MeritMatters - SE Michigan Version 4, Issue 2

Insights for business & life
Bottling
it up
How
Plastipak
has grown
into an
industry
leader
+
BUSINESS
How colasanti built
its business from the
ground up
COMMUNITY
Rebuilding together
oakland county
ASK THE EXPERT
How to choose
a trustee
volume 4, issue 2 // www.firstmerit.com
Bill Young, CEO,
Plastipak
first word
Looking ahead
Springtime in the Midwest is a time of
renewal and looking ahead to expected
growth.
From a financial viewpoint, one critical
part of looking ahead is selecting the right
trustee as part of your estate planning
process. Whether choosing an individual
or corporate trustee, there are a number
of important considerations and options
to strategically guide your selection based
From a financial
viewpoint, one critical
part of looking ahead
is selecting the right
trustee as part of
your estate planning
process.
on your specific needs. In this issue of
MeritMatters, Aaron Reber, FirstMerit’s
head of trust, provides a helpful guide to
seeking the ideal candidate.
Getting a college education remains a
Tom Deininger, FirstMerit’s vice president/
manager, foreign exchange trading,
huge factor in millions of Americans’ plans
provides some insight and explains how
for their career futures. The student loan
FirstMerit’s foreign exchange services can
debt balance in the United States now
help you manage the risks associated with
exceeds $1.3 trillion with more than 40
currency fluctuations.
million Americans carrying that debt. What
This edition also profiles a number of
effect will this, the second-largest category
your neighbor organizations and how they’ve
of household debt, have on economic
met the challenges facing their industries.
growth? Dan Crawford, Chief Investment
I hope you’ll find these articles informative
Officer of FirstMerit PrivateBank,
as you look ahead to your business’ success
examines and analyzes the student debt
throughout the year and beyond.
phenomenon on a macro level.
Looking ahead on a global scale,
As we look ahead at FirstMerit, we are
actively preparing and planning for our
currency market volatility has many
merger integration with Huntington. We
corporate treasurers and controllers
are pleased with the progress and expect to
wondering how foreign exchange market
close on schedule during the third quarter of
gyrations will impact business in 2016.
this year.
2 • MeritMatters®
As always, thanks for
reading MeritMatters.
Paul Greig
Chairman, President and
Chief Executive Officer
FirstMerit Corp.
table of contents
volume 4, issue 2
14
Briefs ........................................................................................... 5
Events, highlights and attractions
Business Matters ................................................................. 6
How the Colasanti Companies built its success
in the construction industry from the ground up
Ask the Expert ......................................................................10
What to consider when selecting a trustee
Ask the Expert .......................................................................12
Addressing volatility in the currency market
6
Cover ......................................................................................... 14
How Plastipak has grown into an industry leader
Investments .......................................................................... 20
Rising student loan debt and the impact
on economic growth
Community ............................................................................. 22
Rebuilding Together Oakland County helps
one homeowner at a time
12
About our new look
You may have noticed that this issue debuts a new look for
MeritMatters. Our streamlined layout and new editorial approach are
designed to enhance your reading experience. What hasn’t changed is
that every page still offers valuable information for business and life.
We look forward to bringing you more of what you love about
MeritMatters.
MeritMatters® • 3
in this issue
David Lochner
sandy pierce
volume 4 issue 2
Publisher
Michael Marzec
Editorial adviser, FirstMerit
Shannon Cote
Managing Editor
Laura Marzec
Contributing Editors
Erik cassano, sue ostrowski,
David searls
A track record of success
Welcome to the newest issue of MeritMatters magazine. There is a lot going on with
businesses in Southeast Michigan, and we’ve talked to some local leaders about the successes
they are having.
In this issue, we speak with Plastipak CEO Bill Young, who co-founded the business with
his father after seeing an opportunity to create one-gallon plastic water jugs that would
make it easier to transport the liquid. From that initial gallon jug, Plastipak has branched out
to produce rigid containers from beer bottles to automotive fluid containers to laundry
detergent bottles, and its 6,600 associates work at 47 production sites on five continents.
We also speak with Chris Colasanti, the third-generation president of the Colasanti
Companies, about the company’s evolution. Founded in 1954, the business has grown from
a place-and-finish concrete slab contractor into a company that has helped construct some
of the largest and most well-known buildings in the Detroit area, including the Renaissance
Center, Ford Field and Comerica Park.
And we talk with Gale Frazee, executive director of Rebuilding Together Oakland County, a
nonprofit organization dedicated to refurbishing the homes and yards of residents who don’t
have the money or are physically unable to do their own home improvement projects.
This edition also presents advice from FirstMerit Bank experts about choosing the right
trustee to be responsible for protecting your legacy and how to manage the risks associated
with fluctuations in the foreign currency market. Finally, we look at the impact of rising student
loan debt and delinquencies on economic growth.
We hope you enjoy this issue of MeritMatters and take away something that will help you
grow and thrive in your own business.
David Lochner
President
Michigan
FirstMerit Bank
4 • MeritMatters®
Sandy Pierce
Chairman and CEO
Michigan
FirstMerit Bank
Art Director
Stacy Vickroy
Project Manager
KAte Castrovince
Cover photo
Tom McKenzie
If you would like to receive future issues
of MeritMatters®, email us at
[email protected].
MeritMatters® is published by
Convero (Formerly SBN Interactive)
835 Sharon Drive, Suite 200
Westlake, OH 44145
(844) 428-8844 / www.converoinc.com
MeritMatters® is solely intended for general
information purposes. It is not intended to provide – nor should it be used in lieu of – financial,
accounting, legal or other professional advice. It
does not constitute a recommendation to buy or
sell any security or adopt any investment strategy. The publisher assumes no liability for readers’
use of the information contained herein. The
information was obtained from sources believed
to be reliable, but such information is not guaranteed as to its accuracy. Readers should seek
professional assistance with regard to specific
matters. All opinions expressed in MeritMatters®
are those of the authors or sources and do not
necessarily reflect the views of FirstMerit Bank
or FirstMerit Corp.
Securities and Insurance products are:
Not FDIC insured. May lose value. No bank guarantee. Not a deposit. Not insured by any federal
or state government agency.
briefs
events
Detroit Belle Isle Grand Prix
June 3-5, times TBD
Free gate admission Friday, seating $40 to
$85 adults, $15 to $75 children 12 and younger
Saturday and Sunday; two-day and three-day
tickets also available
Belle Isle Park, East Jefferson and
East Grand Boulevard, Detroit
(313) 748-1800 / www.detroitgp.com
Commodity-free
business banking
Capital is a commodity, but that doesn’t mean that your banking relationship should
be similarly commoditized. Every business has its own definition of success and unique
strategies and goals for getting there. That’s why the lender relationship needs to grow
alongside the business.
Trends in digital technology make it increasingly easy for your banker to take a more
data-driven approach to identifying your company’s needs and opportunities, then offering
business banking products and services that add real value. But technology can’t — and
shouldn’t — work alone.
While FirstMerit Bank uses data-driven technology to the advantage of our clients,
we start with a more hands-on, personal approach. Our business banking relationship
managers study your business, your industry and your goals before identifying workable
financial solutions. From there, we’re able to offer a customizable portfolio of tools for
treasury management, business payroll and merchant services.
We invite you to partner with your FirstMerit Bank relationship manager, a trusted
advisor who can help you get the most out of your banking relationship.
Please contact your FirstMerit Bank business relationship banker for more information on our
advisory services.
The Chevrolet Detroit Belle Isle Grand Prix
features the cars of the Verizon IndyCar
Series, the WeatherTech SportsCar
Championship and the trucks of the
SPEED Energy Stadium SUPER Trucks
presented by TRAXXAS.
Motor City
Irish Fest
June 17-19,
Friday 5-11 p.m.,
Saturday noon to 11 p.m.
Sunday mass at noon,
1-8 p.m. / Price TBD
Greenmead
Historical Park,
20501 Newburgh, Livonia
(734) 564-0770 / www.motorcityirishfest.com
Activities include 24 Irish bands, a
children’s tent, a stunt group, dance
groups, pipe and drums bands, and
traditional Irish food and drink, along
with vendors selling Irish goods.
Summer concerts
FirstMerit Bank is a proud
sponsor of venues hosting
a range of musical entertainment this summer.
Take a look at just a few of
the national headliners at
each location.
Blossom Music Center, Cuyahoga
Falls, Ohio (featuring the FirstMerit
Bank VIP Club) – Acts include The
Dave Matthews Band (May 21),
Florence + the Machine (June 4),
Journey and the Doobie Brothers
(June 29) and Keith Urban (July 15).
FirstMerit Bank Event Park,
Saginaw, Michigan – Showcase
acts include Rob Zombie (May 19),
the legendary Chicago (Aug. 17) and
Bryan Adams (Sept. 14).
FirstMerit Bank Pavilion at
Northerly Island in Chicago –
Check out Bad Company and Joe
Walsh (June 23), Modest Mouse
(July 2), Heart, Joan Jett and the
Blackhearts and Cheap Trick (July
19) and Josh Groban and Sarah
McLachlan (Aug. 9).
MeritMatters® • 5
business matters
A concrete foundation
How the Colasanti Companies built its success in the construction industry
from the ground up By erik cassano
The path to growth
In the mid-20th century, a good reputation in the
automotive industry could go a long way toward helping
a construction company secure more work. Automotive
plants and facilities are large-footprint construction
projects, and once Colasanti proved its ability to finish
large-scale foundation and concrete work on massive auto
buildings, those projects opened doors for work on other
major construction projects.
Over the coming decades, Colasanti would help
construct some of the largest and most well-known
buildings in the Detroit area, including the Renaissance
Center, Ford Field and Comerica Park.
“My grandfather, Rocco, passed away in 1968, and it was
my father who took the reins and really vaulted us to a new
level,” Colasanti says. “In the 1970s, we started to take on
“With each project, we learned
something new that we could use
on the next project.”
– Chris colasanti,
president, the colasanti companies
bigger jobs in Michigan and out of state. We had gained so
many different types of construction management skills
on our team that we eventually became more of a general
contractor, utilizing our collective skills in new ways.”
The 1977 completion of the Renaissance Center helped
usher in a Detroit construction boom in the late ’70s and
early ’80s. As the concrete contractor for the Renaissance
Center project, Colasanti was able to parlay its work on the
project into more business and become a preferred concrete
and general contractor for numerous construction projects
throughout the region.
The company soon found new ways to utilize its
expertise, as concrete increasingly became a key structural
component in building designs — beyond just the
foundation slab.
“At that time, the soup-to-nuts concrete contractors
weren’t really around,” Colasanti says. “We’re talking about
the companies that would do the pouring, reinforcing and
finishing of concrete structures, from foundation to roof.
General contractors were kind of doing that, but nobody
with a specific background in the concrete space. In that
way, we were blazing a new trail.”
Colasanti found work on a wide variety of new
construction projects, including parking decks, hospitals,
high-rise condominiums, casinos and airports. That variety
required the company to develop additional areas of
competency, including mechanical and electrical services.
continued on page 8
6 • MeritMatters®
photos by Tom McKenzie
Sixty years ago, Detroit was an American boomtown. At a
time when manufacturing powered the country, the city was
the brains and muscle behind the explosive growth of the
U.S. auto industry.
It was the best of times for the industry, as densely
packed urban centers sprawled into the suburbs, aided by
the advent of the interstate highway system. Every family
needed a car, if not two. There was never a better time to
be an automotive manufacturer or a company servicing the
automotive industry.
That’s how the Colasanti Companies, known simply as
Colasanti, got its start in 1954. Angelo Colasanti, along with
brother, Alfred, and father, Rocco, built a company that,
quite literally, provided the foundation for the booming
auto industry.
“At first, we were a place-and-finish concrete slab
contractor, working primarily in the auto industry,” says
Chris Colasanti, Angelo’s son and the company’s thirdgeneration president. “Over the first couple of decades, we
gained a reputation for high-quality concrete work on large
automotive facilities throughout southeastern Michigan,
and that helped propel us to more growth.”
L to R: Chris Colasanti,
President,
Carey Colasanti,
President of CCSI,
and Keith Colasanti,
Executive Vice
President,
Colasanti Companies
MeritMatters® • 7
business matters
continued from page 6
“Each of those projects had its own little
nuances, different means and methods, and
different types of equipment,” Colasanti
says. “With each project, we learned
something new that we could use on the
next project.”
Expanding geographically
The move into the high-rise condominium
space took the company into the Florida
market. Initially performing concrete work
on high-rises in Miami, Colasanti quickly
expanded its Florida business base and now
counts large hotel projects at Walt Disney
World and Universal Studios Orlando as
part of its portfolio.
“It took us about five years to get our
name out in Florida, but it was time well
spent,” Colasanti says. “We’re now a major
contractor there. We’re so sought after,
we actually have to turn down some work
because our plate is simply too full.”
If it’s a big job, difficult job or a job on
a tight schedule, Colasanti has become the
go-to contractor for the project.
“We take the tough jobs because we have
the capacity and capabilities to get it done,”
Colasanti says. “That’s been our calling card,
and it’s what has allowed us to grow into the
thriving company you see today.”
For more information, visit
www.colasantigroup.com.
8 • MeritMatters®
banking on it
For every successful business, there are partners behind the scenes
helping to make that success possible. For the Colasanti Companies,
one of those partners has been FirstMerit Bank.
When times were tough for the company, FirstMerit was able to see
through the short-term troubles and find a stable, competitive company.
“We had a longstanding relationship with another bank that fizzled
during the recession in 2009,” says President Chris Colasanti. “We
were hit with huge losses when some large projects went bankrupt.
Our previous bank couldn’t find the money to help us. We just didn’t
represent a good risk to them anymore.”
FirstMerit saw something different. Its bankers took a look at the
company’s long-term performance and saw the growth the company
had experienced for more than 50 years.
“They recognized our short-term problems as a fluke,” Colasanti
says. “They looked past it and partnered with us, despite it all. And I’m
thankful they did, because now we’re on pace for our biggest year ever.”
A strong banking partner is particularly important in the construction space, where companies must meet payroll and other expenses on
a weekly basis, but receivables could take one to three months to arrive.
“We have 1,000 people working in Florida alone, and that’s about
$1 million in weekly payroll,” Colasanti says. “We’re not going to get
paid on a project for at least 45 days. So the line of credit we get from
FirstMerit is really a lifeline for us and our people.”
Realize your potential
To find out how FirstMerit can help your business grow
to new heights, contact your relationship manager, or visit
firstmerit.com/commercial or firstmerit.com/privatebank.
Solutions That Grow
With Your Business
Get the products, support, and advice
your company needs to thrive.
Increased demand for eco-friendly solvents meant exponential growth for
Lisa—and a conversation with FirstMerit Bank. Thanks to advice and services
from Treasury Management, Payroll, International Services, and more, Lisa was
able to create a new model for order fulfillment that allows her to keep up with
increasing demand. Now, Lisa’s business no longer qualifies as “small.”
TO L E A R N MOR E, C O N T A C T :
David Lochner, President, FirstMerit Michigan,
at 248-228-1620 or [email protected].
Follow the latest market trends
@firstmerit_mkt
Lisa reflects a composite of clients with whom we’ve worked; she does not represent any one person.
firstmerit.com
Member FDIC
5350_FM16
ask the expert
Choosing a trustee
Weigh all your options when protecting your legacy
Naming a trustee to be responsible for protecting your
legacy demands thoughtful consideration and an openminded examination of available options. As part of
your wealth transfer strategy, should you choose an
individual trustee or corporate trustee? What questions
should you ask when seeking the ideal candidate?
Where do you begin?
Before you start, recognize that your situation is unique.
What proved a successful strategy for your neighbor may
not be a suitable approach based on your needs. Selecting
a trustee is an important decision that could significantly
impact your family and estate plan, so do your research to
make an informed choice.
Take the time to grasp what you will be asking your
trustee to do. Specific responsibilities include taking
10 • MeritMatters®
By Aaron Reber
custody of and safeguarding assets, making appropriate
investment decisions, understanding and reacting
to changes in applicable laws, making discretionary
distribution decisions, communicating with beneficiaries,
preparing trust accountings and handling tax matters.
The complexity of your plan and assets also factors
into what you will ask your trustee to do. Absolute
discretion to make distributions as your trustee sees fit is
a lot of responsibility and can create challenges, especially
when there are multiple beneficiaries. Complex assets,
such as closely held business interests or real estate,
may require a trustee with specialized business and
financial skills.
When considering an individual, such as a family
member or trusted adviser, to serve as trustee, ask
Absolute discretion to
make distributions as your
trustee sees fit is a lot of
responsibility and can
create challenges, especially
when there are multiple
beneficiaries.
yourself essential questions. Does he or she have the
time, expertise, experience and desire to take on this
responsibility? Will changes in the trustee’s life, such as
retirement or a move to another location, affect his or her
ability to continue serving in this capacity? Will he or she
be comfortable putting personal assets at risk for decisions
made regarding the trust?
If you have reservations about naming an individual
as trustee, you may want to explore naming a corporate
trustee. Corporate trustees have extensive experience
handling ordinary and complex fiduciary tasks. Knowing
that many years of experience have been drawn on to
develop consistent approaches to decision-making may
provide you a certain level of comfort. Families can
also benefit from having the same corporate trustee
provide uninterrupted service for successive generations,
eliminating mortality issues that come with opting for an
individual trustee.
Keep in mind that selecting a corporate trustee does not
exclude your family from being involved.
• You can appoint a family member as co-trustee to serve
with a corporate trustee.
• You can give your beneficiaries the power to remove and
replace the corporate trustee.
• You can name a family member as a trust adviser for the
trust, to be consulted on
investment decisions,
distributions to
beneficiaries, or both.
our expert
Whatever path is
ultimately taken, many
people find that consulting
an experienced trust
adviser puts the selection
process on solid footing.
FirstMerit PrivateBank has
Aaron Reber
been serving as trustee of
Head of Trust,
traditional and complex
Senior Vice
trusts for more than a
President,
FirstMerit
century. Our local trust
PrivateBank
advisers understand the
responsibilities of a trustee
and have the experience
and expertise to make prudent decisions to carry
out your wishes. We invite you to visit with a
FirstMerit PrivateBank trust adviser to learn how
we can provide you with an objective perspective
on your circumstances and help you select a
trustee who will achieve the objectives of your
legacy plan.
Make the right choice
For more information
and help with choosing
the right trustee for
your needs, visit
www.firstmerit.com or
contact Aaron Reber at
[email protected].
MeritMatters® • 11
ask the expert
Addressing volatility
in the currency market
our expert
Tom Deininger
Vice President /
Manager, Foreign
Exchange Trading,
FirstMerit Bank
12 • MeritMatters®
Currency market volatility
has spiked over the past
18 months, leaving many
corporate treasurers and
controllers wondering
which direction the U.S.
dollar would take next and
how currency or foreign
exchange (FX) market
gyrations would impact their
business models for 2016.
The USD Index 1
appreciated more than 25
percent from July 2014
to January of this year, as
the FX market was largely
focused on the divergence
between Federal Reserve
(Fed) monetary policy and the policy measures of its major
trading partners. While the Fed was moving gradually
to remove monetary accommodation2 and begin raising
short-term rates, its G7 counterparts were moving in the
opposite direction, adding stimulus and taking base rates
into negative territory.
This “race to the bottom” among central banks has
manifested itself in a series of unprecedented actions,
frequently catching markets off guard and leading to
heightened market volatility. In January 2015, the Swiss
National Bank wreaked havoc on the FX world by removing
the long-standing peg (or fixed-exchange rate) between the
euro (EUR) and the Swiss franc (CHF). In response, the
EUR/CHF rate appreciated in value more than 20 percent
in just one day. As part of these extraordinary measures, the
Swiss National Bank lowered its benchmark interest rate to
-0.75 percent.
The European Central Bank has also embarked on an
expansionary monetary policy, introducing quantitative
easing 3 last year and dropping deposit rates below zero for
the first time in its short history. Not to be outdone, the
Bank of Japan adopted a negative interest policy4 earlier this
year for excess reserve balances held by commercial banks
in an attempt to energize a moribund Japanese economy.
Additional shocks to the FX market from central bank
actions in recent months include the devaluation of the
yuan5 by the People’s Bank of China last summer and the
direct market intervention by the Mexican central bank in
the USD/MXN spot market in February.
The end result of all of these undertakings by the various
monetary authorities has been a broadly stronger U.S. dollar
but also a markedly higher level of volatility as the market
reacts, sometimes violently, to unanticipated changes in the
policies that govern the global financial system.
The widespread introduction of ultra-low interest rate
policies has led to much discussion about competitive
Russia
Egypt
India
11%
10.75%
China
U.S.
6.5%
4.35%
0.5%
mexico
3.75%
While interest
rates remain low
in the U.s. and
other parts of the
world, central
banks in egypt
and russia are
charging much
higher rates.
as of April 1, 2016
currency devaluations and their potential impact on
the global landscape. As many nations have struggled
to invigorate their economies, enhancing export
competitiveness through currency depreciation can be
viewed as a viable means to increase production. This is
simply another version of the race to the bottom.
Importers, exporters and companies with foreign
subsidiaries or parents are all affected by the changes in
exchange rates over time. The good news for corporate clients
of FirstMerit Bank is that the bank offers the means to help
manage the risks associated with currency fluctuations.
Most of the transactions that the FirstMerit FX desk
processes for its clients are spot contracts or current rate
trades that settle in one or two business days. But the bank
also works with companies that can assist in identifying FX
risk and seek to actively manage it. The forward contract
is an over-the-counter derivative that is a very effective
method of helping manage either payables or receivables
denominated in foreign currencies. This contract between
client and bank fixes an exchange rate for a predetermined
currency amount for some future date, generally less than
one year forward. For instance, it allows an exporter selling
to a customer in France to lock down an exchange rate for
a series of payments denominated in euros, securing a fixed
U.S. dollar value and, in turn, locking in a profit margin.
The FirstMerit FX desk works on a consultative basis
with its customers to determine the strategies that are best
suited to their risk appetite. We can help formulate and
execute an FX risk policy that will help remove some of that
market volatility to help manage your bottom line.
Understanding the FX market
To learn more about how FirstMerit
Bank’s FX desk can help you achieve
your goals, contact your FirstMerit
relationship manager or FirstMerit
PrivateBank adviser or visit
www.firstmerit.com/commercial or
www.firstmerit.com/privatebank.
1. The US Dollar (USD) Index is a measure of the value of the U.S. dollar 2. Monetary
accommodation is when a central bank stimulates economic growth by lowering shortterm interest rates, making money less expensive to borrow. 3. Quantitative easing is a
monetary policy in which a central bank purchases government or other securities to
lower interest rates and increase the money supply. 4. A negative interest rate means the
central bank charges negative interest, requiring depositors to pay to keep their money
with the bank. The intent is to incentivize banks to lend and businesses and individuals to
invest and spend, rather than pay a fee to keep money safe. 5. Devaluation means official
lowering of a country’s currency within a fixed or semi-fixed exchange rate system.
MeritMatters® • 13
cover story
Bill Young, CEO, Plastipak
14 • MeritMatters®
bottling
it up
photos by tom Mckenzie
Plastipak produces the
packaging that carries liquid
household products to your
home. Here’s how it’s grown
into an industry leader.
By Erik Cassano
If you’ve ever poured a glass of milk,
changed your car’s oil or tossed in a load
of laundry, there’s a good chance you’ve
touched a Plastipak product.
Plastipak Holdings Inc., one of the global
leaders in the rigid packaging space, produces
bottles and packaging for a variety of liquid
household products, including foods,
cleaners, detergents, motor oil and others.
But initially, the product offerings of the
Plymouth-based company were focused on
the most essential of liquids — water.
Throughout the mid-2oth century, large
volumes of water were transported in heavy
five-gallon glass or metal jugs, which were
bulky and heavy. Full, the jugs could weigh
more than 50 pounds. Plastipak CEO Bill
Young, who co-founded the business with
his father, the late William Young, saw an
opportunity in the creation of one-gallon
plastic water jugs to make transport easier.
Those jugs would eventually be sold into
the dairy industry as the common onegallon milk jugs now available in every
supermarket dairy case.
MeritMatters® • 15
“The purpose for establishing the
business was to make a jug that could be
sold into the water and dairy industries,”
Young says. “We were initially focused
on serving those areas, and eventually
branched out from there.”
Plastipak now produces just about every
type of rigid container available — from
beer bottles to automotive fluid containers
to laundry detergent bottles. The company’s
6,600 associates work at 47 production
sites on five continents. And the company
continues to grow, most recently through
the acquisitions of Constar International’s
post-bankruptcy assets, and the acquisition
of the APPE Packaging division of Spanish
company La Seda de Barcelona Group. Both
acquisitions were announced in 2014, with
APPE’s acquisition completed last year.
It’s part of Plastipak’s larger diversified
growth strategy, which combines organic
growth through innovation and investments
in technology with well-timed acquisitions
that increase the company’s vast footprint.
“We targeted both companies because
they could bring us something we didn’t
already have,” Young says. “Whether it
is a strategic geographical area or new
technology, we’re always looking to evolve
and add pieces like that.”
Advancements in technology
Innovation and technology work hand
in hand at Plastipak — and they need to,
because both are essential to success in the
rigid packaging space. Without embracing,
and in some cases spearheading,
advancements in technology, Plastipak
would still count gallon water jugs as its
sole product.
16 • MeritMatters®
“The old saying is
you need to adapt in
order to thrive, and
that’s absolutely true
in our line of work.”
– Bill Young, CEO, Plastipak
“The old saying is you need to adapt in
order to thrive, and that’s absolutely true
in our line of work,” Young says. “We’re
always on the lookout for ways that we
can strategically align ourselves to stay
ahead of the curve and keep giving our
customers new technology and new options
in packaging.”
Plastipak’s acquisition of Constar
International, a company formerly based
in the Philadelphia area, is a prominent
example how innovation drives the
company’s strategic decisions.
“Obviously, air is a critical element in
food spoilage, so food products customers
are always looking for ways to keep oxygen
away from their products and increase
their shelf life,” Young says. “Constar had
developed a ketchup bottle with improved
barrier technology for that exact purpose,
and it was a main driver in our purchase
of their assets. A bottle with that kind of
technology has many different uses —
condiments, beverages, all sorts of things.
Any type of food product is going to benefit
from packaging that maintains its integrity
over a longer period.”
The acquisition of APPE extended
Plastipak’s footprint in northern Europe,
particularly the U.K., where it had yet to
gain a toehold.
“Prior to acquiring APPE, we had a
European presence, but it was mostly
south,” Young says. “APPE brought us into
northern Europe — and brought us some
new technologies that increase carbonation
retention in drinks and some developments
in aerosol cans. We saw potential for
new products there, so that was another
motivator for acquiring them.”
The push to innovate extends beyond
the production of rigid packaging. Plastipak
has also entered the recycling space,
capitalizing on the green movement by
building and acquiring facilities on two
continents that recycle more than 10 billion
bottles per year.
“We have what you’d consider our ‘home’
recycling facility in Dundee (Michigan),”
Young says. “We also have recycling plants in
Luxembourg and France. That’s becoming a
major part of our business.”
The power of people
All the capacity in the world doesn’t matter
if you don’t have talented, qualified people
to run the show. To that end, Young and his
team value the talent that acquisitions have
brought to the company even more than the
added technology and capacity.
Constar and APPE added a combined
1,600 people to what was already a
5,000-person company. The acquired
workforce included engineers, managers,
product developers and other professionals
with a wealth of knowledge and experience.
Young knew it was critical to get those new
team members on board with Plastipak’s
culture as quickly as possible.
“With us, it’s all about driving home
the sense of purpose, and our purpose is
delivering great products and service to our
customers,” Young says. “The great work
you do today is going to set the company up
for more success tomorrow.”
Young says it takes two to three years
for a company of Plastipak’s size to fully
integrate an acquired company. During that
time, the company is working constantly to
put processes in place to develop both the
organization and the people within.
“You’re always looking for ways to
develop the organization further, to
refine your systems and processes, and to
continually discover and groom new leaders,”
Young says. “You’re constantly creating
buy-in, and constantly selling the idea that
you’re delivering products to customers, not
just for today, but so they’ll continue as your
customer well into the future.”
Above all else, Plastipak wants a
workforce that is on board with the evolution
and change necessary to keep the company at
the forefront of its industry. A plastic bottle
might just be a plastic bottle to consumers.
If it holds the liquid without leaking and
keeps a product fresh, an end user won’t
notice more than that. But behind that bottle
are the ongoing research, development and
innovation that result in advancements like
oxygen barrier technology — and that’s
the type of change the 6,600 employees of
Plastipak encounter each day.
For example, in addition to
incorporating the new barrier technology
from Constar, the company is also getting
into the labeling business.
MeritMatters® • 17
“As we approach
the $4 billion mark
in sales over the
coming years, we
have to be sure we
continue to have the
type of organization
that can manage
that type of volume.”
– Bill Young, CEO, Plastipak
“Every container needs a label, and
the technology surrounding something
as basic and essential as labeling a
container is something we have to adapt
to,” Young says.
“For decades, bottles had paper labels,
and that was it. Then we saw clear plastic
labels hit the market. Now, we’re seeing
more and more direct-print labeling, in
which a digital printer can print directly
onto a bottle. We’ve invested a lot in the
18 • MeritMatters®
development of six- and seven-color digital
printers that can blend colors and print
directly onto the bottle.”
Ultimately, Young wants Plastipak to
be known as a new-business enabler — a
company that can help its customers drive
their own businesses forward by delivering
value in the form of service, innovation and
convenience.
“In our space, customer service is the
foundation of our value structure,” Young
says. “We make rigid packaging, but a lot
of companies can churn out generic rigid
packaging. Our value proposition is in the
service we provide and the investments we
make in technology, continually improving
our products.”
Plastipak’s people have a great deal of
interaction with customers on the back
end, as well, seeking feedback via informal
conversations and formal audits. That
feedback is then used to improve products
and processes, as well as overall quality.
“We’re very sensitive as to where we
stand on quality,” Young says. “We’re
constantly comparing ourselves to the
competition in terms of rate of defective
products and things like that. We know
we have to strive for perfection and take
every mistake we make very seriously. It’s a
learning experience, so we can do our best
to make sure it doesn’t happen again.”
Without those key ingredients —
innovation, great people and a focus on
perfection — it would be easy for the
company to lose ground in a competitive
market, Young says.
“As we approach the $4 billion mark
in sales over the coming years, we have
to be sure we continue to have the type
of organization that can manage that
type of volume and keep performing at
a high level,” he says. “That takes great
leadership, great people and an obsession
with the details.”
Successful M&A growth
Discover how FirstMerit Bank can
help you make your merger or
acquisition-based growth plan a
reality. Contact your FirstMerit
relationship manager, or visit
www.firstmerit.com/commercial or
www.firstmerit.com/privatebank.
Acquiring support
Building out a company through
acquisitions takes vision, a lot of
sweat and a stomach for risk. But it also takes
a lot of support — particularly where money is
concerned.
Plastipak has partnered with FirstMerit
Bank for its financial needs for more than five
years, and the partnership has included the
financing packages for its acquisitions of Constar
International and APPE. Additionally, FirstMerit
was the lead in refinancing Plastipak’s domestic
real estate holdings, which provided capital for
the acquisitions and day-to-day operations. Both
large-scale acquisitions required a great deal of
banking assistance, not just in terms of dollars
and cents, but also in terms of consultation
and advice.
“FirstMerit was a big part of the financing
group for the acquisitions, and their experience
in real estate financing has been invaluable to us
through all of it,” says Bill Young, Plastipak’s CEO.
“The care they took in analyzing our situation and
supporting us really spoke to me. It’s exactly what
you look for in a banking partner.”
In addition to financial matters, Plastipak and
FirstMerit also share a passion for bettering the
communities in Southeast Michigan.
“FirstMerit was a big part
of the financing group
for the acquisitions, and
their experience in real
estate financing has been
invaluable to us through
all of it.”
– Bill Young, CEO, Plastipak
“Sandy Pierce (chairman and CEO of
FirstMerit Michigan) shares our desire to make
this an even better place to live and work,”
Young says. “And that’s important to us, as
well. I think we’re very aligned in that way. Both
organizations work on numerous community
projects around the region. So we’re partners in
more ways than one.”
For more information on Plastipak,
visit www.plastipak.com.
MeritMatters® • 19
investments
Student loan debt:
An anvil, not a bubble
Billions of Dollars
Do rising student loan debt and
Similar to the mortgage market prior to the housing crisis,
delinquencies pose a threat to
student loans have been made easily accessible through
economic growth?
various government programs. Student loans surpassed
At a time when Americans are looking credit cards in 2012 as having the worst delinquency rates
for economic certainty, the answer is,
in consumer credit4. Further, the biggest financial burdens
unfortunately, yes and no. This comes are owned by students who can afford it the least — poorer
as no surprise. Exhibit 1 illustrates
Americans who took out smaller loans to pay for courses at
total student loan debt balance in
less prestigious institutions (often of the for-profit type), and
the U.S. is approximately $1.3 trillion,
graduated or left with nonemployable credentials.
making it the second largest category
It remains to be seen how much student debt weighs on
of household debt behind mortgages
the rest of the economy. Unlike housing-related debt, which
which total $8.3 trillion.
can be discharged during bankruptcy, bad student loans
The average 2015 college graduate left school with just
cannot be wiped clean, leaving billions of dollars of defaulted
over $35,000 in debt.1 Drivers for student loan debt over the loans on household balance sheets. This has the potential to
past decade include greater enrollment among millennials,
limit one’s ability to save money for retirement, invest or even
cuts to public funding for higher education, stagnant
purchase a home. incomes, an increasing share of low-income students, rising
tuition, parents’ impaired ability to offset costs and the fact
Are there signs that the student loan debt situation
that students are taking longer to pay their loans.
is improving?
About 40 million Americans are carrying some student
Again, the answer is yes and no. On a more positive note, the
loans2. Approximately 70 percent of students leave college
U.S. Department of Education recently reported that loans
with student loan debt.3 As a percentage of total debt, student
made directly by the U.S. government, the most common
loan debt now represents over 10 percent of total household
type of student loans, had a delinquency rate (defined by the
debt, versus just 3.3 percent in 20034.
Department of Education as 31 days behind in payment) of
The debt delinquency rate (defined as an overdue
19.7 percent, down from its previous reading of 22.2 percent5.
payment by at least 90 days) is now above 11.5 percent,
These borrowers in default owed a median of $8,9006.
4
according to the Federal Reserve Bank of New York .
However, this delinquency rate understates student-debt
Some believe student loan debt is approaching crisis
trouble. According to the Wall Street Journal, millions of
levels. Others contend that it may
Exhibit 1
be simply more of a headwind
to economic growth. Recent
Student Loans Owned & Securitized, Outstanding
increases in the prevalence
2015 Q4: 1,320.4094
1,400
of delinquent student loans
1,300
1,200
demonstrate the difficulties that
1,100
some borrowers face managing
1,000
and paying down their debt.
900
800
Defaults are concentrated among
700
borrowers who did not graduate
600
from a four-year institution and
500
those who attended for-profit
400
2007 2008 2009 2010 2011 2012 2013 2014 2015
institutions.
Source: www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2015Q3.pdf
20 • MeritMatters®
borrowers are technically not delinquent but nonetheless
are failing to pay down debt because they are in so-called
forbearance or deferment situations, in which the government
allows them to postpone payments for a period due to tough
financial spells.
What impact, if any, is the student loan debt situation
having on the housing market?
The American dream of homeownership is not dead — it may
just be deferred. Perhaps there is a silver lining that will soon
strengthen America’s housing market. Student-loan holders
are more likely to delay buying a home rather than give up
on homeownership altogether. Millennials eventually want
to own a home. They just face significant obstacles in doing
so. As a result of the Great Recession, millennials, who are
underemployed, may not have enough money for the initial
down payment necessary for a mortgage. Or they may have a
low credit rating, which often translates into a higher interest
rate on a home loan or completely disqualifies them as a
borrower. With millennials getting married and having children
later in life, there may be little incentive for them to move from
a rented bachelor pad (or Dad and Mom’s basement) to a home
of their own. But the biggest factor impeding their transition to
homeownership is student loan debt.
Yilian Xu, a professor of consumer economics at the
University of Illinois, notes that student loans are the
biggest problem for this generation, potentially disqualifying
millennials for mortgage loans due to low credit scores and
high debt ratios7. It is estimated that millennial student-loan
debtors have to spend about half of their monthly income
to make debt payments7, but if they wish to finance a home
while they are paying the student loan debt, the high debtto-income ratio effectively disqualifies them for almost all
mortgage loans. Even among those millennials who are
doing well financially, just a general aversion to debt is also
discouraging them from taking out a mortgage.
On the other side of the student loan debate, some
believe the crisis rhetoric surrounding student debt has
been overblown. More student debt means more people
are getting an education. People who get an education have
higher wages. They pay more in taxes and spend more. The
gap in earnings between college and high school-educated
workers is both large and growing. College-educated
millennials are more likely to earn higher wages and be
employed than those without a college degree. A four-year
degree yields approximately $570,000 more in lifetime
earnings than a high school diploma alone, while a two-year
degree yields $170,000 more.8
Household formation, a key driver of homeownership,
recently jumped above the long-term average about a year ago.
Millennials are either forming or wanting to form households,
as they now appear to be getting full-time jobs at an increasing
rate. The median age for a Millennial’s first marriage is now
the highest in modern history — 29 and 27 years old for
men and women respectively8. Notably, just 26 percent of
this generation is married. This compares to 36 percent of
Generation X, 48 percent of Baby Boomers, and 65 percent
of the members of the Silent Generation when they were the
age that millennials are now.9 Most unmarried Millennials
(69 percent) say they would like to marry9, but many,
especially those with lower levels of income and education,
lack what they deem to be a necessary prerequisite — a solid
financial foundation. As a
direct correlation to this, the
majority of millennials have
our expert
yet to buy their first home,
with approximately 35 percent
owning a home versus the
national homeownership rate
of 63.7 percent, according to the
U.S. Census Bureau10.
The headwind of sluggish
household formation may be
ending as job growth improves.
Most importantly, an improving
Dan Crawford,
economy will support labor
Chief Investment
growth, lessen the student debt
Officer, FirstMerit
burden and strengthen the
PrivateBank
housing market.
1. Ballast, Inc http://ballastplan.com/americas-student-loan-dilemma-the-next-debt-crisis/ 2. http://
money.cnn.com/2014/09/10/pf/college/student-loans/ 3. Marketwatch http://www.marketwatch.com/
story/every-second-americans-get-buried-under-another-3055-in-student-loan-debt-2015-06-10 4.
https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2015Q3.
pdf 5. http://www.ed.gov/news/press-releases/new-student-loan-report-reveals-promisingrepayment-trends 6. http://www.wsj.com/articles/student-loan-delinquencies-decline-1458243801
7. http://www.eurekalert.org/pub_releases/2016-02/uoia-pha020916.php 8. White House Millennial
Economic Report 9. Pew Survey Pew Survey http://www.pewsocialtrends.org/2014/03/07/
millennials-in-adulthood/ 10. http://www.census.gov/housing/hvs/files/currenthvspress.pdf
MeritMatters® • 21
community
Rebuilding together
Making over Oakland County,
one home at a time
Rejuvenating Metro Detroit’s distressed residential
neighborhoods might seem like an overwhelming goal,
but Rebuilding Together Oakland County is up to the
challenge. The nonprofit organization is dedicated to
refurbishing the homes and yards of residents who don’t
have the money or are physically unable to do their own
home improvement projects.
Camp Cheerful
provides fully
accessible camp
activities for children
and adults of all
abilities to enjoy.
What Rebuilding Together Oakland
County does
How its people help
The need for home rehabilitation and upkeep in Oakland
County is large, particularly among the disabled population.
This past October, Rebuilding Together Oakland County
partnered with FirstMerit Bank on a $10,000 refurbishment
of a home owned by a disabled Gulf War veteran.
“We replaced the outdoor steps, which were crumbling,
we fixed interior electrical fixtures that were no longer
working, and we replaced carpeting and flooring that were
coming apart and becoming a tripping hazard,” Frazee says.
Frazee is hopeful that his organization will partner with
FirstMerit on a similar project in 2016.
“The thing that sets FirstMerit apart is they wanted
to come out and help work on the house,” he says. “They
didn’t just want to write a check. They wanted to be a part of
making this project happen. There were probably 20 of their
volunteers working on the house.”
22 • MeritMatters®
About the organization
Name: Rebuilding Together Oakland County
Website: www.rebuildingtogether-oaklandcounty.org
City: Farmington Hills, Michigan
Phone: (248) 432-6551
Mission: Rebuilding Together Oakland County
organizes and supplies volunteer-based home
repair and refurbishment projects for economically
disadvantaged and disabled residents throughout
Oakland County. It is a part of the national
Rebuilding Together program, founded in 1988.
How you can help
To volunteer to help homeowners in need, visit
www.rebuildingtogether-oaklandcounty.org.
photos courtesy of rebuilding together Oakland County
The organization is a local chapter of the national
Rebuilding Together program, which has refurbished more
than 120,000 homes nationwide since its launch in 1988.
Locally, Rebuilding Together Oakland County completes
dozens of home projects each year, ranging from small
home repairs to complete home and yard rehabilitations.
“We participate in a national rebuild day on the last
Saturday of April each year,” says Gale Frazee, executive
director of the organization. “In 2015, just on that one day,
we had about 1,000 volunteers complete 37 home projects.”
Legacy
William
*
Family is a top priority for us. Which is why we want to know that the
decisions we make now will ensure a bright future for us, our children
and our grandchildren. Our FirstMerit Client Advisor understands our
aspirations and helped us develop a long-term investment plan. He also
helps us manage our day-to-day banking needs so we can focus on what’s
important. We have peace of mind knowing our legacy will live on.
TO L E A R N MOR E A B O U T
F I R S T M E R I T P R I VA T E B A N K , C O N T A C T :
Ken Duetsch II, Senior Vice President,
at 248-430-1255 or [email protected].
Follow the latest market trends
@firstmerit_mkt
*William reflects a composite of clients with whom we’ve worked; he does not represent any one person.
Non-deposit trust products are not insured by the FDIC; are not deposits or obligations of FirstMerit Bank, N.A, or any of its affiliates; are not guaranteed by
FirstMerit Bank, N.A or any of its affiliates; and are subject to investment risk, including possible loss of principal invested.
Member FDIC
5350_FM16
2 Towne Square, 6th Floor
prsrt std
u s postage
paid
Harrisburg, PA
permit no 149
Southfield, MI 48076
Keep Your Business Moving Forward
Get the advice that will help your company succeed.
As Jennifer’s business continues to grow, so does her need for advice from the local merchant
service experts at FirstMerit Bank. By knowing and understanding Jennifer’s needs, they were
able to better assist her with fraud and chargeback mitigation, as well as help her business stay
PCI compliant. And with access to a 24-hour support desk and online credit card transaction
information, Jennifer’s business can now enjoy many more years of forward momentum.
TO L E A R N MOR E, C O N T A C T :
David Lochner, President, FirstMerit Michigan,
at 248-228-1620 or [email protected].
Follow the latest market trends
@firstmerit_mkt
Jennifer reflects a composite of clients with whom we’ve worked; she does not represent any one person.
firstmerit.com
Member FDIC
5350_FM16