Mackay Envelope Corporation

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Mackay Envelope Corporation

2100 Elm St. SE
Minneapolis, Minnesota 55414
U.S.A.
Telephone: (612) 331-9311
Toll Free: (800) 622-5299
Fax: (612) 331-3460
Web site: http://www.mackayenvelope.com

Private Company
Incorporated: 1959
Employees: 500
Sales: $85 million (2000 est.)
NAIC: 322232 Envelope Manufacturing

Mackay Envelope Corporation manufactures approximately five billion envelopes a year at two manufacturing facilities in Minneapolis and Mt. Pleasant, Iowa. The company also has sales offices in Illinois and Kansas. Mackay Envelope’s products meet the needs of diverse customers: specialized envelopes come in any size, color, and configuration with a variety of options for color printing and embossing capabilities. Commercial envelopes account for much of the company’s business, including envelopes for the direct-mail industry, publishers’ renewal programs, and cycle billing statements. A second division manufactures envelopes for the photofinishing industry, while a third division produces stationery and business cards. In a sea of other envelope manufacturers, Mackay Envelope stands out because its founder, Harvey Mackay, has achieved modest celebrity status as a best-selling author and public speaker. Mackay has written four inspirational business books: Swim with the Sharks Without Being Eaten Alive, Beware the Naked Man Who Offers You His Shirt, Dig Your Well Before You’re Thirsty, and Pushing the Envelope All the Way to the Top.The books are packed with anecdotes, aphorisms, and advice for success in business and life. Altogether, the books have sold more than ten million copies worldwide and have been translated into 35 languages. In addition, Mackay earns top dollar as a public speaker. His experience leading an envelope company provides a practical illustration for his ideas on successful management, salesmanship, hiring, and networking.

The Rise of a Struggling Company: 1959-70

In a 1996 interview, Harvey Mackay told Minnesota Business and Opportunities, “I always wanted to own my own factory. I didn’t care if it was nuts and bolts. I didn’t care if it was widgets. ... I just visualized myself walking up and down the aisles and having these people, you know, my people, my team, making some products and smiling at me.” Chance decreed that envelope manufacturing was to become Mackay’s vehicle to success. After Mackay graduated from the University of Minnesota, his father, a reporter for the Associated Press, got him a job as an envelope salesman through a connection with a businessman about whom he had once written a story. Harvey Mackay began working for Quality Park Envelope Co. in 1954.

While selling envelopes by day, Mackay took night courses in printing and considered opening a printing plant. Soon, however, he saw an opportunity to acquire a nearly insolvent envelope manufacturer, Paypar Envelope Company. Mackay secured a loan and bought the company in 1959 at age 26. At the time, the company had 12 employees, three folding machines, one small printing press, and $200,000 in annual sales. Not sure if the company would survive, Mackay waited several years before renaming it so that his personal name would not be connected with the company if it went bankrupt.

A year later, the company showed some promise of surviving, and the employees voted to unionize. Mackay tried to dissuade them from their decision, painting a picture of a bright future if only everyone stuck together, but the pro-union vote won. Mackay raised prices so he could afford union wages.

After a few years the company was on solid enough ground that Mackay was willing to attach his own name to it. In 1963 the company changed its name to Mackay Envelope Corp. and moved from a location that Mackay described as a “red light district” to a new Minneapolis headquarters. Recognizing that his skills were more in salesmanship than in technical expertise, Mackay got a cost specialist to design an effective manufacturing system that was still in place decades later. While turning to experts to ensure that his company’s infrastructure and methods were solid, Mackay used his considerable talent as a salesman to win customers to the fledgling enterprise.

Unique Business Practices Driving Growth in the 1970s

Mackay Envelope built its solid customer base during the 1970s using the tactics that Harvey Mackay was later to promote in his best-selling books. One of Mackay’s key concepts was that “Knowing something about your customer is just as important as knowing everything about your product.” Mackay went to extraordinary lengths in his adherence to that principle, developing a 66-question customer profile to gather information that reached beyond the normal realm of business. The “Mackay 66” included questions related to personal and family life, such as the names, ages, and hobbies of the customer’s children, the customer’s religion and community involvement, favorite places for lunch and preferred reading material, as well as more usual questions related to education and business background.

The information-gathering method, when applied with sincerity, was effective in winning customers. Over the years, Mackay Envelope’s major clients included General Mills, Pills-bury, Medtronic, and Billy Graham. As Mackay put it in the 1996 interview, “You have to have a deep down burning desire to find out about people you come in contact with.” According to him, the successful businessperson misses no opportunity to glean information about a customer, from observing plaques hanging on the buyer’s wall to reading Who’s Who to making connections in the local bar. In Swim with the Sharks Mackay related a number of successes that resulted from persistent information-gathering. After overhearing that a customer’s daughter competed in gymnastics, he brushed up on the sport, attended a competition, and a month later got an order after mentioning his involvement to the buyer. For particularly tough prospects, Mackay suggested delving into the buyer’s charitable interests. A donation to a favorite charity had been known to open doors to a long-lasting business relationship.

The hiring process was also carried out with unusual intensity at Mackay Envelope. Harvey Mackay called the ability to recognize ability his “number one strength.” For the first 25 years of business, he told Minnesota Business and Opportunities in 1996, he hired virtually every employee himself, from the truck drivers to the switchboard operator. “Getting hired by Mackay Envelope is like a battlefield commission,” he wrote in Swim with the Sharks.The goal was to become familiar with all sides of the candidate’s character in a variety of settings. It was not enough to have a dozen meetings between the candidate and numerous people at the company. Mackay would also interview the candidate’s spouse, meet his or her children, and seek the opinion of an industrial psychologist.

The whole process seemed extreme to some, but candidates who made it through the process were likely to remain at Mackay Envelope for some time. As Mackay described it in the 1996 interview, “I’m going to scare the living hell out of you, and if you still keep coming back for more at the end of that three month process, which 99 out of 100 companies won’t do, then I’ve got a hungry fighter on my hands.” Not only did employees stick around, but, in positions from switchboard operator to executive assistant, they were likely to be among the best in the business.

Growing Community Visibility: The 1980s

Such intensive management and sales principles required a large amount of energy to carry them out. Harvey Mackay proved he had the drive, the people skills, and the focus to convert his maverick approach to business into a company successful by all conventional standards. Steady growth continued year after year as Mackay Envelope developed from a small manufacturer into a large, specialized producer offering a wide variety of envelope sizes and printing techniques. High-speed presses carried out color printing, while special multi-hue dying equipment was able to tint a product to the customer’s exact color specifications.

As his company established itself as a force in the envelope manufacturing industry, Harvey Mackay became more and more visible in the Minneapolis business community. Encouraged by his father, he began speaking publicly, offering his advice on entrepreneurship and marketing in an engaging anecdotal style. Soon favorable word of mouth garnered him invitations to speak out of town, until by the early 1990s he was giving about 50 speeches a year at $25,000 per appearance.

Mackay’s growing civic involvement provided him with the experiences that supported and illustrated his principles for success. He became known for his efforts to get the Metrodome stadium built in Minneapolis in the late 1970s, and played a key role in bringing the Super Bowl to the city in 1992. While his high-profile involvements earned him the nickname “Mr. Make Things Happen,” he proved a deeper commitment to civic involvement in his activity with less glamorous organizations, including the Minnesota Orchestra, the United Way, and the American Cancer Society.

Although his outside involvements took time away from the envelope company, Mackay always remained closely involved with what he believed was the crucial aspect of management—hiring good people. With Mackay’s leadership and the hard work of dedicated employees, Mackay Envelope continued to grow. In 1980 a strike at the Minnesota manufacturing facility made Harvey Mackay realize that it was inadvisable for the company to depend on a single central facility. That year a second manufacturing plant opened in Mt. Pleasant, Iowa. Although the company had trouble finding skilled labor in the first few years, by 1988 50 percent of Mackay envelopes were produced in Iowa.

Company Perspectives:

Mission: To be in business forever.

At Mackay, quality is the goal to which everyone contributes, and customer satisfaction is the reward for which everyone strives. From pre-press operations to shipping, the skills of Mackay professionals strengthen each link in the chain.

Our size and depth of experience give us the ability to thoroughly understand the changing needs of our customers, and the resources to respond to those needs. Through it all, one thing remains constant: we’re never satisfied until our customer is satisfied.

Mackay welcomes change, and we invite you to challenge us with new requirements and new ideas.

In 1982 Mackay Envelope began to maintain an audio library to which all employees had access. The purpose of the library was to allow employees to capture driving time for the purpose of self-edification, following Harvey Mackay’s injunction to “turn your automobile into a university.” Another expansion came in 1984, when a five-person sales office opened in Schaumburg, Illinois. The office sold envelopes from the company’s commercial division to businesses in the Chicago area.

Meanwhile, Mackay’s speeches were generating requests for an audio or a printed version of his talks. Encouraged by Ken Blanchard, author of The One-Minute Manager, Mackay decided to write a book. He went about the endeavor with his usual thorough persistence, researching the market for two years before picking a publisher, and persuading the editor to print a unheard-of first run of 100,000 hardcover copies. Published in March 1988, Swim with the Sharks Without Being Eaten Alive sold 300,000 copies by November. Subtitled “Outsell, Outmanage, Outmotivate and Outnegotiate Your Competition,” the book reproduced the Mackay 66 and included 69 lessons whose lengthy titles belied the sound bite style of each chapter. Lessons included “It Isn’t Practice That Makes Perfect; You Have to Add One Word: It’s Perfect Practice That Makes Perfect,” and, “It Isn’t the People You Fire Who Make Your Life Miserable, It’s the People You Don’t.”

Since Mackay was touring to support his book four days a week, he relied heavily on company President William Jacobs to manage the envelope company. Despite its chairman and CEO’s newfound status as a best-selling author, Mackay Envelope continued its steady growth. In 1988 the company had sales of $35 million and employed 350 people.

Continued Growth and Expansion: 1990-2001

Harvey Mackay’s second book, Beware the Naked Man Who Offers You His Shirt, was published in 1990. The book offered advice on dealing with people and loving your job. It highlighted networking as a key to success. Mackay wrote, “If the house is on fire, forget the china, silver and wedding album—grab the Rolodex.” His own Rolodex, he said, included 7,500 names, 20 percent of whom he kept in touch with actively, while the rest were at hand to be called on in situations where they could be of assistance.

In October 1990 William Jacobs, who had been company president for approximately two decades, left Mackay Envelope. James Basset, former president of Old Colony Envelope, replaced Jacobs. Mackay Envelope continued to develop its business through the recession of the early 1990s. A new stationery ordering system called M-Print was introduced in 1992. While it required a considerable investment in software, M-Print paid off by allowing clients to place orders for envelopes, letterhead, or business cards directly from any of multiple branches. Corporate graphics were maintained at Mackay Envelope for consistency. The new system reduced staff time involved in ordering stationery and eventually became the basis for an entire division centered around stationery and business cards.

By 1993 annual sales had climbed to $40 million, and Mackay Envelope was in the middle of another intensive search for a company president. Basset had left to accommodate his wife’s out-of state job, and Mackay embarked on a quest for a replacement. After a five-month process involving an executive search agency, none of the finalists met Mackay’s high standards. Finally, in September 1993, Mackay broke from tradition and hired a new president based on gut feeling. Scott Mitchell, a salesman with a background in computers and real estate, impressed Mackay with his “instant credibility and friendliness,” according to a Minneapolis Star Tribune article.

Mitchell maintained the company’s upward trajectory. In 1996 sales reached $50 million at a production level of 12 million envelopes per day. The following year an office with a single salesperson was opened in Overland Park, Kansas. Harvey Mackay still divided his energies between company management and his writing career. His third book, Dig Your Well Before You’re Thirsty, was published in April 1997, followed by Pushing the Envelope All the Way to the Top in January 1999.

At the end of 1999 sales had reached $85 million, 17 million envelopes were manufactured a day for 3,000 clients, and Mackay Envelope employed 500 people. The company was a dominant provider of photofinishing envelopes, sales of which had doubled since 1993. Attracted by the firm’s solid standing, Colorado-based competitor Mail-Well offered to buy the company in late 1998. Mackay was tempted by the attractive price and a lucrative management contract, but had reservations about selling out of state. When company President Scott Mitchell expressed an interest in buying the company, Mackay was willing to accept less money to keep the firm privately held in Minnesota. In September 2000 a leveraged buyout by Mitchell was finalized. Under the terms of the deal, Mackay retained a significant share and a management role in the company, while Mitchell became CEO and the dominant shareholder.

In 2001, Mackay Envelope continued to be an attractive choice for envelope buyers. Harvey Mackay’s knack for salesmanship, coupled with extraordinary energy and drive, had propelled the company to a prominent place in the industry. The future of the company would depend on whether Mackay’s management principles, instilled in the company over the past four decades, would retain their effectiveness even after his inevitable departure.