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Date: August 16, 1995

Title: Interview/Alfred Teo

Sigma Plastics Group of Lyndhurst was the 1994 Top 20 Company of the Year for Northern New Jersey. CEO Alfred Teo has built an empire of six plastics companies since founding Sigma Extruding in 1979. The main product is polyethylene packaging. China-born Teo also owns companies in the eyeglass and trucking industries, as well as running several commercial real estate ventures. In 1993, Sigma Plastics Group had revenues of $165 million, and Teo projected last year that he expected to do more than $200 million in sales.

BUSINESS: How has business been during the past year?

Teo: While last year we projected sales of about $200 million for 1994, we actually did $350 million in sales. We”ve made four acquisitions since then of two companies in Canada, another in Illinois and one in Kentucky. All of these companies are more or less related to the product we are making. Growing through acquisitions is part of our strategy at Sigma, and we have been growing very comfortably. All the acquisitions are well planned. We have, of course, encountered the normal problems involved in taking on new companies. We have had to work very hard to integrate these companies into our culture.

BUSINESS: How would you describe Sigma Plastics” corporate culture?

Teo: We run at a low overhead and very efficiently. We always buy the latest state-of-the-art equipment. We invest in high-volume technology, which requires low labor costs. As for employees, one might think that since I was born in China I would employ many Asians. That is not true. The only Asians working here are me, my two brothers and my son, who is going to join the company next month. Right now we employ about 800 people, out of which only a handful is Asian. I realize Northern New Jersey has a large Asian population, but that has not influenced my business.

BUSINESS: As a manufacturer, have you had to deal with New Jersey”s stringent environmental regulations?

Teo: Thank God we don”t have any environmental problems. All our raw material is FDA approved. Our printing inks are water-based. We switched from solvent-based about two and a half years ago. I feel as though the state government is pro-business. I am very happy with the job Christie Whitman has been doing.

BUSINESS: You have mentioned in the past that you encounter a great deal of overseas competition in the plastics market. Has that continued?

Teo: Competition is still about the same. We try not to compete with these companies head-on. We know we can”t possibly compete with them because of their low labor costs. Depending on which market you look at, polyethylene packaging is still growing at the rate of between 3% and 10% annually. In the last couple of years, there have been those companies that have not kept up with technology. They are usually the ones that don”t have solid financial management. Several of my competitors have not reinvested in the latest technology, and that has hurt them. Quite a few U.S. companies are going out of business. Imports are also hurting them. They can”t compete anymore. As for us, we have no plans to expand overseas. Plastics is a huge market in the U.S. That is where I see the most potential.

BUSINESS: You also run other companies in areas unrelated to plastics. How are those companies doing?

Teo: They are all doing well. I manage them well, and that shows. But there is nothing more fascinating to me than my core business, plastics. Though I also run an eyeglass company, a trucking company and invest in real estate, I never feel as though I am spread too thin. I”ve got good people and good managers. Some 90% of my managers are hand-picked and trained by me. They are watching the store for me, and reporting directly to me.

BUSINESS: Do you have plans to get involved in any new ventures?

Teo: I don”t have anything specific in mind right now, but I”m always looking for opportunities to grow and diversify. I enjoy taking risks. I also keep the notion of taking my company public in the back of my mind. I”m reading up on the pros and cons of going public right now. The advantage is that it gives you assets to grow bigger much faster. The disadvantage is that you have a lot of shareholders to report to. And you also have to report to regulatory agencies. But going public is still one option we are exploring. We haven”t made up our mind yet.

BUSINESS: If a larger company were to come courting, would you consider selling Sigma Plastics Group?

Teo: If the price is right, anything is for sale. Why not?

BUSINESS: There is no doubt that your company has grown dramatically in the past 18 years. Have you ever questioned your decision to start a business in the U.S.?

Teo: No. I came here in 1968 when I was 21 years old to go to Queens College in New York City. I graduated with a degree in business and accounting. I worked for an accounting firm after college, where I was sent into Blue Star Packaging, a plastics manufacturing company that was losing money. I made some recommendations, and the president of the company offered me a job with a stock option. I took it and worked very hard to help him turn the company around in three years. We went from losing a lot of money to making a lot of money. When we sold the company, he honored my stock option. I then came to Lyndhurst to open my first company. My accounting background and experience with him helped me learn the plastics industry. I”m a quick learner. Coming to the U.S. was the right decision.

BUSINESS: What do you see for the future of Sigma Plastics?

Teo: In our core business, I envision that we will be a $500 million group of companies in the next two years. We already have several product lines that plan to grow. Right now a lot of this is still in the planning stage, so I can”t give you any specifics. We are also looking for new acquisitions. I am pleased that my son is coming to work for the business. All these years I have built the business along with the help of some good, key people. But now I have come to realize I could use even more help. Who better than your own flesh and blood?

BUSINESS: You claim your companies have few hardships now. But there must have been a time when you were unsure your business would survive, much less succeed. What did that experience teach you?

Teo: In 1979, when I first started Sigma Extruding, I sold my house in Bayside. With that money, the stock option and a $300,000 Small Business Administration loan, I started the company. President Carter was running the country, and interest rates were 22% in 1980 and 1981. Being a new business, I lived through those very tough years. I couldn”t afford to have a shipper, mechanic, salesman or bookkeeper. I did all those jobs myself. I was doing only about $4 million in sales annually. Looking back at those events, I feel much stronger. I really feel like I”ve come a long way. u