Steven Eisenstadt: Executive Vice-President, Cumberland Packing Corp.

The Eisenstadt family founded the Brooklyn-based Cumberland Packing Corp. — the market leader in artificial sweeteners with its classic Sweet ’N Low brand — at New York City’s manufacturing zenith, and prides itself on never having laid off an employee in the 62 years since, even as the East River waterfront became a dormant industrial museum.

But as competition increased in the artificial-sweetener sector in the late 1990s and costs of production in the United States began to rise, the company, with annual revenue of $103.5 million, began in 2000 to outsource most of its coated-paper production — no small matter for a concern that produces around 24 billion sweetener packets annually.

That an otherwise all-American company opted for an Asian supplier when faced with cost pressures is not surprising, given the recent megatrend toward overseas sourcing. What is surprising is that last year the Eisenstadts were able to reduce Cumberland’s costs by switching to a sole-source contract with a U.S. supplier, Coating Excellence ­International (CEI). “We didn’t switch to CEI because of patriotism,” says Steven Eisenstadt, executive vice president and a third-generation owner. “It was for efficiency and peace of mind.”

Such corporate solace stems directly from the determined focus of CEI chief executive Michael Nowak. A University of Chicago MBA who previously worked at International Paper, Nowak had seen his industry bleed market share, and founded the $160 million–in-revenue company in Wrightstown, Wisconsin, a decade ago with the idea that he could help stanch it. “You can’t just sit back and lament losing business to the Far East,” he says. “You have to do something about it: make the investment to get more efficient and compete.”

Partnering with industrial engineer William Arndt, CEI came up with a method that requires half the man-hours that competitors use to make a given quantity of product. The slim headcounts allow CEI to pay workers multiples of typical wages in Korea — about $20 an hour — and produce a superior product. From there, the company employs bespoke solutions to drive down costs further. To capture the Cumberland contract, for example, CEI developed custom robotic machinery that helped cut Cumberland’s per-packet cost, reducing its overall materials costs by 10 percent. Total savings per year: $700,000. In addition to producing packaging for Cumberland, the company’s other sole-source clients include Georgia Pacific, Weyerhaeuser and Boise Cascade.

Given the recent concerns about product quality and safety in China, CEI’s domestic cost-effectiveness couldn’t be better-timed. “All things being equal, we like to do business in our own country,” says Cumberland’s chairman emeritus, Martin Eisenstadt, 74. “It’s easier to manage the relationship, and since we’re dealing with a food product, safety is paramount.”

While CEI provides all the printed, coated paper for Cumberland’s products, the actual packaging of Sweet ’N Low and other products, such as Sugar in the Raw, still happens at company headquarters in Brooklyn. A staff of about 400 unionized employees produces tens of millions of packets a day in a plant that resembles a cross between Willy Wonka’s chocolate factory and the opening-title set of Laverne & Shirley. Industrial machinery churns and quacks, spilling blizzards of pink packets onto ­conveyor belts.

Steven Eisenstadt, who greets workers by name, says that choosing CEI as its sole supplier is in line with Cumberland’s founding spirit: “We believe in karma around here; we’re not going to hire efficiency experts or ruthlessly cut jobs. But at the same time, we’re continuing to grow and compete in a tough environment.” 

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