Lorin Krueger – Sailor Plastics

Photos: Kris Kathmann

CEO Reinvented

Lorin Krueger embraces an opportunity in Southwest Minnesota as the next step in his career.

When Mankato native Lorin Krueger drives across southwest Minnesota, he sees more than small towns dotting the map. He sees opportunities.

“It’s amazing, isn’t it? I have lived here my whole life, but as I’ve gotten out and around more in southwest Minnesota I find there are a lot of really neat businesses. Last month Connect talked about River City Eatery in Windom. That is a neat business. The Worthington area is really starting to pick up. The city of Luverne has a lot of things in motion right now and they brought back another pork processing facility to replace the Gold’n Plump Chicken processing place, which had been there forever, but now they’re closing that down. I even had an opportunity to meet the mayor of Luverne at dinner one evening and hear the plans that they have. There’s a lot of small businesses popping up in those smaller towns. I’ll tell you what, the people who wanted to stay are really making something happen.”

And Krueger is one of those making something happen, although he has taken a circuitous route to get to where he is today, owner of Sailor Plastics in Adrian, Minnesota. A whole new direction from what he had done his entire previous professional life. And a bit outside the radius of where he thought he wanted to own a business.

Sailor plastics bottles are used to package a variety of products.

“It’s interesting when I looked at Sailor, I started checking out the community,” he explains. “The big thing for me was to check out the K-12 school. That checked out. Also, Adrian has a lumber yard, they have a grocery store, a hardware store. The key though is the school system because I want to make sure it’s a place that can attract young families which will be my future employees!

“Without that, these small towns will shrivel up and go away. They need something to keep people there. It was really interesting after I started looking into Adrian, I started running into people who live in Mankato now but grew up there. For instance, Todd Loosbrock of U.S. Bank, he is from Adrian. Then I ran into Kenny Klooster, Edward Jones, who is also from Adrian. Then Bob Kitchenmaster is from Hills, Minnesota which is just southwest of Adrian. There are so many people that moved to Mankato from there because there wasn’t necessarily an opportunity, but I think there’s opportunity growing. People want small businesses in the community.”


Krueger is no stranger to taking an opportunity and helping it grow. We last featured Krueger on the cover of Connect Business Magazine in 2004. At that time, he was the CEO of Winland Electronics. A company he co-founded in the mid 70s as a small, local start up and helped grow to a publicy-traded, $20 million dollar plus company.

A lot has changed for Krueger since that interview.

“The company (Winland) continued to grow and we were very prosperous. I retired from Winland in 2008. We came to a point in time where I wanted to do something different and the company was growing. So, I moved to just being a director of the company at that time and stepped down from my CEO duties. Then, of course, I had to decide what I was going to do with the rest of my life! I did take a year to look at a lot of different things.”

Born and raised in Mankato, Krueger always knew those “different things” would be something that would be beneficial to the place he has always called home. Graduating from Mankato East and later Mankato Area Technical Institute (now South Central College), Krueger didn’t want to get too far from home. But an opportunity elsewhere presented itself right away.

“In about 2009, 2010 a friend of mine in Chicago had an opportunity and we formed a new company that we located in Lisle, Illinois called Supply Tigers,” Krueger explains. “It is a purchasing, consulting and sourcing company for businesses. I was able to put what I learned in my years at Winland to good use.”

His experience with Supply Tigers poised him perfectly for understanding the business end of Sailor Plastics, a specialty bottle manufacturer for the food industry.

And that’s where we pick up this cover story. Krueger’s journey since our last visit with him has taken many turns.

Your history with Winland has been well covered over the years, so let’s start with your life after Winland.

Even after retiring as CEO, I have still been involved with Winland’s board this whole time. Winland sold its manufacturing operations to Nortech, but still kept the security electronics products, so they still have those going today in addition to other investments as Winland Holdings.

I was also in on the ground level helping start Supply Tigers, which I helped grow and then after a few years sold my interest but took with me a lot of valuable experience. After I sold my interest in Supply Tigers, I started looking for another business to buy and had my feelers out to all the different people I knew around the community and let them know what I was looking for.

An opportunity came up in 2015 with a company called Sailor Plastics, which is in Adrian, Minnesota. It met all the criteria of what I was looking for in my next business ownership. Except one, I guess. One criteria I had was that it couldn’t be farther than 50 miles away from Mankato. This is 135 miles!

So a little farther away but once I looked it over and got to know the community, it felt right and that is my focus now.

Let’s talk about Sailor Plastics. What is it?

You know those cute little honey bear containers you see on store shelves…that‘s us! Sailor Plastics is a manufacturer of bottle products for the food industry. We really thrive on the people who make fresh squeezed juices and flavored waters. We do a lot of work with sauces, like barbecue bottles. Probably a third of our business is with honey producers. We produce cute little honey bears as well as other bottles that are styled for the honey industry.

What attracted you to this particular business? It’s a far cry from electronics or anything you had done before.

Sailor Plastics was founded by the Sailor family in the 1950s. They started producing bottles in about the mid ‘70s and have been building and making plastic bottles since about 1977, I think.

It was really interesting how I came upon it. It was a second generation family operating the business and they didn’t have another person in the family interested in taking it over. They decided to put it up for sale.

That family feel is part of what attracted me to the deal. Having that owner support was really important. And I knew as I initially took over, I would have that support during the transition. They cared about the ongoing success of the company and they cared about making sure any new owner would stay in Adrian.

What are some of the criteria that you were looking for when it caught your eye?

At this stage in my career I was looking for something that was maybe between one million and five million in revenue. I was looking for something that was profitable. I didn’t want to have to nurse a business back to health again. I wanted to be a private business. I wanted the owner to be able and willing to stay around for a couple of years to help transition the business. I wasn’t really particular. It didn’t have to be a technology business, even though my 30 years prior to that were all technology. Manufacturing is manufacturing. Manufacturing bottles, that’s a lot simpler than making circuit boards. They have a lot less parts.

Sailor Plastics’ manufacturing floor in Adrian, Minn.

The operations have always been located in Adrian?

Yes. It was founded in Adrian by Terry Sailor’s father and it grew and grew making plastic products for the food industry, companies like Schwan’s and Blue Bunny Ice Cream. At that time, I think, there was a company called Morrell Foods and Swift Foods out of Sioux Falls and Worthington. Little known fact, Sailor was one of the original producers of bottles for Cookies barbecue.

Today our customers are smaller business owners that use our bottles for their fresh produced juices. For example, here in Mankato you’ll find our products at WYSIWYG. It’s wonderful to have that local connection.

That’s the type of business model, the type of customer model that we have. Then we also have our bottles featured by many distributors throughout the nation. We are not selling much international because of the shipping constraints you have. Imagine putting 100,000 of the honey bear bottles in the truck, they take up a lot of space. That’s good for us because it also keeps out foreign competition. It’s not cost effective to make a bottle in a low-cost production country, then ship it to the United States. It’s very expensive, just the shipping cost alone would be steep. Our shipping costs are high, so our concentration is more in the middle of the United States.

You mentioned WYSIWYG. How do you find businesses like that or do they find you?

I think part of it is the Sailor reputation. Sailor has an established customer base, and a lot of our new people come from referrals through them. That’s how we connected with WYSIWYG. More recently in the last two years our eCommerce efforts have really ramped up. With a redesign of our eCommerce platform. We shot all new photographs, using another locally owned company, Concept & Design. Then we increased our outreach with programs such as Mailchimp. We already had a customer base of over 4,500 customers in the system. But it seemed every year we would bring on 400 new customers, but then lose 200. There was this constant churn. So the real hard work was just keeping in contact with those people and bringing them in. So when prospective customers are trying to find us, our internet presence is a big deal.

Would you say developing eCommerce for Sailor is one of the biggest impacts you’ve made since you bought the company?

Yes. I think so. Through my experience with Supply Tigers, we did a lot of work building a website system. We also worked with the packaging industries. It helped me know how programs needed to be set up for distributors and larger customers to be interested in our products. With Supply Tigers we would run the buy side of things. We would find a company like Sailor to produce or quote product for our prospects and customers. I knew how the industry worked and I brought that experience with me. I think that helped a lot in redesigning the go-to-market strategy for Sailor Plastics.

When I think of manufacturing, I think of big warehouse spaces, a lot of stuff going on, and a lot of people there but you were telling me yours is smaller.

Yes. That’s right. It’s quite small in space and personnel for the quantity of product we put out. It’s due to the way we do things.

It’s called a reheat and blow process for producing bottles. It uses a bottle preform. The preform supplier we have, and we’re fortunate for this, is in Sioux Falls, South Dakota, 25 miles away. We buy our preforms, which look like a test tube with the cap threads of the bottle already on it. It goes into a machine and we reheat the preform and then that goes into a mold that clamps down and blows the bottle up into the form of the mold. It blows it up in the form of a square bottle, a round bottle, a honey bear, or a barbecue sauce bottle. The machinery really paces the product line. You need a technician to maintain the machinery.

The heating stage as bottle preforms are made into finished bottles.

You need a person to load the preforms into the machine and you need another person packaging the product as it comes out. We have some very simple systems. About every four or five seconds we produce two bottles. This runs five days a week, eight hours a day. With some overtime during our busier seasons when people are consuming more juice and using more barbecue sauce. Our honey production is also more broadly based in the summer months because it stretches from Canada all the way to the southern borders. Where right now our biggest honey producers are limited down south.

How many employees total?

Sixteen.

What is a day like for you? I know you office mainly out of the Hubbard Building here in Mankato, while the bulk of the business remains in Adrian.

We have an office in the Hubbard Building. To help our eCommerce efforts, in May of this last year I hired a young man, a recent graduate from Minnesota State and we located him in the Hubbard Building, which is really an entrepreneurial center. It has a really cool vibe to it.

I don’t know if people realize what is going on there. That building houses a lot of eCommerce and entrepreneurial businesses. But there are also some more mature businesses located at the Hubbard Building. It’s a good location for our outside sales office and eCommerce operations. Also my contact base is stronger in Mankato for recruiting and finding people. I live here and it’s an area I wanted to keep in closer touch with. The production facility and the fulfillment facility is in Adrian, Minnesota and will always be in Adrian. They do a very good job of processing purchase orders, taking phone orders and processing our internet orders. We’re probably one of the top one or two employers next to the school district in the city of Adrian.

How would you describe yourself, because you have the technical background and you’re obviously clearly a very good businessman. So how do you bring that all together?

Oh man. It’s a mess. (chuckles) I’ve been fortunate to be around and work with a number of very smart and very bright people. Going back to Clint Kind, who was the first to help Winland. Kirk Hankins Sr., Kirk taught me management accounting and business. I didn’t know business when we started Winland. He taught me business. Denny Siemer taught me electronics, and taught me a lot of good things about life. I have a small consulting group out in Minneapolis I have worked with since 2000 they are still a part of my team, that I call on. Meeting people are a constant in my business dealings by design. You just build this network of people and lean on it. I think it’s more of an integration of all these different people’s knowledge, skills, and things they’ve taught me. I have learned where to call to get help, and be willing to reach out and get that help when I need it.

That’s one of my mottos…just keep learning.

Yes, they keep you constantly learning. You have to trust the people that you hire or work with or are employed by you. They know the answers to most of the issues of the day. They really do. My job is more of a coach, maybe come up with a different game plan or help them come up with a solution to the opportunity or the problem of the day. My style is not command and control, it’s more of empowerment. I just let them run with it and I always seem to get really good answers and results.

What do you think is next? You’ll just keep trying to grow Sailor Plastics?

Yes. Sailor Plastics is my growth opportunity. I want to grow it to a certain size and am enjoying spending a lot of time working on it. The culmination of my past skills allow me to handle the administrative side, so I take most of that load myself. For the accounting resources I work with Eide Baily and Kitchenmaster Accounting. They both work with me on the administrative and finance side. United Prairie Bank has just been super through this transaction. Getting Sailor up to the next level of growth is my priority. That said, though, I don’t intend to make this a huge growth company. It’s more of a small business and I want to keep it like that and stabilize it.

And I want to make sure that when it is time for me to sell the business, there is a team that could carry on for whoever may own the business going forward. It’s become important to me to leave the business in Adrian, as the Sailor family wanted to leave the business in Adrian. I think Sailor is an important part of the community and part of what makes Adrian, Adrian.

You were born and raised in Mankato and you haven’t left. What do you like about Mankato? What keeps you here?

I think it’s the network of friends and people I’ve met over time. I have had opportunities to work in different community service programs starting way back in 1977 with a group called the Exchange Club. I met a lot of business people, we became friends. I was a part of the Valley Industrial Development group now Greater Mankato Growth. I’ve shared my passions with the South Central College electronics department and I support the Foundation. I’ve just built this network over time. It’s key to me, having a network of people and friends around that I can call on, it helps me feel comfortable being here. I know if I needed something, or I needed advice, or I needed help, I could reach out and get that fairly quickly.


Getting the Band Back Together!

Not only is Krueger gifted in business, but in a band as well. He plays both guitar and is a vocalist in the local band Roses & Thorns.

“I started playing guitar at age 11. My cousin was in a popular regional band in Mankato in the 60s and that got me interested,” says Krueger.

“Playing music like any art form allows a person to use their creative side. It is also very relaxing and something you can lose yourself in for hours, a great way to defrag the brain. Having bandmates, challenges you to open up to new ideas and helps me break out to different music I may not explore. As you can see a lot of similarities to business.”


A Life of New Beginnings

Born and raised in Mankato, Krueger got a first hand view of the growth of the region.

“I had the opportunity to attend several brand new schools in Mankato. Back in the ‘60s, Mankato was on a huge growth trend. We moved to Hilltop Mankato in 1964 just prior to Kennedy Elementary School being built. I then attended Franklin for middle school and I was part of the first graduating class of Mankato East High in 1974. We had the opportunity to do all of the naming of the mascot and be involved with a lot of different committees to put together the school colors and song.

“I graduated with a group of really neat people. I still keep in touch with a few of them from both East and West. It’s a fun and successful class. Even from a young age, I was interested in technology. I was an amateur radio operator in high school. One of my instructors at Mankato East was an amateur radio operator. Also, while I was working my senior year, I worked at a CB radio shop that was started by three instructors and one of their students. I’d go down after school and that was my part-time job, selling and servicing CB radios primarily sold to truckers. My interest in technology just started growing. So from there I went to Mankato Area Technical Institute as it was known at the time. Now it’s South Central College. That’s where I really obtained my grounding in electronics.

“I went through the program with communications as my specialty driven by my amateur radio background. At the end of that, I took a position with a company in Waseca called EF Johnson. I was working under John Bipes, who I worked for at the CB radio shop, who became an engineer at EFJ. I got to work with John for just a few months in the engineering lab. At that time, EF Johnson was going through some significant changes due to contracts with the cellular phone program, which was brand new in its infancy.

“That was in the mid 70s, cellphones were just being discussed and EF Johnson was involved in the program. They were also working on some advanced radio programs. It was my dream job to be an electronic engineering technician and work in communications. It all came to a screeching halt only a few months after I was there. The contracts were put on hold and I eventually was laid off from EF Johnson, just 3 months after marrying my wife, Mitzi. After that event, “I went back to my Technical College instructor Denny Siemer to help me look for opportunities. He and another person Swen Farland were just beginning Winland Electronics. I was a temporary hire that just would not go away. We started in the basement of Denny’s house on Viking Drive in Mankato, building alarm systems for agricultural buildings. That was 1976. In 1977 we were getting a little bigger and needed more space and people. We moved to the Mankato Free Press newspaper building and continued to grow from there. As the company grew, we moved into the security electronics area, and contract engineering and manufacturing, and built the building in 1995 in Eastwood Industrial Center. Another early advisor was Clint Kind. Clint was the dean of the College of Accounting at Minnesota State. The business was growing and needed more structure. Clint introduced us to another professor at MSU, Kirk Hankins. Kirk eventually came in as a partner and became CEO and President of Winland Electronics back in about 1981. Kirk helped the company organize and help us to go public in 1983. I succeeded him in 2001 as CEO.”


Creative Financing

The Southwest Initiative Foundation (SWIF) is there to help people like Krueger invest in the region’s smaller communities. SWIF is a great resource for the business community. In the case of Sailor Plastics, it helped with some gap financing to help get the deal done.

Among SWIF’s managed funds is $11 million dedicated to supporting regional businesses through a revolving loan program. SWIF leverages private investments by partnering with banks, credit unions, economic development centers to help create and retain quality jobs, foster entrepreneurship, and help the region’s smaller communities compete in a global marketplace.

SWIF’s business finance loans generally fall between $50,000 and $400,000. Lenders then provide a 50-percent match. SWIF says that when loan applications are considered, the organization looks at how critical or necessary a business is to the region. To learn more about SWIF and its Business Finance Program and Microenterprise Loan Program, please visit swifoundation.org/ or call 320-587-4848.


Living in Minnesota

I know music is one of your hobbies it sounds like. What else do you like to do when you’re not working?

“Living in Minnesota of course, you go hunting and fishing and that’s always a big thing for me. I played softball with the same team of guys for over 30 years. I also enjoy spending time with family. My wife Michele (Mitzi) and I have a son Jon, who lives in Mankato. Our daughter Emily lives in Sherburn with her husband Tony. We also like to spend time with our many friends. We live in a great little neighborhood outside of Mankato and we get together often. We live right above the hill from Javen’s Winery. It’s one of our frequent gathering spots in the neighborhood and small business,” he smiles.

While Lorin has certainly proved he can go to the distance when it comes to running a business, his wife goes the distance quite literally!

His wife, Mitzi, is a marathon runner. She has certainly been one of Lorin’s top supporters throughout his career, and encouraging her running is one way Lorin gets out of the office and around the country in support of her.

“Recently she did the Route 66 Marathon in Tulsa, so we drove down to Tulsa a week before Thanksgiving,” he says. “We drove the Route 66 piece through Missouri and Oklahoma, which is interesting. I enjoy those outings and that time with her
immensely.”


THE ESSENTIALS

Sailor Plastics
8 Main Avenue
Adrian, MN 56110

Phone: 800-380-7429
Web: www.sailorplastics.com

Lisa Cownie

Lisa Cownie

Editor of Connect Business Magazine

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