On the cup and up - the rise of The Paper Cup Company
If you're a fan of Willy Wonka and his Chocolate Factory, it's a fair bet that the first few bars of the Oompa Loompa song will pop into your head when you visit Tullamarine business The Paper Cup Company.
A spiderweb of tubes rocket paper products left and right, machines are stationed about the factory floor, boxes of finished product are ready to be shipped off to their final destination while sheets of printed cup designs wait patiently for their chance on the production line.
With orders rolling in from across the globe, these colourful, locally-produced cups could just as easily end up at a New York coffee house as at the chip stand at a local footy match.
From an acorn of an idea around four years ago, The Paper Cup Company owner John Haddad has built a veritable wonderland of paper-cup-making magic, taking the business from a solo operation in 2004 to an enterprise now fielding huge orders from national companies.
John's rise in the small business world began when he was introduced to the National Enterprise Incentive Scheme (NEIS) - the government initiative designed to help eligible unemployed people start and run their new, viable small business.
"Up until then, I had been looking into the possibility of establishing a business which just imported paper cups from overseas. After some background research, I discovered that the costs involved in shipping and storing the cups made the venture unrealistic, so shifted focus and explored the possibility of producing the product here in Melbourne," he says.
"The NEIS program was instrumental in helping me develop a business plan in those early days, and since then, The Paper Cup Company has grown to now employ 16 staff members with machines working around the clock to fill our current orders."
John is quick to point out that it hasn't all been smooth sailing over the past four years. He's come up against a number of hurdles - including his very first business purchase of a lemon cup-making machine - but says his "big picture" thinking has helped him persevere.
"The story of The Paper Cup Company so far has taught me that you can never be too prepared for surprises. At the beginning, I purchased a dud machine and it was a costly mistake. It felt like I had made one step forward in business and then two steps back," he says.
"Many others would possibly have cut their losses at that stage, but I contacted an old friend to explore the possibility of a partnership, and we purchased three more machines and moved into new premises."
At that stage, all the printing took place off-site. With the assistance of an overseas investor, John quickly realised that while the business was growing in clientele and output, profits were being severely dented by the off-site printing process. He was able to finance the purchase of a printer by re-investing a substantial amount in the business.
"We've overcome a lot of hurdles since then - like purchasing sub-quality paper and problems sourcing skilled local workers - and built the business up through quality of product and level of service," John says.
"Our output has cut the lead time from overseas imports of paper cups from around nine to 12 weeks, to a priority job which we could now turn around - from design concepts by our in-house graphics team to delivery - in around five days."
The continual growth of the business has brought with it a need to diversify. John has increased the business' profitability in the last year by branching out into the production of paper cup machines for export around the world. With a team of engineers and his own expert knowledge of the industry, John has been able to improve on the previous design of the cup-making machines by increasing output levels and improving maintenance issues.
"This side of the business is undergoing continual research and development to see how we can further improve machine operation," he says.
"Already, the initial machines we are currently using have increased production by 25 percent. We've sold eight of these machines to the Philippines, and we're getting ready to roll out another model with even more benefits."
John says the new machinery will boost production again, allowing the company to operate 24-hours a day, increasing the current 50-cup-a-minute level of output to 80 cups a minute.
The Paper Cup Company's client list continues to grow as many national companies make the move away from foam cups to the more environmentally friendly paper option. One contract currently underway calls for the production of 55 million paper cups a year.
Research and development have proved extremely important to the business. John estimates he has spent in excess of $2.5 million on R&D alone, recognising the need to control growth at a realistic rate while increasing his market share.
"In terms of technology advances, we're also the only paper cup producer which is using ultrasonic means to adhere double-walled designs. It's a method we've developed in-house and is proving far superior to the traditional glue used by other producers," John says.
"When you grow so quickly, there's always the need for cash-flow support, so government support for small businesses is so important - there are always challenges to face."
With a move to centralise operations and retain strong quality control over his product, John's next business move will involve relocating to larger premises and looking at the possibility of sourcing locally-milled paper.
Currently, that's the only part of the process which can't be created in-house, but with John's aim of creating an entirely local product, he's hopeful the future will bring an opportunity to bring paper production into the bigger picture.
Despite some of the obstacles along the way, John credits the success of his business to persisting during times when many other business operators would have just walked away.
"This is a multi-billion dollar industry - we've grown from a $70,000 business in 2004 to a $1.5million business today - so I always knew the market was there," he says.
"Obviously there's a point when it's important to realise your business dream may not work, but my long-term vision and being able to see the light at the end of the tunnel' has helped me persevere."
