A need for paper documents still propels Fellowes

Still spry at 90, Fellowes Inc. is growing with constant product innovations and expansion into foreign markets.

Fellowes is a family-owned, Itasca-based maker of cardboard file boxes, as well as one of the nation's leading makers of personal shredders.

Originally a corrugated box maker in Chicago, the company was a good investment for Harry Fellowes, who bought it in 1917 for $50. The company has grown from a kitchen table-top assembly line into a multinational manufacturer that employs 2,700 people.

Early on under Fellowes' leadership, the company began producing its signature Bankers Box, a brand of file box that Fellowes still markets today.

The evolutionary process from boxes to shredders began in the early 1980s, during the nascence of the personal computer.

According to John Fellowes II, vice president and general manager of business machines and the fourth generation of his family to work at Fellowes, the company worried about the future need for paper storage and began diversifying its product line with workspace products.

By 1990, it had produced the first personal shredder selling for less than $100. At 15-inches wide, 5-inches deep and 3-inches high, it sold at a retail price of $99.

Today, Fellowes is the Chicago area's No. 42 largest privately held company, according to Crain's Book of Lists 2007, and its shredders now cost anywhere from $59 to $249.99.

Some of the company's other products, such as personal binding and laminating machines, range from $49 to $199.

This month Fellowes will launch online sales of a new jam-proof shredder line called the Intellishred series. Available at select office retailers nationwide in April, the shredder prevents paper clog-ups by turning off if too much paper is shoved through its mouth. There is also an LED system that indicates how close the machine is to capacity when the operator is putting multiple sheets of paper through.

Fellowes has also expanded into foreign markets with wholly owned subsidiaries in 15 countries. Distributor and licensing relationships exist with partner companies in 10 other countries in Eastern Europe, Asia, Africa and South America. It's been doing business in Japan for 10 years.

"What we find is that as you get into markets, you learn the differences and you learn the nuances of the business and are able to understand how customer relationships work and consumers, how they value products," Fellowes said. Products popular in the American market might not be as popular in say, Japan.

"In Japan specifically, the customer relationships are extremely important and they are made out of a series of meetings and respect that is gained over time," Fellowes said.

Due to space limitations in Japan, Fellowes' smaller products, such as its PS-62C and P-450C shredders, sell better there.

For Diane Korling, a transportation consultant and landlady in Evanston who owns two Fellowes shredders, several features were important to her during her search for the perfect paper destroyer. The ability to shred thick stacks of paper and the ability to run the shredder for a long period of time were key.

She hadn't set out to buy the Fellowes brand in particular, but came back with one both times. "The triggering moment was when I went to the nearest store and looked at what they had," she said.

In October, Fellowes was one of 10 recipients of the 2007 Chicago Innovation Award. Fellowes won for its Powershred DS1 personal shredder, which uses the company's patent-pending SafeSense technology to automatically shut the shredder down if a hand gets too close to the shredding apparatus.

Such product improvements help offset concerns that the marketplace is becoming a "paperless society."

"Our Bankers Box business continues to show increases year over year," Fellowes said. "Our shredder business continues to show increases year over year. And we find that people do e-mails and all sorts of e-type of commerce, but at the same time, there's a significant amount of paper being printed still and information that's being distributed on a hard-copy basis."

Just as consumers' use of paper remains strong, so too does the Fellowes family's hold on its company.

"The business gives to the family and the family gives to the business, and it's kind of a win-win situation," Fellowes said. "I would say that as long as that continues to be a good thing for the business and a good thing for the family, it's something that's definitely worth continuing."

Business profile

Company: Fellowes Inc.

CEO: James Fellowes

Headquarters: Itasca

Business: Cardboard file boxes and shredders

Sales: $690 million in 2005

Employees: 2,700

Web site: www.fellowes.com