Marcal Manufacturing challenged the shortcomings of the disposable world well before recycling became the green thing to do. The company collects more than 120,000 tons of paper annually from New Jersey municipalities and recycling facilities -- saving millions of trees -- to produce its 100% recycled branded Small Steps ® lineup -- paper towels, napkins, facial tissue, and other paper goods. Products are used in the home and away-from-home markets, such as hotels, hospitals, offices, and restaurants. Marcal sells its line primarily in the northeastern US. Founded by Nicholas Marcalus, the company operated under four generations of his family until Highland Capital Management acquired the company in 2008.
A well-crafted asset purchase and reorganization plan, led by Highland Capital and Marcal's largest creditors, enabled Marcal to emerge from a Chapter 11 bankruptcy in mid-2008. Marcal received support from union employees who agreed to a reduction in overtime and a pension for 401(k) plan swap, sweetening the deal for Highland Capital.
The acquisition also included damage control for the recycled paper product maker. Marcal had faced more than $900 million in environmental claims brought by the federal government as well as the New Jersey Department of Environmental Protection. The claims alleged pollution of New Jersey's Passaic River. Marcal settled the disputes with a $3 million payment.
However, because no other suitor appeared and because of the significant amount owed, Highland Capital claimed that it was strong-armed into buying Marcal. Highland Capital got some of its money back in fall 2010; it sold off Marcal's Chicago specialty packaging products business to US Packaging Dynamics Corp. In addition, the move aims to more profitably concentrate Marcal's resources on making 100% recycled household paper goods.
The portfolio meanwhile has received a series facelift. Marcal repositioned its lineup in early 2011 as softer, stronger, and more absorbent than its previous offerings. Such performance improvements followed a rebranding effort in 2009; the company launched the Small Steps® brand name to connect Marcal recycled paper products with the concept of using consumer purchasing power to help the environment. Although direct-to-consumer sales (roughly half of Marcal's business) slid more than 15% in 2009 from 2008, management reported that the company turned profitable in 2010.
Marcal also gained new management in late 2010. Former Schofield Stone CEO and Sealed Air Corp. executive Fred Smagorinsky was named CEO. He succeeded Tim Spring, who bowed down in spring 2010 after 21 months of turnaround service.
Founder Nicholas Marcalus used recycling to make paper as a way around the '40s wartime pulp shortages. Marcalus is credited with inventing the cutter box (or serrated edge) dispenser for Cut Rite brand waxed paper. His innovation is still in use today. Although he became one of New Jersey's leading manufacturers, his family is no longer associated with the company. – less