Owner priorities clear at stretch film maker Paragon
BROKEN ARROW -- A long, yellow mechanical arm reaches down with robotic precision to pick up four rolls of plastic stretch film and place them in a cardboard box.
The machine works with a human instinctiveness as it packages one container after another, never missing a beat.
Paragon Films Inc. has invested nearly $50 million in the automated system to separate itself from the competition. That investment apparently has paid off -- the Broken Arrow-based company has grown to become the sixth-largest producer of industrial stretch film in the country.
"We're moving to a service economy where the customer wants what he wants when he wants it and how he wants it, and we try to do that with technology," said Mike Babb, Paragon's founder and president.
Babb speaks proudly of the company's high-tech setup but even more proudly of the 130 workers who are the company's heartbeat. As he likes to say, Paragon is a chain of success stories about people believing in people.
"For me, life is not all about money -- it's all about people," Babb said.
"Our people are an extended family. I'm very proud of the fact that we manage our business in a way that is biblically correct. We don't compromise. We don't lie, cheat or steal to make money.
"I think that makes people here feel good. There's not this disjuncture between their life journey and business."
The name Paragon, which was aptly picked by Babb's wife, Deb bie, is meant to show that the business stands for a model of excellence or perfection.
The company makes stretch film that is used for tightly wrapping pallets of products that are delivered to retailers. The wrap keeps dust off the products and prevents them from slipping.
Companies often use stretch film in place of metal strapping, plastic banding or containers made of cor rugated cardboard secured with glue or tape.
About 75 percent of Paragon's business is national and 25 percent international, with products sold in all 50 states as well as in Canada, Mexico, Puerto Rico, the Dominican Republic, South America and Africa.
Some key customers include Wal-Mart Stores Inc., Sysco Foods, Plasti Pak, Coca Cola Bottling Co., Pepsi Bottling Group, Exide Battery and BASF.
Local distribution customers include Master Packaging, Tulsa Tape & Packaging and Omni Packaging.
Paragon was founded in 1988, but its beginnings stretch back years before that when Babb's father, Bill, moved to Tulsa to pursue a career in plastics after building underground nuclear bomb-proof manufacturing facilities for Johnson & Johnson in Arlington, Texas.
Bill Babb's journey to Tulsa came at the behest of a bank that hired him to turn around a company called PolyVersion and make it profitable. Later, after the bank and venture capitalists sold the company to Armin Corp., the new owners let Babb go.
The setback was only momentary. Soon, Bill Babb ventured out on his own, forming a family of three plastics companies over several years -- Tulsa Polyfilm Inc., Linear Films Inc. and HMW Film Products Inc. Along the way, he also invited his son Mike -- one of six children -- to join him in the business.
Father and son eventually merged the three companies into Linear Films Inc., which pioneered the stretch film industry.
In 1985, they took the company public, only to find themselves caught in a corporate takeover by Atlantis Group Inc. a few years later. The father left the company, and Mike Babb resigned along with five other employees.
"Losing that company was the first time I ever got heartbroken," Mike Babb said. "I didn't know what it felt like to be heartbroken until I left that company. I loved all those people."
But to this day, Babb said, he doesn't have an ounce of animosity about what happened. It turned out that those events set him free to pursue the lifelong dream of owning a company.
His father, too, provided great encouragement, and in the end provided monetary help.
It was the 1980s when Mike Babb was ready to step out on his own, and Oklahoma's economy was struggling. Oil had dropped from $40 a barrel to $9 a barrel, and banks didn't want to loan money, he said.
Miraculously, Dow and Exxon, two large resin suppliers Babb had worked with while he was at Linear, stepped in and offered to help finance his new company.
"They did it on a handshake agreement," he said.
Babb's father and a friend, Tom Ackley, provided seed money for the company, and his father agreed to guarantee the loans.
Today, the company continues to have annual growth in the double-digits and produces more than 80 million pounds of plastic a year.
Mike Babb credits his workers for much of the success.
"We try very, very hard to make work fun," he said. "Life is too short."
The company has no dress code but encourages people to dress country club- appropriate, which means they can wear jeans or shorts any day of the week. And a bit of horseplay, such as a good-natured water fight, is not unheard of at Paragon.
"I cannot overstate this: If your whole focus is the almighty dollar, then you lose sight of people and what they are in the equation," Babb said.
His appreciation for the employees makes itself felt in numerous ways -- bonuses twice a year that equal 15 percent of his workers' salaries, gifts of cars and motorcycles to some employees, and Rolex watches for anyone who works 10 years at Paragon. The company even has helped workers pay for costs associated with adoption, legal fees and car repairs.
"We take care of our people," Babb said. "We try to send a message to our people that we expect them to live responsibly, but let's face it, sometimes life gives you a bad hand. Things happen beyond your control."
While business is good now, the going hasn't always been easy for Babb, who early on went to his father with worries about the company's survival.
"He never lost faith," Babb said. "I wanted to sell the business so we could recoup the cost, and he wouldn't lose his stake. But I wasn't even allowed to discuss that with him."
Ironically, the very next month after that father-and-son talk, the company made a profit, and it has been profitable every quarter since 1991, Babb said. Sales last year were right at $50 million, and so far this year are up 26.5 percent, he said.
Today, Babb owns all the voting shares of stock in the privately held company, and three other employees have a minority stock ownership. Although he gets approached almost weekly with buyout offers, Babb said he has no desire to sell his company or take it public.
The owner of a private company can make decisions quickly and not worry about competing for cash with other divisions, Babb said.
"I've been in a place where there's this tug-of-war between management and stockholders on where the money goes," Babb said. "I have strong feelings that being forced to focus on quarterly earnings as opposed to a long-range plan is not a good thing."
Babb's goals for Paragon call for getting the plant fully automated in the next four years. The company plans to diversify into other areas, he said, noting that a second plant could be built on Paragon's 40-acre site.
Within next five years, the company also plans to build a second multipurpose plant in North Carolina that would make stretch film and other products.
Paragon Films Inc.
3500 W. Tacoma, Broken Arrow
Stretch film production
Mike Babb, founder and president
Laurie Winslow 581-8466