I didn’t expect this column to have anything to do with bagel baskets.
But it does, and I will explain later.
The piece started with an email a few weeks ago from a small Baltimore manufacturer named Drew Greenblatt. He asked me to come up to see the fruits of the $2 million he invested to expand his niche business after a story I wrote explaining capital expenditures.
I love factory tours. So I went.
Marlin Steel is a privately held business with $6 million in revenue, located in a leased warehouse not quite the size of a football field. The company is in one of those unglamorous industrial parks that are home to businesses that sell to other businesses — think middlemen who sell machines, pipes, glass, printing materials or tools for other companies.
My suspicion has long been that these backwaters are home to the millions of lucrative enterprises that you never hear of but that power a huge chunk of the U.S. economy.
Marlin’s specialty is high-tech metal containers for assembly lines at Boeing, Pfizer, Ford Motor and a couple hundred other clients across 39 countries. But it makes lots of other stuff, too.
“Our bent-up wire is used in phone rooms in Singapore, India, Taiwan, China, Mexico and Ireland,” said Greenblatt, 52, president and majority owner of Marlin (his father, a rocket scientist, owns the rest). “Our baskets are used to wash expensive components and are critical elements of S&P 100 companies.”
He is referring to the baskets that hold jet engine turbine blades as they are fine-tuned for General Electric, Pratt & Whitney and Rolls-Royce.
Greenblatt walked me through the offices where two mechanical engineers from the University of Maryland were designing custom orders for a health-care implements company and for Harley-Davidson motorcycles. “This is where it all starts,” Greenblatt said, pointing to the images on the computer screen.
We walked across the factory floor (microscopically flattened for his machines), where Greenblatt proudly showed off his $35,000 metal-cutting saw that he bought from Arkansas, his $150,000 deburring (“it smooths metal”) machine from Minnesota and his $250,000 robotic welder from Cleveland.
A giant spool of wire weighing as much as an automobile was feeding into an apparatus that pulls the wire, cuts it, threads one end so it can be screwed into something, and then inserts the other into a “stamper” that pounds the end flat.
“This will be used in a telecommunications application,” he said, adding a bit of mystery because he cannot name the client. “We stole this job from an Indian vendor.”
His new electrical system and power plant allow him to increase or reduce the output according to demand, saving him money when it’s not needed or even targeting power toward certain machines. “We are betting we are going to need the extra power,” said Greenblatt, who lives in Rockville with his wife and three sons and commutes to Baltimore every day.
Almost all the $2 million in improvements were made during a three-week shutdown last January that obliterated revenue but allowed Greenblatt to create a carefully choreographed environment that increases productivity. Aisles were widened. Skylights were added. There’s even a new $83,000 LED lighting system to help workers see better.
“We moved every piece of equipment in the factory to optimize flow,” the productivity junkie said. “We jiggered every machine to get a seamless working stream and make it safer. We did all of this in anticipation of the big boom in business.”
The big boom hasn’t arrived, but Greenblatt is betting it will. He projects $5.9 million in sales, helped, in part, by the corporate tax cut’s ripple effects.
Marlin’s biggest costs are steel and labor. After Greenblatt pays his six-figure lease, insurance, power bill and administrative costs, he sees a single-digit net profit. But not always.
Marlin had a middling 2018, in part because of the three-week shutdown but also because of a rise in the price of steel as a result of President Trump’s steel tariffs. Greenblatt buys his steel from companies in Illinois and Indiana, but they raised prices to match the imports.
He said the tax plan passed in December 2017 allows him to expense the new equipment in the first couple of years, far more cost-effective than spreading it out over several years.
“For the first time, we have a tax policy that enables me to become more competitive with my German competitors,” Greenblatt said.
Greenblatt’s 28 employees are under a company health-care plan and receive a 4 percent match on their 401(k) retirement savings. Many salaries are in the $40,000 to $60,000 range, but some are well into the six figures. Greenblatt gives out bonuses every two weeks to reward output.
I met Hector, Nathan, Josh and Tom, as they operated highly technical machines. They were turning out components, including specialized electrical junction boxes, for clients that include spy agencies and Army bases.
“I am creating and hiring middle-class jobs,” Greenblatt said.
Greenblatt said one of his most important employees is the quality-control person who sits alone in a room, randomly inspecting products for mistakes. “That’s our secret sauce,” Greenblatt said. “We did not have one bad part escape in the last quarter. We are nuts about quality.”
Every business should be fanatical about taking care of its clients so they keep coming back. Keeping clients is paramount and the key to being lucrative. Recruiting new business is expensive.
“I live on the reorders,” Greenblatt said.
He plans to reduce his 281 clients to a core of 60 or so premium “white glove” accounts that will create higher profit margins and increase efficiency by allowing him to concentrate more. “We are trying to reduce the complexity,” he said.
Greenblatt grew up in Silver Spring and graduated in 1988 from Dickinson College in Carlisle, Pa., with a liberal arts degree.
After getting his MBA from Tulane University in 1991, he bought a home security company in Bethesda for $107,500. He sold it three years later for nearly $600,000 and then took the money and looked for his next investment.
“I developed a list of 800 brokers, lawyers, association presidents and accountants that I would call once a month,” he said.
One finally turned him on to a small company in Brooklyn that had a corner on the market for metal baskets that hold bagels in retail stores.
Marlin Steel was located in a 1920s townhouse in a hollowed-out section of Brooklyn known as Red Hook, which lies across the East River from Manhattan. The company had $800,000 in revenue, and its owner ran it by the seat of his pants with old equipment and little record-keeping.
“The newest equipment was from the 1950s, and everything was done by hand,” Greenblatt said. “Despite the owner cursing out clients and nonexistent intellectual property or prints, they still made money. They had no competition.”
Greenblatt bought the bagel basket company for $650,000 in 1998. Eight months later, he moved it and its nine employees to Baltimore. “It worked well for a few years, until two things happened,” Greenblatt said. “China figured out you could commoditize baskets.”
Then, shortly after 2001, the Atkins Diet — which emphasizes eliminating carbohydrates — decimated the bagel business.
“My clients died because everybody stopped eating bagels,” Greenblatt said. “The biggest carb in the world is a bagel.”
Then came The Call.
An engineer at Boeing needed a customized basket with ultra-precise specifications. Greenblatt made the item and charged the engineer double what he charged the bagel clients.
“That was my epiphany,” Greenblatt said. “I was in the wrong business. I pivoted into a company that made high-quality engineered baskets.”
It took two years, but the trip from bagels to Boeing paid off. Greenblatt and Marlin survived.