Fellowes Manufacturing Company

1917–1999

Fellowes Manufacturing Company is a leading global manufacturer of home and office organizational products, including computer accessories, consumer electronic accessories, paper shredders, and records storage boxes. Founded in 1917 by Harry Fellowes, the privately held, family-owned and -operated company is headquartered in Itasca, Illinois. Originally known as The Bankers Box Company, Fellowes has been responsible for creating innovative, leading-edge products such as the Disk Clip, introduced in the 1990s, the first device that allowed users to attach a 3.5″ diskette to a hardcopy document without damaging the diskette, as a banker's clip would.

Top competitors have included CompX International Inc., General Binding Corporation, and Tab Products Co., among others. By 1999 the company employed more than 1,500 people and operated seven wholly owned subsidiaries in Australia, the Benelux countries, Canada, France, Germany, Japan, and the United Kingdom. Fellowes' U.S. division operates from five plants located in Itasca, Illinois; Atlanta, Georgia; Belcamp, Maryland; Plano, Texas; and Cerritos, California.

The Bankers Box Company, 1917

A chance meeting in an elevator between Harry Fellowes and Walter Nickel in 1917 is where the Fellowes story begins. The two gentlemen were small businessmen who worked in the same office building. Harry learned that Nickel had been called up for duty in World War I and needed to sell his business, a start-up company that made inexpensive corrugated boxes used for storing bank records. Harry found the idea intriguing because of the recordkeeping requirements brought about by the newly enacted federal income tax. Consequently, before the elevator had reached the lobby, Harry Fellowes had purchased the company for a whopping $50. Thus The Bankers Box Company was born. Harry assembled the sturdy file-like boxes on his kitchen table at night and went out to peddle them during the day.

In May 1938 Harry's sons, John E. and Folger Fellowes, joined the company, traveling to the West Coast on sales calls. Some 20 years later, during the 1950s, John and his brother took over the management of the business from their father, with the goal of building the company into a strong national manufacturer. While Folger established the company's customer base and was in charge of sales and marketing, John managed the internal operations of purchasing, manufacturing, and administration, overseeing new product developments and new locations, increasing production and efficiency with each move, tailoring each new manufacturing location to regional customer needs, culminating in Fellowes' current one million-square-foot location just outside of Chicago, Illinois.

Third Generation, 1969 In 1969, when third-generation Fellowes family member James began working for the company, total revenues were somewhere around $4 million per year.

1969–1998

John recognized the company's global opportunities and led the company through a decade of overseas expansions during the 1960s and 1970s, opening subsidiaries in the United Kingdom, Australia, and Canada, as well as four regional U.S. manufacturing plants, which were added to provide faster service and lower freight costs for customers across the country. Building upon this foundation, the company later developed businesses in Germany, Belgium, the Netherlands, Luxembourg, France, and Japan, including exports to more than 60 additional countries. By 1972 the company was a major manufacturer of office products. As of 1998, John was still involved with Fellowes as vice-chairman, as an active member of the board, and as its principal stockholder, though he had turned the reins over to his two sons, James and Peter.

Third Generation, 1969

In 1969, when third-generation Fellowes family member James began working for the company, total revenues were somewhere around $4 million per year. Under his guidance as CEO--along with brother Peter as chief operating officer--the company increased its revenues at an estimated 14 percent annually from 1980 to 1994, with total revenue somewhere around $220.4 million in 1994 and a net income of about $9.2 million.

Industry Change and Paper Shredders in the 1980s

By 1980 total revenues reached approximately $31 million. During that decade, the office products industry changed radically. Manufacturers were challenged as office technology advancements changed the way people worked and the products they needed to support that work. In addition, increased foreign competition, consolidation within distribution channels, and rapid expansion of retail outlets began to present remarkable challenges to the manufacturers who supplied the distribution channels. Fellowes Manufacturing's answer to those challenges was to devote its energy and resources to planning carefully for the future. For example, early on Fellowes envisioned the computer as being the center of workplace activity. That led Fellowes to envision many products that related to the computer-based work environment of the 1990s. Consistent with the company's vision of the computer-based work environment, noticing that the computer environment was information-intensive and realizing that information in the wrong hands represented a significant risk for businesses and individuals, James Fellowes led his company into the paper shredder business.

1982–1999

In 1982 the company started selling, as an original equipment manufacturer (OEM), five general office shredders, which were manufactured by other companies, under their own brand name with moderate success. But competition soon sprang up, and the large, expensive ($1,500-$4,500) shredders quickly faced a shrinking market share. By the end of the decade the Fellowes line of general office shredders had evolved to eight machines with sales of more than $7 million per year. Nevertheless, although it was a thriving business for Fellowes at the time, the company was learning that its products, and those of its competitors, were not meeting consumers' needs effectively.

Listening to its customers complain about the inconvenience and distraction of leaving their workstation to shred documents, the company's vision changed. The new plan: to design and manufacture a shredder so inexpensive that anyone handling sensitive information could shred documents at their workstation and to decentralize the shredding function in the same way that computers were being decentralized in the 1980s through PCs. In 1990 Fellowes introduced the world's first "personal shredder," making it convenient and affordable (starting at about $149) for the first time for anyone to have one at their workstation. The company also began marketing its products through the office "superstores" that were sprouting across the United States, such as Office Depot, OfficeMax, and Staples, as well as in chains such as Kmart, Target, and Wal-Mart, rather than through the big office machine dealers or wholesalers traditionally used in the industry. Prices for personal shredders continued to fall (by more than 60 percent from 1990 to 1999), creating stronger demand for shredders. By mid-1999 Fellowes was the leading brand of shredders in the world, growing from $8 million in sales in 1990, to account for 18 percent of the company's total sales in 1994, and to some $40 million in 1995, which represented more than half of the estimated $75 million market.

The company shipped more than 1,300 interbranch shipments with a total weight in excess of 32 million pounds in 1990. Looking for a more efficient way to provide better service and to meet the needs of its plants and its customers, the following year the company changed its distribution system from rail to trucking, employing carrier CRST Inc. of Cedar Rapids, Iowa, to handle the load.

Other Products in the 1990s

While the shredder lent prominence to the Fellowes name, and the company's original business--record storage equipment&mdashcounted for 45 percent of sales during 1994, the new market was in computer accessories. In December 1994 the company introduced several new organizational products and computer accessories, including its new "Wild Things" line of multicolored computer accessories, its "Box Options" line of multipurpose corrugated storage products, and "Neat Ideas" portable organizers, all at the School and Home Office Products Association show in New Orleans. Computer accessories accounted for nearly 37 percent of the company's total revenue in 1994.

1995–1999

In January 1995, in an effort to continue to expand beyond office organization products and to increase its strength in new business segments, Fellowes acquired C-2 Office Gear Inc., a $21 million Chicago-based manufacturer of computer covers, mouse pads, wrist rests, keyboard protectors, laptop carrying cases, and molded products, as well as a license for a line of Looney Tunes products, for an undisclosed price.

At the 1997 Consumer Electronics Show, the company introduced a handheld computer input device, called "Tracker." The device was a result of a joint venture between Fellowes and Fujitsu Takamisawa, a Japanese producer of high-end technology. The Tracker used Fujitsu's proprietary Non-Contact Magnetic Field Detection method for "effortless and accurate" cursor control. The device, which contained no moving parts, was designed for both righthanded and lefthanded operation. The two-button device was released in both IBM PS/2 and Microsoft compatible formats.

In October 1998, to take advantage of its brand equity in the Fellowes name, the company unified the packaging of its products under a newly redesigned black, white, and yellow corporate logo. That year, the company, which was ranked 469th on Forbes "Private 500" list, expanded its product line by 147 new products, including such breakthrough products as the first Memoflex gel for ergonomic support, as well as new media storage products, glare filters, copyholders, licensed mouse pads, dust covers, and computer cables, all of which were added to enrich the company's offerings. In addition, the company expanded its line of Looney Tunes licensed computer accessories and audio storage products, including an embroidered CD player case, Tweety-at-the-Beach mouse pad, and character-themed CD jewel cases. By May 1999 the company offered the industry's most extensive line of computer accessories, with roughly 350 unique products and more than 2,000 SKUs (storekeeping units) within 17 different product categories. Also early that year, the company completed the acquisition of French binding and laminating company Lamirel.

In April 1999 the company received a 1998 Sears Partner in Progress Award. The award was given each year by Sears, Roebuck and Co. to a select group of vendor companies who supplied Sears with quality products and services on several levels and for various achievements.

By the end of the 20th century Fellowes Manufacturing remained a family-run firm as Harry's grandsons, James and Peter Fellowes, continued to build the global business, driven by a strong commitment to excellence. In mid-1999 the company had 1,500 employees worldwide, and seven foreign subsidiaries, marketing products in more than 60 international markets. As it had in the past, the office products industry would continue to evolve, and the company fully anticipated adapting new strategies to prepare for the future. The company cited as an example the trend toward increased mobility in the workforce. New product lines would accurately reflect this development as Fellowes continued to heed the most important voice in the industry, that of the consumer.