Union Packaging

“Entrepreneurs have big egos. They have big dreams. And they need a lot of knowledge to carry out those dreams,” says Michael Pearson, president of Union Packaging in Yeadon, Delaware County, which manufactures paper cartons for the fast food industry.

Pearson should know. Prior to launching Union Packaging, he spent seven long years gaining experience, refining the ideas for his company, building relationships with potential investors and clients, and researching resources to help him fulfill his dreams.

In 1997, when Union Packaging was still in the concept stage, Pearson took his business plan to the Wharton Small Business Development Center (SBDC) for feedback. A graduate of the University of Pennsylvania himself, he knew the business school’s MBA student consultants would be skilled in the critical financial analysis needed to give his business model a thorough evaluation. The SBDC consultants assured him that he was on the right path.

As a rising young executive, Pearson had worked in marketing for Pfizer, the pharmaceutical giant, and then for the country’s biggest paper company Westvaco (now MeadWestvaco) where he was instrumental in growing its pharmaceutical packaging division. As Pearson describes it, this corporate experience – and having to make presentations to boards of directors – gave him confidence and stood him in good stead when it came time to attract large companies as his own clients.

While at the paper company, Pearson, who is African American, saw an opportunity to develop a company to serve the fast food industry’s packaging needs by taking on high volume, long run projects – an area many manufacturers were abandoning. From his experience, he knew that large corporations were seeking a diverse supply chain of vendors. In particular, many of these large companies were interested in smaller firms that could meet their quality standards and help them penetrate new markets.

Two years later, with a redrafted plan and his first big client in line, Pearson was ready to seek financing for his venture. He returned to the Wharton SBDC for another assessment of his financial projections.

“With many eyes looking at your plan, especially those who excel in quantitative analysis, you know they are really going to test your plan’s viability,” says Pearson. “Those with weak mettle don’t get through.” He credits the SBDC for showing him the way to financial discipline and for fine-tuning his plan.

Within three years of its founding, Pearson’s company, which is certified as a minority business enterprise, was surging, having landed McDonald’s, Burger King, and Wendy’s as clients. Every piece of McDonald’s apple pie now sold in the U.S. is served in a Union Packaging carton.

His sales surpassed $20 million. Union Packaging’s profit margins have been well above the industry average too, a testament to Pearson’s financial management and to his use of resources like the Wharton SBDC. “Without the SBDC’s assistance,” he attests, “I would have been off to a start that would have eventually led to failure.”

In June 2011, Mike took a major step in the next phase of growth for the business: he used a several million dollar SBA loan from National Penn Bank to finance his buyout of his longtime partner and begin implementing his ambitious plan to grow jobs and revenues to $20 million, taking on much bigger competitors in the food industry. Throughout the growth plan, Mike will continue his long-time commitment to supporting diversity in UP’s workplace and to contributing to the development of the individuals who work at UP. 90% of his current employees are African American. He has developed a highly regarded program to hire and support ex-offenders.

Mikes states, “The Wharton SBDC facilitated Union Packaging with every step in our history.  From start-up (business plan assistance) to (the) strategic reassessment that became the foundation for our current strategic plan. The 2008 SBDC consultation led to a revamped strategic plan which fueled the buyout that occurred last week.  Several years of work with a fluid solid strategic plan will once again have UP at over 20MM in revenue.  We also have roll-up strategy in play for acquisition of four other folding carton plants around the country and I am using investment bankers with that portion of the plan, again a concept introduced initially in that 2008 SBDC consultation.”  

A veteran, Mike is an important leader in the Southeast Pennsylvania civic and business community. He has served on the Boards of the Greater Philadelphia Chamber of Commerce, and the Delaware Valley Industrial Resource Center.