Donna Baumgartner says foresight is the reason her husband Donald was able to ride the growing popularity of fast food and coffee to build a business that supported hundreds of jobs, millions of dollars in donations to the Milwaukee arts, and global adventures.
Donald says he was lucky.
“I’d like to say, using Donna’s word, that I had all this foresight and could see where the market was going to be and was preparing for it, but really it came to us,” Donald said during an interview in his River Hills home.
Donald, 88, started Milwaukee Shipbuilding Corp. with his father in 1951 to do U.S. Department of Defense work during the Korean War. The company was renamed Paper Machinery Corp. in 1956 and built into a global leader in manufacturing the machines that form paper cups and other containers.
While the business’ success allowed Donna and Donald to travel the world, he also invested significantly in the company and the Milwaukee arts community. The Baumgartners ultimately sold the business to employees through an employee stock ownership plan in 2016.
For his commitment to growing business locally and major contributions to the arts in Milwaukee, Donald Baumgartner will receive the 2019 Bravo! Entrepreneur Lifetime Achievement Award, presented by BizTimes Media. The award will be presented during the annual Bravo! Entrepreneur & I.Q. (Innovation Quotient) Awards luncheon at BizExpo on May 30 at Potawatomi Hotel & Casino
A break in the U.S.
Whether it was luck or foresight, Donald says Paper Machinery Corp. did not hit its stride until it began selling in the United States. The company faced stiff competition when it first started. Major cup companies Dixie, Lily-Tulip, Solo, Sweetheart and Bondware dominated the U.S. market and each company made its own forming machines.
In the early days of the company, Donald went into another business with his friend, Ozzie Jaeger. Their plan was to make cups of their own and sell them to the shops to which Jaeger sold bread. They bought a Paper Machinery Corp. forming machine and set up production in a former mortuary. The problem was their production far outpaced demand from Jaeger’s customers and they ended up with a surplus of cups.
A chance meeting with a man named Herb Geiger at the yacht club would ultimately give PMC the jumpstart it needed. Geiger owned coin-operated coffee vending machines at businesses around the city. He felt his supplier was overcharging for cups and saw an opportunity to make his own. Donald and Jaeger ended up selling their business to Geiger and he began production of his own. Word began to spread to other independent vendors and PMC suddenly had a market in the U.S.
“Pretty soon we were supplying machines to any number of vendors,” Donald said.
As Donald worked to break into the U.S. market, he also looked overseas for business opportunities, selling first in pre-Castro Cuba, then Venezuela, Canada, Europe and eventually, Japan and Asia.
“In Japan we really hit the jackpot,” Donald said.
Not only did PMC find demand for its products in Japan, but also customers that were more particular.
“If you said the machine was going to run at 200 (cups) a minute, it better damn well not run at 199,” Donald said.
He added sometimes Japanese customers would want to send an entire machine back if it had a single scratch.
“They were really very, very difficult customers, but they made us better producers,” Donald said. “We learned to build a better product thanks to the pressure we got from the Japanese.”
Selling around the world came with another challenge, however. Finding blue-collar workers willing to leave home and travel for the company wasn’t always easy, Donald said.
“We knew that we had to service what the hell we sold and we had to keep it running and make it profitable for our customers,” he said.
Donald’s approach to the business in general focused on finding the right people.
“I made a study of what the average toolmaker made in Milwaukee, what the average machinist made and set our rates way the hell above those so I could attract the very best,” he said. “I knew I needed people and I needed good people and aside from paying high wages I put bonuses in front of them so that they had incentives to do better, to work harder.”
A major key to the business’ success was building a quality machine, which required strong mechanical and electrical engineers. Donald said he was fortunate to hire gifted engineers and noted the Milwaukee area has many people with strong technical skills.
“This is a wonderful area to do what we did,” he said.
As for Donald, his skillset came in a different area.
“I didn’t have a lot of technical skills,” he said. “I wasn’t a toolmaker or a machinist or a mechanical engineer, but I did have an ability to get things done; that showed up at a very early age. I was impatient and I sort of would bulldoze my way through projects one right after another and I managed to get a lot done and I think that’s the key to my personal success.”
A surprise announcement
In 2016, Donald surprised employees by announcing he would be selling the company to them. He had seen businesses started by his father sold to out-of-state firms, only to see local operations shut down and jobs move away. He did not want the same result for PMC.
“I was well aware that this company was built not just by me and my son, but by the guys that were on the floor, by the guys that were out in the trenches, and they needed to be rewarded,” he said.
Advisors cautioned Donald that he could be leaving more than $100 million in upfront payments on the table by doing an ESOP. Three years after the deal, he says he has no regrets. He remains chairman of the PMC board and goes to the office on a regular basis.
“We will get our reward eventually,” he said.
Donald noted the Baumgartners are scheduled to receive a significant payout in 2020 based on the company’s performance and the business is essentially sold out for all of next year.
“The new group is doing pretty well,” he said. “They’re meeting all their projections. I like the way they’re running the operations. I just keep an eye on it; from what I’m seeing it looks pretty damn good.”
The new group tasked with leading the company is also full of PMC veterans. Luca Dellomodarme, president of PMC, has been with the company 16 years. Scott Koehler, chief financial officer, is in his 27th year and Mike Kazmierski, executive vice president, has been with the company 41 years.
The trio said Donald built the company by being willing to invest in it.
“We see a lot of private companies that ownership is more interested about their own personal wealth or are very conservative in nature,” Dellomodarme said. “Donald was never afraid to reinvest in new technology, new equipment, new products.”
Kazmierski said in some companies employees who do not aspire to higher positions in the business might be encouraged to leave at some point, but Donald was good at figuring out where a person’s limits were and pushing them to reach that point.
“I would say he’s a benevolent person as far as understanding people are different and everybody you hire isn’t a superstar, most aren’t, and you need a lot of hardworking, skilled professionals to run a business,” Kazmierski said. “I think you find examples of that throughout our company. A lot of people have been promoted from within and have stayed in those positions for decades.”
Dellomodarme said Donald was loyal to employees and would allow the business experts to do what they do best.
“Some owners have a tendency to want to micromanage the employees,” Koehler added. “I think Donald understood that you should really hire smart people and just let them go.”
Kazmierski said Donald’s approach helped spawn an ownership mentality of sorts before the ESOP announcement took place.
Donald said his parents, both of whom ran businesses as he was growing up, had spent every minute of the day at work, watching employees carefully for fear someone would steal from them.
“They were at the job a lot more than I ever was,” he said. “They had an attitude that they could do it better than anybody who worked for them and I had an attitude that I can’t possibly do it as well as the people who work for me.”
Hiring the best people he could find also had another benefit for the Baumgartners.
“They did all the heavy lifting; it made time for Donna and I to go play,” Donald said.
The Baumgartners certainly had their share of adventures, many of them chronicled in Milwaukee author Kurt Chandler’s biography of Donald, “With the Wind at His Back: The charmed and charitable life of Donald Baumgartner.”
Donald’s life has been full of adventures. There was the perhaps ill-advised crossing of the Atlantic Ocean in a yacht that had not been tested for such a journey in 1979. There was the 1986 Rose Garden ceremony where President Ronald Reagan recognized PMC for its success in exporting. Other trips included scuba diving in Australia and the Maldives, Formula One races in Monaco and Brazil, and photography trips on safari in Africa and through the jungle of the Democratic Republic of the Congo.
Donald has also taken to collecting sports cars. He started with a 1954 Kaiser Darrin while in his 20s before graduating to Cadillacs and then Mercedes. He later would buy a Rolls-Royce, Ferrari Testarossa and a McLaren P1 – one of 375 made.
Both of Donald’s parents were ambitious. He got a desire to succeed from them and saw that hard work will produce results, Donald said. There is one lesson he did not get from them, however.
“I grew up during the Depression when things were damn tough and money was very scarce,” Donald said. “They could have but didn’t really teach me the value of a dollar. When I had money, I spent it freely. They never did. They held on to every dime, so I didn’t learn that from them.”
Supporting Milwaukee arts
Beyond their adventures around the world, Donna and Donald also invested in the business and the Milwaukee community.
Even before selling the business, the Baumgartners were significant supporters of the arts in Milwaukee, contributing time and money to causes including the Milwaukee Art Museum, Milwaukee Ballet, Florentine Opera Co. and Milwaukee Symphony Orchestra.
Donald and Donna had given to a number of causes on a smaller scale over time.
“As we became capable of giving more money, we started thinking we needed to focus more,” Donald said. “We thought we would do more good if we just focused in a narrow area.”
Since the Baumgartners sold Paper Machinery Corp., the couple has made major gifts, including $8 million to the Milwaukee Art Museum’s endowment fund to pay the future salary of museum directors and $10 million toward the Milwaukee Ballet’s new facility in the Historic Third Ward. The couple also made $1.5 million gifts to Milwaukee Film, the Milwaukee Symphony Orchestra and the Florentine Opera.
Donald is a lifetime trustee of the Milwaukee Art Museum and a life director of the Florentine Opera. Donna continues to serve on the board of the Milwaukee Ballet and the Milwaukee Film Festival.
Donna and Donald each came to the arts from their own direction. She was a potter. He saw his first opera as a teenager.
“I think the arts bring everything to the community. They bring education; it’s more than what’s on the stage,” Donna said, adding that learning about art can help children develop self-esteem and confidence while building a richer community. “It’s very important for businesses to recognize what that sort of education does in the life of a child. They seem to be into more social services, but there is no greater social service than arts education.”
“It’s the soul of the community,” Donald said.
In addition to charitable contributions, Donald had a major hand in the Santiago Calatrava-designed expansion of the Milwaukee Art Museum, completed in 2001, at a cost of about $125 million. He was part of the committee that selected Calatrava, chaired the building committee for the expansion and later served as president of the museum’s board of trustees.
“I look back at the Calatrava as one of the larger achievements of my lifetime,” Donald said. “I’m extremely proud of the work that I did and I’m extremely proud of the building. To this day, I look at it and I think, ‘My God, how did we ever do that?’”
The architect stayed at the Baumgartners’ house on one occasion during construction when hotel rooms in Milwaukee were booked. Donna said he stayed up most of the night painting watercolors and left a stack of them behind for the couple. When Calatrava heard Donald would be receiving a lifetime achievement award, he sent his friend a letter congratulating him.
“He wrote me a letter, but it’s not just a letter. It’s a work of art; it could be framed,” Donald said.
“He never does just anything without drawing,” Donna added.
Calatrava’s designs continued to evolve as construction of the museum’s expansion got underway and costs increased, partially due to interest payments. Donald said it was important to him that the architect’s vision came to life on the city’s lakefront.
“This is Milwaukee and there are a lot of conservative voices out there,” Donald said. “It took a lot of persuasion to convince these people that we needed to fulfill Calatrava’s vision for what the museum could look like … he was visionary and I knew for damn sure that if we fulfilled his vision we would have something totally spectacular and I didn’t want to cut it short in any way possible.”
Donald’s commitment to the Calatrava project extends beyond the construction project. Each of the forming machines PMC ships out its doors include a Made in Milwaukee logo that features the building’s iconic brise soleil.