passed. They felt Halliday always treated the employees like his family. So, to carry on Halliday’s legacy and keep the company strong, Montagna and his two partners decided to buy CIPS from Halliday’s family.

“His family was wonderful to us, and gave us the opportunity to work with them to continue the business. They let us show them that we could make the company profitable and do it without Erick’s guidance,” says Montagna. “We are eternally grateful to them for that.”

Montagna says that he and his partners did not use any broker or consulting firm in the acquisition. Instead, they negotiated the transaction with Halliday’s family and their friend. Peter Miller, of Paul deLima Coffee Co., and a good friend of Halliday, played the role of a consultant who worked with the family to help them understand what the business was worth based on the cash flow and the assets, says Montagna.

He says no Halliday family members currently work at the company following the sale. The family decided to sell because it “really wasn’t that involved in a day-to-day operation of the business,” says Montagna. “We feel we came to a very fair agreement on what everything was worth, and we put the down payment down.” He did not disclose the financial terms of the sale.

Montagna and the other two new owners were able to get their financing from M&T Bank, he says.

They kept all 15 employees after the purchase, and have since added two new hires. They are hoping to add three more workers for warehousing, trucking, and the manufacturing side of the business, as well as one sales representative by the end of June, says Montagna.

He says CIPS is expecting that adding another sales representative would lead to another $500,000 to $1 million in revenue, which would help justify other expansion costs.

“We now have three trucks, and all our representatives basically have vans, so we all make small deliveries,” he says. “And if we could do that [increase our sales by adding another representative], we could add another truck and a couple more employees … but we are trying not to put the cart in front of the horse, that’s the goal.”

Packaging

CIPS, a distributor and manufacturer of industrial packaging supplies, operates a 60,000-square-foot headquarters located at 8255 Willet Parkway in the town of Lysander. The company also runs a 20,000-square-foot facility in Auburn that makes wood pallets. The new owners were able to continue leasing both locations.

Montagna says the company provides mainly distribution services and vendor inventor-management systems with just-in-time delivery programs, which can help customers reduce their administrative cost of managing the flow of packaging material needs.

He says 80 percent of the business is distribution, and 20 percent is manufacturing. The company distributes products such as Sealed Air Mail supplies, Cantech tape products, Tri-Wall containers, Cook foams, and Sigma Stretch films.

Montagna says some of CIPS’ suppliers are also its competitors, but he believes the company has its own niche that makes it stand out from others.

“We are really one of the very few places where somebody can come and just do a one-stop shop and get everything they may need for their package,” he says. “They can get the pallet, they can get the box, they can get the label, they can get the stretch film, they can get the bubble wrap all from one spot. That’s our biggest strength.”

Montagna says CIPS is moving toward providing more warehousing services for its customers. He says the company is also looking to add new product lines this year.

“We are trying to look at green packaging, and we are trying to work with environmentally friendly foams, and things of that nature,” he says.

Montagna says the company’s major market area is about a 100-mile radius of Syracuse, but CIPS also sells products and services to customers both nationally and internationally, including Canada, Mexico, and Europe.

Montagna says the company’s clients are mainly industrial manufacturers such as ITT Corp., Lockheed Martin Corp., Pall Trinity Micro Corp., and Fulton Boiler Works, Inc.

Janitorial

CIPS also has a janitorial division that provides sanitation products. The company’s co-owner, Thomas Trunko, who worked for Wilcox Paper Company, a Syracuse–based packaging and janitorial company, started the janitorial division after joining CIPS in 2006.

Trunko says the company’s previous owner Halliday saw potential in starting a janitorial division within CIPS, so he invited him to join the company to help develop this new division. Trunko says he was able to build the janitorial side of the business by cross selling to CIPS’ existing clients in the industrial market.

“You have customers, and you are calling out to them. You could be selling them more, so you want to sell them janitorial

also,” he says. “Erick knew that he’s selling packaging to a lot of companies, and a lot of them use janitorial supplies. It was just natural to look for more business from your customers.”

Trunko says the janitorial division shares the warehouse and office with the packaging side of the business.

CIPS’ janitorial division provides sanitation products including garbage bags, hand soap, toilet paper, paper towels, and other general cleaning supplies. The division now provides supplies for local schools, doctors’ offices, dental offices, nurseries, grocery shops, and convenience stores.

Trunko says the janitorial side of the business grew about 10 percent last year, which contributed to about one-sixth of CIPS’ revenue growth.