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THE NATION'S ONLY MINORITY-OWNED MANUFACTURER OF PAPER CUPS OPENS ITS DOORS WITH FIRST PURCHASE AGREEMENT FROM NATIONAL FOOD SERVICE GIANT

 TURBEVILLE, S.C., July 15 /PRNewswire/ -- The nation's only minority-owned manufacturer of paper cups began operation this month thanks in part to a purchase order from Sportservice Corporation of Buffalo, N.Y., to produce beverage containers for two of its Major League baseball units. Sportservice's initial requisition of just 100,000 32-ounce size cups -- a modest order in anyone's estimation for this foodservice giant -- was enough to set the cutting, shaping and printing machinery in motion at American Paper Products, Inc. of Turbeville, S.C.
 "In this instance, the size of the order simply doesn't count," says Harry E. Pelzer, an African-American and former IBM executive who is American Paper Products' president, CEO and majority stockholder. "Sportservice was the first. They took a chance on an unknown when paragons like Sweetheart and Solo command major recognition in the industry. Sportservice will always have our profound gratitude for that alone. But, the fact that this customer has high reference transferability to other leaders in the foodservice industry isn't lost on us either."
 Gary C. Fraker, vice president in charge of purchasing for Sportservice, downplays the importance of his company's initial purchase order. "We didn't set out to be heroes," insists Fraker, who is responsible for ordering close to 300 million beverage cups per year for the company's contract foodservice units. "Although, I must admit it is personally rewarding to know that a fairly routine business transaction has helped breathe life into a new minority business venture."
 American Paper Products is located in a 10,000-square-foot building on U.S. 378 in rural Clarendon County, one of the poorest counties in South Carolina. Its mission is to be a major supplier of poly-coated beverage cups for the fast food industry and convenience and other specialty stores.
 The operation has started modestly with four production workers and one cup-making machine that can generate four million cups per month. Expansion plans call for a second machine to be added in early 1994 at a cost of $600,000. It won't be long, Pelzer predicts, before American Paper Products employs up to two dozen people working three shifts.
 Pelzer has created the company with Howard Hirschhorn, also a former IBM executive, who is treasurer and chief financial officer. A third investor, Richard J. Merrithey, who served as production manager for Sweetheart Cup for 25 years, is vice president in charge of manufacturing operations.
 "In 1986 after spending 19 years with IBM, I decided to leave the corporate world and form the only minority-owned manufacturing company of paper cups in America," says Pelzer. "Our company originally was designed to provide employment to inner city residents since our plan was to locate in the heart of one of America's urban centers. We wanted to prove that making money and doing business in the inner city are not mutually exclusive.
 "We proceeded to shop our plan for several years," Pelzer continues. "Most potential investors and lenders suggested that our risks were too high and our return-on-investment was not competitive. We were summarily rejected by venture companies, public markets and several municipal economic development groups.
 "We eventually looked to rural South Carolina where its poverty and high levels of unemployment make new business ventures and good job opportunities desirable. We have experienced extraordinary support from both the Governor's office and Clarendon County," Pelzer adds.
 Clarendon County is 56.5 percent African-American and 43.5 percent white. Twenty-nine percent of its residents live below the poverty line. Unemployment stands at 9.2 percent.
 Initial start-up funds for American Paper were made available through a $100,000 low-interest loan from the Governor's Division of Economic Development and a $50,000 loan from the Santee-Lynches Regional Development Corporation.
 American Paper is producing 32-ounce size cups for Sportservice, imprinted with the foodservice company's red and blue logo. The cups, which are used to dispense soda pop, lemonade and iced tea, will go into Sportservice's inventories at Busch Stadium, in St. Louis, and Milwaukee County Stadium where it holds the concessions contracts.
 Depending on attendance at these ballparks, cups supplied by American Paper Products could last through August. Throughout the summer Sportservice will evaluate the quality of the product as well as the company's ability to meet shipping deadlines and pricing requirements. With acceptable results in those categories, the opportunity for newer, larger cup orders is promising.
 Particularly promising, Fraker says, is the cup manufacturer's carry-over prospects with Concession Air Corporation, a sister company to Sportservice that manages foodservice operations at airports across the country. Concession Air and Sportservice are subsidiaries of Buffalo-based Delaware North Companies, Incorporated, an international holding company. Fraker handles purchasing for both subsidiaries.
 "Delaware North's corporate philosophy and purchasing policies predispose us to do business with MBE (Minority Business Enterprise) companies," says Fraker. "In that respect -- and several others -- American Paper Products is a true 'find' for us: they are minority owned, they have the capacity to produce a tremendous volume of cups in a full range of sizes, their proximity to Interstate 95 is key to the nationwide shipping capability we require, and they produce an environmentally friendly product."
 American Paper has the capacity to produce a variety of cup sizes ranging from 16-ounce to 46-ounce size. They are manufactured using thin layers of biodegradable plastic and recyclable virgin board.
 Pelzer hopes that Sportservice and other clients view American Paper Products as "a project that has had most of the risk managed to a minimum," and points to several objectives that are guiding his start-up philosophy.
 "It's crucial that we work with customers whose utilization volumes are so large that our production capacity is viewed as incidental," he says. "We want to work with these customers in a small way to start so that they become comfortable with our quality and ability to meet pricing requirements.
 "We will continue to market ourselves to high-visibility companies like Sportservice," he continues, "so that our references and client lists complement our new business efforts. Realistically, however, we must work with customers in volumes such that, if we are unable to meet their requirements, a decision on the part of anyone of them to stop doing business with us would not be tantamount to putting American Paper out of business."
 Pelzer is optimistic about his company's future prospects.
 "We are poised to have a socially responsible impact on our environment," he reasons. "We are poised to make an economic impact on Turbeville, S.C. And, we have the ability to be very competitive."
 Surely where opportunity is concerned, his cup runneth over.
 -0- 7/15/93
 /CONTACT: Samuel L. Gifford of Delaware North Companies, 716-858-5000/


CO: Sportservice; American Paper Products ST: New York, South Carolina IN: PAP SU: CON

BM -- CLFNS2 -- 1728 07/15/93 07:35 EDT
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Date:Jul 15, 1993
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