Pearson is still the complete package

Michael Senske could have turned his back on the family business a decade ago.

He was at Microsoft Corp. then, supporting consumer products like Encarta. He had never even been in the plant managed at the time by his mother, nor concerned himself much with a company founded by his grandfather in 1955.

But the future of Pearson Packaging Systems as a Spokane company may have rested on whether or not he chose to take over.

Pearson machines form, pack and seal boxes for Dell, Procter & Gamble, Coca-Cola Enterprises and other clients around the world. One of its case erectors can turn a flat cardboard pre-cut sheet into a box with a taped or glued bottom in less than a second. Another can stuff them with bags of olives almost as fast, and not crush the pimento. Still another can stack the filled boxes on a pallet.

The company has been an industry leader since “Lefty” Pearson built his first case erector in his garage. Pearson worked at the Bohemian Brewery, which hand-made all its six-pack containers and cases. His machine eliminated that chore, and was quickly adopted by breweries all over the country and Europe.

Pearson died in 1971. The family hung onto the business, sometimes taking charge itself, sometimes hiring outsiders. Pam Senske, Lefty’s daughter and Mike’s mother, took command in 1986 and righted a company experiencing its first losses. By 1997, she was looking for a successor. None of the other third-generation Pearsons was interested in taking her place. Unless Mike stepped up, Pearson would be sold and almost certainly moved because most of its customers were in the Midwest.

Pam Senske, he says, felt a tremendous responsibility to the local families that depended on Pearson for their livelihood. What he saw when he walked through the West Plains plant in early 1997 was a dedicated and skilled workforce and the sophistication of the machines they were building. But a second walk-through, at Costco, may have sealed his decision to leave Microsoft. Boxes were everywhere, holding everything.

“It became clear how pervasive the equipment was,” Senske says.

What was also clear, he adds, was the growth potential in a $5.5 billion industry served by hundreds of mom-and-pop-sized companies, much like Pearson itself.

Mike signed on, and began a multi-year rotation through every department from sales to design to assembly to project management. He was named president in 2003, then chief executive officer. Much has changed.

To streamline production, the company narrowed its product line, and implemented the lean-manufacturing disciplines made famous by Toyota. Leery workers bought in when they were assured increased efficiency would not translate into layoffs. The cost of producing some machines has been cut by half, lead times by one-third.

Senske expects Pearson to introduce more new products in the next three years than the last 10. Most will be machines tailored to small and mid-sized businesses that do not need high-volume equipment. Also, instead of focusing on the sale of individual machines, Pearson will market complete package-handling systems, even if they incorporate machines from another company.

Export sales have also been strong, so much so Pearson may build a plant somewhere in Mexico or in Central or South America to handle business there. Eastern Europe and Asia are other active markets.

In the United States, Pearson has opened service centers throughout the Midwest and East Coast to compensate for the lack of easy access to Spokane.

Competitors closer to those same customers are sometimes less service-oriented, Senske says, adding that Pearson should be able to take market share away from less agile competitors. The company, which is debt-free, may also look for partnerships or outright acquisitions where they make sense, he says.

Senske says sales have climbed to $35 million, thanks to annual growth rates in 2005 and 2006 of 20 percent to 25 percent. Yet the workforce has remained steady at about 185.

Senske by no means takes the credit for Pearson’s resurgence.

His mother remains chairman of the board of directors. His grandmother, Alma, is also a member, as is cousin Douglas Pearson. Senske is adding independent directors to expand skill sets and perspective. Chief Operating Officer Paul McKee is an old Boeing Co. hand. Chief Financial Officer Randy Bell was formerly with Tully’s Coffee and Shurgard Storage Centers.

Senske says he has come to feel the same sense of responsibility towards his workers his mother and grandfather did before him.

“We don’t have any unskilled labor here,” he says. “It’s a fantastic group of people.”

As good a company as Microsoft is, Senske says he does not regret the decision to leave.

Growing Pearson, taking on the competition, “It’s just kind of invigorating,” he says.